President Donald Trump is so convinced that his reelection depends on the economy staying strong that the merest hint of recession has sent him into political crisis management mode.
Unpopular and with a middling record of legislative achievements, Trump enters the 2020 campaign season facing significant headwinds — except on the economy.
Growth has been on the upside for a decade now and Trump takes all the credit that he can for record low unemployment and what he repeatedly claims to be “the hottest” economy in the world.
But what he doesn’t want to talk about is the bad news — and that’s starting to accumulate.
An alarm bell went off in the US 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 US-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.
Unless your name is Donald Trump.
In his world, there can be no economic shrinkage.
Just 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.”
Trump’s aides have also been inundating the media with interviews where they repeat this same line.
“Let’s not be afraid of optimism,” as White House economics guru Larry Kudlow said on Sunday.
Trump, though, is spooked.
How can you tell? He’s already blaming people for the recession he says won’t happen.
Target number one is the Federal Reserve, which Trump, in one of his many breaks with convention, has been browbeating for months over its reluctance to cut interest rates.
Last week, the president branded Fed chief Jerome Powell “clueless,” and tweeted in all caps: “CRAZY INVERTED YIELD CURVE!”
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 is already rummaging around the tool box.
Senior White House officials are mulling several moves to stimulate the economy including temporarily cutting the payroll tax to increase workers’ monthly take-home pay, The Washington Post reported.
Also under consideration is reversing new tariffs the Trump administration imposed on Chinese goods, according to The New York Times.
The White House doesn’t want to project concern, but Gidley confirmed that some kind of action may indeed be in the works.
“He’s looking at tax cuts again,” Gidley said. “He’s looking at all options out there.”