The economy could be taking a turn -- and Trump could be making it worse: columnist
Washington Postcolumnist Robert J. Samuelson wondered if President Donald Trump's mistakes are leading America into an economic recession and Trump is setting up China and the Federal Reserve as the "fall guy."
Other than the mass shootings that dominated the week's news, the growing concern is that America is headed toward a recession just as Americans were rebuilding from the 2007 crash.
Trump generally enjoys polling in the 40s, but has yet to break 50 percent. While many Republican voters disapprove of the president's racism, Twitter rants, and other concerns, they've been willing to overlook it because the economy was doing well and businesses were great. That could be coming to an end, however.
"For Trump to lose his edge on the economy would clearly make it harder for him to win the general election," wrote Samuelson, on Sunday. "One obvious possibility would be perverse: Democrats might become so overconfident that they'd nominate someone too far to the left for most Americans."
Trump inherited an economy on an upswing with vastly improving unemployment numbers. He quickly passed a massive tax cut for corporations, promising Americans that it would trickle down to workers. It hasn't.
America currently enjoys the longest economic expansion in history. Generally, since 1974, there has been a recession every ten years.
"What threatens this rosy picture is growing economic strife over trade," said Samuelson. "Last week was chaotic. Trump threatened to slap a 10 percent tariff on roughly $300 billion of Chinese exports to the United States. Rather than submit, China retaliated by letting its currency, the renminbi (RMB), depreciate below the symbolic rate of 7 to the dollar. A cheaper RMB would make China's exports more competitive, offsetting some of the effects of Trump's tariffs."
Trump called China a "currency manipulator," which basically leads to nothing since Trump is already negotiating with them.
"All this is curbing already-sluggish economic growth," Samuelson explained. "Higher tariffs raise prices to consumers and businesses, reducing their purchasing power. In late July — before the most recent turmoil — the International Monetary Fund downgraded its economic outlook and warned that "risks to the forecast are mainly to the downside." The main danger seems a loss of confidence that delays business investment and consumer spending. The plunge in interest rates is seen as evidence that investors are seeking safe havens for their money."
Most economists aren't sounding the alarm yet, but doing so would likely cause panic.
"Trump seems acutely aware of the threats to his reelection," Samuelson closed. "He's repeatedly assailed the Federal Reserve for not lowering short-term interest rates sooner; he's also accepted a federal budget with huge deficits. These constitute traditional "stimulus" designed to keep the economy advancing. If they don't work, it's a safe bet that Trump won't blame himself. The Fed and China are being set up as the fall guys for the next recession."
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