What happened
President Trump responded with alarm
this week to warning signs of a possible
recession, first saying he wanted to cut
taxes to stimulate the economy, then
reversing course and insisting that “we
don’t need it.” The White House has been
shaken by a raft of troubling economic
data, including a brief inversion of the
bond yield curve that sent the Dow Jones
industrial average plummeting by 800
points. An inverted yield curve, in which
the value of 10-year Treasury notes dips
below that of two-year notes, indicates
investors are worried about the near-term
future, and has preceded all seven of the
last recessions. Other data show falling levels of capital investment
and declining optimism among business owners, with GDP growth
slowing to 2.1 percent. Three out of four economists surveyed by
the National Association for Business Economics now expect a
recession within the next two years.
Trump appeared torn over how to respond. At first, he called for
a payroll-tax cut and capital gains–tax cut to bolster the economy,
before backing off the idea a day later. Nonetheless, the president
again called on Federal Reserve Chair Jerome Powell to cut interest
rates by a full percentage point, blaming him personally for hob-
bling growth. Privately, Trump told advisers he didn’t believe some
of the negative economic statistics, and publicly accused Democrats
and the media of exaggerating the threat in order to harm him
politically. “I think the word ‘recession’ is a word that’s inappropri-
ate,” Trump said. “We’re very far from a recession.”
What the editorials said
Rather than look for scapegoats to blame if the economy slips into
recession, Trump should “look in the mirror,” said The New York
Times. Trump’s trade war against China and other major American
trading partners has created huge uncertainty for businesses and
investors around the globe. That uncertainty has corporations “sit-
ting on their wallets.” The best thing for Trump to do is to “stop
making things worse” by constantly sending contradictory signals.
The president has been badly advised, said The Wall Street Journal.
“We’ve been warning for two years that
trade wars have economic consequences,
but the wizards of protectionism told Mr.
Trump not to worry.” The main culprit
is White House aide Peter Navarro, a
tariff-loving China hawk who serves as
the president’s point man on trade. For-
tunately, when markets plummeted last
week, Trump postponed plans to impose
a new round of tariffs on Chinese goods
until mid-December. Trump should go
even further and call a worldwide “tariff
truce.” Otherwise, the U.S. could face a
“Navarro recession.”What the columnists said
President Trump’s economic message is utterly incoherent, said
Josh Barro in NYMag.com. One minute, Trump insists the
economy is “very strong.” The next, he suggests that we need dras-
tic measures to prop it up. “So, which is it?” If the economy is as
strong as he says it is, why should the Fed cut interest rates again?
If Trump wants a divided Congress to pass more tax cuts, he’ll
have to explain why his last one isn’t boosting growth as promised.
If he ends the trade war, he’ll have to admit it failed.“Trump haters” wish there would be a recession, preferably right
before the election, said John Crudele in the New York Post. A few,
like liberal comedian Bill Maher, have admitted as much. “We have
survived many recessions,” Maher said. “We can’t survive another
Donald Trump term.” Rooting for a recession is reckless, especially
since Trump is reacting by signaling that he’s worried. “The quick-
est way to cause a recession is to kill the confidence of consumers.”“Trump—like the rest of us—had better hope and pray that we
don’t have a recession anytime soon,” said Catherine Rampell in
The Washington Post. The president has left himself few tools
to respond if and when disaster strikes. Interest rates are already
low, which means the Fed can only do so much to stimulate the
economy. And the government can hardly afford more stimulus
after Trump spent $2 trillion on a tax cut for corporations that has
created a $1 trillion annual budget deficit, “leaving little powder left
in the keg when we’ll actually need it.” If there’s a recession, “it’s
gonna be bad.”Newscom, APA new tax cut is on the agenda, then off.THE WEEK August 30, 2019
4 NEWS The main stories...
Trump’s response to recession fears
It wasn’t all bad QMaddy Freking was the only girl in this year’s Little League
World Series, and only the 19th to play in its 72-year history.
But it was the 12-year-old’s talent, not gender, that grabbed
the most attention. Normally a second baseman, Maddy
pitched during her Coon Rapids–Andover, Minn., team’s
game against Virginia’s Lou-
doun South American, and
with the bases loaded struck
out a batter, then threw out
a base runner to end the
inning. Though her team
ultimately lost, Maddy made
a lot of new fans. “The last
time I saw that much blond
hair throwing that hard,” said
Pittsburgh Pirates manager
Clint Hurdle, “it was [the
Mets’ Noah] Syndergaard.”QSusan Cook and Patrick Riordan
walked into a Payless store looking
for one reasonably priced pair of
shoes—and walked out with 247
pairs for families in need. The
Payless chain declared bankruptcy
earlier this year, and the Hamilton
Township, N.J., store was slowly
selling off its inventory at $2 a pair.
“What if we buy everything here?”
asked Riordan. They got the entire
stock for $1 a pair, and the couple
donated the haul to Womanspace,
a charity that helps families affect-
ed by domestic violence. “We’re
not rich,” said Cook. “But you think
about making such a difference for
247 people, and that’s so worth it.”QSeth Craven was sure he’d miss
his son’s birth. The National Guard
sergeant had flown from Afghani-
stan to Philadelphia, but his con-
necting flight to Charleston, W. Va.,
was canceled because of a storm,
and all the rental cars were sold out.
His wife, Julie, was due to have a C-
section the next day. Then Charlene
Vickers, another stranded flyer,
heard his story and offered Craven a
seat in her car. They drove for eight
hours, and Craven, 26, arrived just
in time to see baby Cooper born. “If
it wasn’t for Charlene,” he said, “I
never would have made it.” Maddy: In a league of her ownIllustration by Howard McWilliam.
Cover photos from Newscom, Alamy, Getty