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WASHINGTON (AP) – The "fundamentals" of the US economy are solid, the White House said, citing an unfortunate political declaration a decade ago, as the recession threatened to compromise the re-election of President Donald Trump.
Kellyanne Conway, Senior Advisor, told reporters Monday that "the fundamentals of our economy are very strong," said senior advisor Kellyanne Conway on Monday.
It's a sentence with a story. Republican John McCain was accused of being disconnected from reality when he made a similar statement in the 2008 presidential campaign, just hours before the investment bank Lehman Brothers declared bankruptcy, sparking a crash stock market and a global financial decline.
A case can be made for the position of the White House. The US job market is breaking records for unemployment and the economy has continued to grow uninterrupted since Trump took office. But growth is slowing, stock markets have rocketed sharply in recent weeks due to recession fears, and housing and manufacturing indicators have prompted economists to pause. A new survey released on Monday reveals that the vast majority of economists expect an economic slowdown to occur by 2021, according to a report by the National Association of Business Economics.
Trump asks to disagree.
"We are doing extremely well. Our consumers are rich. I have given a considerable tax cut and they have a lot of money, "Trump said Sunday. "I do not think we have a recession."
The Republican President nonetheless invited Twitter on Monday to ask the Federal Reserve to stimulate the economy by lowering interest rates and returning to a "quantitative easing" of its monetary policy, a sign of deep concern under the bravado from his government. And he came back last week to take another step in escalating his trade war with China, fearing that new tariffs on consumer goods could hamper the Christmas season. .
White House campaign assistants and advisers have been watching the recent turmoil in financial markets and troubling indicators at home and around the world, raising concerns about Trump's chances for 2020.
Every administration must balance the world's financial reality with the adoption of its historic role as cheerleader for the US economy. For Trump, achieving this balance can be even more difficult than for most.
For decades, economic performance has proven to be a vital part of the approval of a president's post, and no US leader, to the point that Trump has tied his political fortune to that. The famous businessman was elected in 2016 promising to reduce unemployment – a task that he was successful at – and to generate historical GDP growth, where he was less successful.
Today's situation is not as bad as it was in September 2008, when the United States and the world were headed for the Great Recession. There are no waves of house foreclosures, no spikes of layoffs, no market crisis and no bailout from the government to save banks and powerful financial corporations to limit the damage. What exists is a heightened sense of risk regarding the trajectory of the economy in the face of slowing global growth and the volatility caused by the US-China trade dispute.
Optimistic statements by the administration also have other reasons, said Tony Fratto, former spokesman for the Treasury Department of the Bush administration at the start of the financial crisis. He said that he understood with the Trump administration to have to choose between an "honest or responsible" response or other about the state of the economy, noting that any concern "could be self-fulfilling".
"The history of the economy is largely based on what people think about it," said Lanhee Chen, a member of the Hoover Institution and former economic adviser to Mitt Romney, a 2012 GOP candidate. it's intrinsically difficult to measure. "
Highlighting a disconnect between the country's general economic indicators and the "personal savings" of voters in alternative states is a priority for Democratic candidates and external groups by 2020.
Trump's advisors acknowledge that he has few tools to avoid a slowdown or a recession, if any: Internal concerns about a federal balloon deficit, in part because of the 2017 tax law the president, stifle discussions on stimulus spending, and skepticism reigns in abundance. the chances of getting something through a polarized convention before the elections. But that did not stop the White House from exploring ways to make the political cost less painful.
Seeking to avoid a potential slowdown, Trump blames the Federal Reserve, China and now the Democrats, claiming that their political opponents "are trying to" want "the economy to be bad for the 2020 election" .
If the Federal Reserve reduced rates and pulled itself back on the money supply "over a fairly short period of time," he tweeted, "our economy would be even better and the global economy would improve greatly and quickly – for the benefit of all "! "
The actions he is talking about are the kind that a central bank would traditionally take to cope with or try to avoid a general slowdown or recession.
Solid fundamentals? Much depends on those that the administration highlights or ignores in public comments.
Conway and other Trump associates aptly described the increase in retail sales and the strength of the labor market, with its 3.7% unemployment rate, as a source of strength.
Still, factory output and home sales are down, while business investment has been limited due to Trump's uncertainties, which have exacerbated trade tensions in China.
Even if the economy avoids a recession, economists still expect a weakening of growth.
Federal Reserve officials estimate that gross domestic product will slow to around 2 percent this year, from 2.5 percent last year. During his presidential campaign, Trump was touted to achieve long-term growth of 4%, 5% or more.
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Marcy Gordon, editor of AP Business magazine.
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