When it comes to the U.S. economy, there are plenty of warning signs about where things are headed. The New York Times recently summarized, “The United States economy is starting to show signs of strain as President Trump’s abrupt moves to shrink federal spending, lay off government workers and impose tariffs on America’s largest trading partners rattle businesses and reverberate across states and cities.”
The latest data on consumer confidence doesn’t look great. The latest data on inflation expectations doesn’t look great. The latest data on new unemployment claims also doesn’t look great. The latest data on consumer spending doesn’t look great. The latest jobs numbers didn’t look great. The stock market doesn’t look great.
In a Washington Post column late last week, Heather Long characterized a recession as “a real possibility,” adding, “Almost every economist I talk with uses words such as ‘uncertain,’ ‘jitters’ and ‘shaky’ to describe the situation. Trump’s whipsaw actions have put businesses and consumers on edge, and they might pull back on hiring and spending. This could lead to a downward spiral: government cutbacks triggering layoffs in the private sector and spending cuts in health care, education and nonprofit services, which necessitate reductions at restaurants, stores and so on.”
A variety of White House and Trump administration officials have spent the last few weeks trying to manage expectations, warning Americans that they should expect to feel some “pain“ — at least temporarily — as the Republican agenda takes root.
How much “pain”? Enough to cause a recession? As The New York Times noted, Donald Trump was asked about this, and he wasn’t exactly eager to answer the question directly.
In the interview with Maria Bartiromo, the host of “Sunday Morning Futures” on Fox News, Mr. Trump also said that he was considering increasing tariffs against Mexico and Canada. The interview took place on Thursday at the White House. Referencing “rising worries about a slowdown,” Ms. Bartiromo asked Mr. Trump: “Are you expecting a recession this year?”
“I hate to predict things like that,” Trump told Bartiromo, whom he recently appointed to the Kennedy Center board. “There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing, and there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.”
That wasn’t exactly a “no.” On the contrary, given the straightforward nature of the question, the president’s comments made it sound as if he believes a recession, in the near term, is a distinct possibility.
Hours after the interview aired, the Republican spoke with reporters on Air Force One, and he was asked again about a possible recession. This time, he gave a far sunnier answer.
“We’re going to take in hundreds of billions of dollars in tariffs and we’re going to become so rich, you’re not going to know where to spend all that money, I’m telling you,” Trump said. “You just watch. ... It’s going to be great.”
First, if this was an attempt to clean up his on-air comments with Bartiromo, it wasn’t exactly persuasive.
Second, it remains an enormous problem that the president’s confidence in the economy is rooted in a tariff policy that he still doesn’t understand.
And finally, given Trump’s abysmal track record when it comes to predictions, especially about the economy, his assurances about the looming economic nirvana are impossible to take seriously.