Signs of recession worry Trump ahead of 2020

The financial markets signalled the possibility of a US recession last week, sending a jolt of anxiety to investors, companies and consumers.
The financial markets signalled the possibility of a US recession last week, sending a jolt of anxiety to investors, companies and consumers.PHOTO: AFP

WASHINGTON • United States President Donald Trump is warning of an economic crash if he loses re-election, arguing that even voters who personally dislike him should base their ballots on the nation's strong growth and low unemployment rate.

But privately, Mr Trump is growing increasingly worried that the economy will not look so good come Election Day.

The financial markets signalled the possibility of a US recession last week, sending a jolt of anxiety to investors, companies and consumers. That is on top of concerns over Mr Trump's plans to impose punishing tariffs on goods from China and word from Britain and Germany that their economies are shrinking.

Though a pre-election recession in the US is far from certain, a downturn would be a devastating blow to the President, who has made a strong economy his central argument for a second term.

Trump advisers fear a weakened economy would hurt him with moderate Republican and independent voters who have been willing to give him a pass on some of his incendiary policies and rhetoric.

And White House economic advisers see few options for reversing course should the economy start to slip.

Mr Trump has taken to blaming others for the recession fears, mostly the Federal Reserve, which he is pushing for further interest rate cuts.

Some of Mr Donald Trump's closest advisers have urged him to lower the temperature of the trade dispute, fearing that further tariffs would only hurt American consumers and rattle the markets further. The President blinked once last week, delaying a set of tariffs in an effort to save Christmas sales.

Yet, much of the uncertainty in the markets stems from his own escalation of a trade war with China, as well as weakened economies in key countries around the world.

Some of Mr Trump's closest advisers have urged him to lower the temperature of the trade dispute, fearing that further tariffs would only hurt American consumers and rattle the markets further. The President blinked once last week, delaying a set of tariffs in an effort to save Christmas sales.

Aides acknowledge it is unclear what steps the White House could take to stop a downturn. Mr Trump's 2017 tax cut proved so politically unpopular that many Republicans ran away from it during last year's midterms.

 
 
 

And a new stimulus spending programme could spark intra-party fighting over big deficits.

The hope among administration officials is that a mix of wage gains and consumer spending will power growth through next year.

Yet, Mr Trump knows his own survival hinges on voters believing he alone can prolong the economy's decade-plus expansion.

"You have no choice but to vote for me because your 401(k), everything is going to be down the tubes," the President said at a rally last Thursday in New Hampshire, referring to an American pension scheme.

"Whether you love me or hate me, you've got to vote for me."

A version of this article appeared in the print edition of The Sunday Times on August 18, 2019, with the headline 'Signs of recession worry Trump ahead of 2020'. Print Edition | Subscribe