Trump's attempt to come out of a recession could make things worse

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Economists, however, believe that the president's attempts to cope with a slowdown today would leave policy makers with much less ammunition to cope with further calamities.

"We shoot all the arrows even before we need to start firing," said Steven Rosenthal, a senior associate of the non-partisan Tax Policy Center. "If things go wrong, our classic tools will be exhausted to a large extent."

In past recessions, Democrats and Republicans – including former Presidents George W. Bush and Barack Obama – have relied on tools such as one-time tax cuts or extended unemployment benefits to boost unemployment. consumer spending, a major driver of economic growth.

The US economy seems – at least for now – in trouble, with growth of 2.1%. The wages of the workers have increased. Unemployment remains at its lowest level in 50 years. And consumers continue to spend at a price at their favorite retailers.
Concerns over a slowdown and a possible general recession have increased since the beginning of August, as the chances of concluding a trade deal with China have diminished. Several large countries reported weak growth, with the German economy contracting slightly. Classic market indicators are blinking red and the US bond yield curve is reversing (briefly) last week for the first time since 2007, the year before the recession.
JPMorgan Chase warned last week that the likelihood of a slowdown over the next 12 months had risen to 40%. Bank of America says the chances of a recession next year are above 30%. And Goldman Sachs said the risk of recession was increasing due to Trump's trade war, although the bank official said last week that he was not afraid of an imminent crisis.
The president began to blame the media for their alarmist remarks, as well as for hitting his favorite scapegoat, the Federal Reserve, for what he considers to be too high interest rates.

"We are very far from a recession," Trump said Tuesday. "In fact, if the Fed was doing its job, I think we would have a tremendous growth spurt – a tremendous boost."

In recent months, Trump has been heavily relying on the Fed to keep the US economy on a solid footing, as manufacturing activity has fallen into recession. Business investment has remained marginal in the uncertainty surrounding the ongoing trade war with China and the slower prospects for global growth.

Trump asked the Fed, which he called "of psychological importance," to lower rates up to 100 basis points "over a period of time" to help revive the economy.

But Fed Chairman Jerome Powell has called for a more cautious approach that relies on incoming data. It should give a clue later this week if it is willing to continue further cuts next month or to keep the fire going until the economy begins to show signs of more pronounced slowdowns .

In July, the Fed lowered rates for the first time since the Great Recession, lowering interest rates in the range of 2% to 2.25%. But we still do not know if this initial rate reduction will bring a series of others.

"There is really no reason for the expansion not to continue," Powell told reporters at the time, describing this reduction as a "mid-cycle adjustment" of the interest rate policy.

The Fed will release the minutes of the meeting on Wednesday, which could indicate whether policymakers are leaning towards further rate cuts. Wall Street is already expecting three more interest rate cuts in September, December, and January.

The problem, however, is that further rate cuts this year may not be enough to overcome the long-term damage caused by Trump's trade war to the US economy.

"If the Fed lowered interest rates – if it did its job properly and made a significant reduction, because it is growing too fast, you would see growth like the one you have never seen in this area" country, "said Trump Tuesday – before countering his case, again, repeating that the economy is still in good shape.

"I mean, our country is doing very well," he said twice.

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