“The ghost of the recession has entered the White House.” Although the Trump government officials frequently denied that the US economy is heading for a recession, the US media has seen the anxiety behind it. Is it really going to fall into recession? Around this issue, the United States is presenting two very different styles of painting: on the one hand, public opinion is increasingly worried about the economic recession, and the latest survey shows that about three-quarters of economists believe that the US economy will fall into recession next year or later. On the other hand, senior officials of the White House, including President Trump himself, continue to fight and fight, claiming that “our economy is still very good” and pushing the responsibility of economic slowdown to the disobedient Fed. For Trump, who is seeking re-election, the “recession warning” is really not the time, once it becomes a reality,
May endanger his re-election. Ironically, analysts generally believe that the trade war launched by the US is the biggest factor that causes the US economy to face risks. “Trump is losing a trade war with China.” The Wall Street Journal reported on the 19th that the US’s tough attitude did not allow China to make any meaningful concessions, but it is increasingly hurting the US economy.
US media: White House preparation emergency plan
According to the Associated Press, the National Business Economic Association’s survey released on the 19th showed that 74% of American economists believe that the current economic policy adopted by the US government will cause the US economy to fall into recession before the end of 2021. The survey was conducted between July 14 and August 1. 34% of economists surveyed believe that the US economy will fall into recession by 2021, 38% think it will fall into recession in 2020, and 2% think that there will be a recession this year. The Washington Post said the findings reflect the growing skepticism of economists and investors about the US economy’s ability to withstand the US-China trade war and the global economic downturn.
Since last week’s US 2-year and 10-year US Treasury yields have been upside down and the stock market has been turbulent, there has been growing domestic concern about the possible recession in the US economy. The Associated Press said on the 19th that the US economic growth is slowing down. In recent weeks, due to concerns about the economic recession, the stock market has fluctuated wildly, and the indicators of real estate and manufacturing have also worried economists.
“Any recession in the US economy could disrupt Trump’s campaign strategy.” The Wall Street Journal said that Trump has made the strong domestic economy a core selling point for his presidency, and his advisers think this is Trang. The key to winning re-election, but unfavorable economic trends have spurred new warnings that may be in recession.
The New York Times and other media quoted people familiar with the matter as saying that in order to prevent a recession, White House officials have begun preparing emergency plans to help stimulate the economy, including considering cutting wage taxes and possibly canceling some of the imposed tariffs. Many US citizens are subject to a 6.2% salary tax. From 2011 to 2012, the Obama administration implemented a two-year payroll tax reduction plan to cut the tax rate to 4.2% to stimulate the US economy to recover slowly from the recession that ended in 2009. . However, the reduction of payroll taxes requires Congressional approval. Currently, the Democratic Party controls the House of Representatives and it is not easy to pass the plan. The report said that White House officials tried to downplay this statement, a White House official said that more tax cuts are under discussion, “but have not yet considered reducing payroll taxes.” Another senior government official said that he did not seriously consider cutting the payroll tax.
At the beginning of this month, after threatening to impose a 10% tariff on the remaining US$300 billion worth of Chinese goods from September 1, the US recently announced that it would postpone the tax increase on some of its Chinese goods. On the 19th, the United States will extend the temporary license to Huawei by 90%. In the eyes of some analysts, this also has something to do with the White House’s feeling of recession. The BBC said on the 19th that the US stock market fell sharply last week, and the bond market revealed that the US has a recession risk. At this critical moment, any policy that is believed to hit the US economy will cause huge losses to Trump, who is seeking re-election. Public pressure.
Trump: The economy is still strong
In the face of the recession warning of the public opinion field, the White House is busy denying. On the 19th, Trump issued a tweet that although Fed Chairman Powell was “extremely lacking in foresight”, “our economy is still very strong.” The Fed should cut interest rates by at least 100 basis points in a short period of time, and perhaps some quantitative easing policies should be introduced. “If we do this, our economy will be better.” Trump also accused the Democrats of trying to worsen the economic situation in order to achieve the “bad purpose” of the 2020 election.
On the same day, US Vice President Burns said in a speech at the Detroit Economic Club: “Despite the irresponsible remarks made by many mainstream media, the US economy is gaining momentum and the US economic outlook continues to be strong.”
In the past few days, from Trump himself to the White House National Economic Council Director Kudlow, US Presidential Trade Adviser Navarro and others have participated in TV interviews many times, denying the US economy signs of recession, trying to alleviate people’s concerns. However, in the opinion of public opinion, this shows the anxiety of the White House. CNN said on the 19th that Trump sent his senior advisers to participate in television interviews to clarify. He is increasingly worried that the end of 11 consecutive years of economic growth in the United States may ruin his re-election.
On the 20th, Yahoo News Network of the United States said that the “recession of the recession has entered the White House”, the US economy has not yet entered a real recession, but the ghost of the recession has made the White House feel uneasy. The Associated Press said it called for the Fed to cut interest rates and return to quantitative easing, which shows that “the Trump administration’s bluffs hide deep anxiety.”
“The fact is that our economic fundamentals are very strong.” When the reporter talked about the economic downturn on the 19th, the White House senior adviser Kelly Anne Conway said. However, the Washington Post disclosed that this sentence is exactly the same as the political statement that McCain failed 10 years ago. During the 2008 US presidential election, Republican presidential candidate John McCain said this sentence in a few hours, the investment bank Lehman Brothers filed for bankruptcy, and the subprime mortgage crisis broke out.
Trade war against China is the biggest threat to the economy
Regardless of whether the recession will occur, it is an obvious fact that the trade war is bringing more risks and uncertainties to the United States and the entire world economy, and the trade war has once again been verified. CNN said on the 19th, ironically, some of the White House’s own policies, such as the tariff war with China, are triggering investor concerns about the economic downturn. Yahoo News Network said on the 20th that in order to reduce the probability of economic recession or delay the recession, the Trump administration should solve the US-China trade war. Raising tariffs on China and taking other punitive measures are the biggest threats facing the US economy. If the trade war continues until next year, Trump’s re-election plan may “sink”.
The US “Huffin Post” reported that although Trump government officials have repeatedly promised that US consumers will not be affected by China’s commodity tariffs, according to the latest analysis released by JPMorgan on the 19th, tariffs on Chinese goods will be imposed. This is equivalent to an annual burden of $1,000 per American household. The company estimates that the US government’s latest round of 10% tariff on Chinese goods worth $300 billion will result in an increase of $400 per household. The tariffs already imposed on China are expected to cost the average family $600 a year.
“Trump is losing a trade war with China.” Jason Foreman, a professor at Harvard University’s Kennedy School who served as chairman of the White House Council of Economic Advisers, wrote in the Wall Street Journal on the 19th that the White House’s China strategy is failing. A tough attitude does not allow China to make any meaningful concessions, but it is increasingly hurting the US economy. Today, China is closer to the rest of the world, and the United States is more isolated. In the short term, the addition of tariffs on Chinese goods has significantly damaged the US economy. In the second quarter of this year, tariffs intensified the decline in fixed investment of enterprises, which may reduce the growth rate of US GDP by 0.5 percentage points this year.
Some competitors have also increased their criticism of Trump’s policies. In an interview with CNN, Democratic presidential candidate Pete Butigig said: “It is vain to think that using tariffs to poke China’s eyes can make China change its basic economic model.” Butijig, the mayor of the city, said, “There are some basic facts that cannot be evaded. One of them is that American farmers are being killed.”