‘I think the word recession is inappropriate. We’re very far from recession…’
(AFP) President Donald Trump on Tuesday insisted that recession—a potentially dangerous blow to his reelection next year—is not in the cards. But he indicated he’s preparing just in case.
“I think the word recession is inappropriate,” Trump told reporters in the White House. “We’re very far from recession.”
With approval ratings consistently below 50 percent and polls showing him getting thumped by potential Democratic candidates, Trump enters the 2020 campaign season facing significant headwinds—except on the economy.
After tepid growth during the Barack Obama presidency which both he and his Treasury secretary notoriously declared “the new normal,” Trump helped usher in record-low unemployment, a surging, surging consumer confidence, an upward-trending stock market and what he repeatedly claims to be “the hottest” economy in the world.
One key indicator, in fact, was that the Federal Reserve, after maintaining near-zero interest rates for the entire Obama presidency, incrementally began to raise them again, claiming to combat inflation as wages continued to rise.
But an alarm bell went off in the U.S. Treasury bond market last week when 10-year bond yields briefly fell below the yields offered on a two year-bond—the inverse of what normally happens.
The so-called “inverted yield curve” is a statistical phenomenon that has previously been an accurate herald of eventual recession.
Add in growing fears of fallout from the U.S.-China trade war and Germany’s own recession warning, plus Britain’s Brexit chaos, and suddenly the “R” word has become a regular part of the conversation for hopeful critics of the president.
‘A Fine Tuned Engine’
As for Trump, he remained nonplussed–at least in public.
On Tuesday morning, he tweeted or retweeted more than a dozen boasts about the booming economy.
“#Trump has this Economy humming like a fine tuned engine,” one of the retweets claimed, while crediting the president with “Super Human like Energy.”
In extensive comments to reporters, Trump piled on the superlatives, saying the “incredible” economy was doing “fantastically” and was “number one in the world.”
Trump has for months criticized the Fed its reluctance to cut interest rates.
On Tuesday, he insisted that a deep rate cut would unleash “a tremendous spurt of growth.”
Villain number two is the US media, which Trump and his aides accuse of trying to whip up recession fears deliberately to hurt him.
“They’re pushing a recession lie. The fact is, so many on the left want these horrible things to be true,” Trump deputy spokesman Hogan Gidley said on Fox News Tuesday.
Tax cut solution?
A survey by the National Association for Business Economics on Monday showed that 72 percent of economists believe there’ll be a downturn before the end of 2021, with about half of them predicting the recession for 2020, in time for Trump’s reelection battle.
And despite claiming that nothing’s broken, Trump confirmed Tuesday that he’s rummaging around the tool box.
He told reporters he’s considering a cut to capital gains taxes by indexing them to inflation.
“We’ve been talking about indexing for a long time and many people like indexing,” he said, adding that he believes this would not require congressional approval, unlike another measure he favors—a cut to the payroll tax.
Even then, Trump was careful to stress that this would have nothing to do with a downturn he believes will never happen.
“Whether or not we do it now, it’s not being done because of recession,” he said.
Liberty Headlines’ Ben Sellers contributed to this report.
© Agence France-Presse