Economy At a crossroads: Is a global recession avoidable?

[bobgeese]

For the most part, I try and avoid the war room. It's too easy to get drawn into arguments that are driven my emotion as opposed to fact, running around in circles with seemingly no resolution in site.

However, after watching Trump's response to the potential trade war with China, I can't help but feel we are on the precipice of a disaster, with the global economy a couple of tweets away from a collapse.

On one hand, unemployment is at historic lows, corporate earnings remain strong and consumer sentiment is near all time highs. Conversely, national debt has more than doubled, the central bank has limited tools to enact monetary policy (interests rate are already super low) and the president has embraced protectionist policies that violates the spirit of free and open trade.

At first, I thought Trump was taking a hard line on China merely to appease his base - paint China out as the economic Boogeyman, and talk about bringing jobs back to America. In the past week though, he has unraveled, doubling down on threats of increased tarriffs, ordering American businesses to find alternatives to China, and when questioned about the legality of the latter, he said he would declare a national emergency to force businesses to comply.

Almost universally, economists have derided his approach, with numerous studies demonstrating that tariffs are hurting Americans more than its helping. Large corporations have pleaded with Trump to slow down on his rhetoric, which has only fueled him more.

When the stock market dropped 600 points on Friday, Trump pointed blame at the federal reserve, taking no accountability for market volatility. In fact, his most recent tweet is that his affect on the stock market should be judged solely on what occurred the day after his election (where it rallied significantly).

While I am critical of Trump, I have always felt that there was a method to his madness, and that he would deliberately make inflammatory statements knowing it would get a reaction. Now I'm wondering whether he cares more about his ego and image than the economy - that his presidency has less to do with serving the American public, and more to do with him having to get his way.

Early reports out of the G7 suggest that Trump has been extremely difficult to work with and unwilling to compromise. Looking at the futures market for tomorrow, stocks are already down well over 300 points.

Being heavily invested in the stock market, I legitimately get anxious every morning opening up my portfolio to see just how badly I've been fucked (although I can't blame Trump for that, I am invested heavily in oil and nat gas which has been crushed lately).

What are your thoughts on likelyhood of a recession? Is this a temporary blip and the bull market will continue to run, or is this the start of something much more sinister, with a repeat of 2008/2009 on deck?

So, you enjoy bending over for China?

 

[ObamaPhoneLady]

Recessions and booms are just part of the game.

 

[ObamaPhoneLady]

Every day someone else wakes up and realizes this country is being run by a conman.

But actually no.

https://news.gallup.com/poll/265487/trump-latest-approval-rating-stable.aspx

 

[SammyPops]

No but it's the government's duty to ensure that recessions, as naturally occurring as they do in an open-market economy, incur as little impact on the vulnerable population as possible.

Starting trade wars on a whim, deregulating the financial market to pre-2008 levels, reducing the social safety-net for the benefit of tax cuts to the ultra rich and others is a direct contradiction to that of which the actions have been decried by several, if not most, credible economists.

Wasn't the OP asking if we are heading for a recession? I answered yes.

Not sure what you're going on about.

 

[PEB]

The notion that Trump had really nothing to do with it is a full out lie as much as his supporters will spew it out at every chance they can even playing the media behind it narrative. I posted 6 months ago that we will be in a full out recession in 12 to 18 months and will be accelerated by the massive corporate tax breaks. I even brought out that personal debt has grown since President Trump took office. Especially new car loans and spending without anything more then a temporary sugar high from some companies offering employees a one time bonus and many employees where surprised to find out their taxes went up even with the supposed tax break.

Banks and Wall Street will continue to play up Trump economy much like Wall Street did under Bush 2. The sky was falling in 2007 and 2008 and all you could hear that the economy was never better. Faang stocks continue to perform well but clouds are moving it especially with Chinese trade but personal debt is reaching a new limit and that will slow spending especially towards driving the economy to new highs. No one really talking about personal debt and that's going to be the new issue especially since 2008 was the housing bubble in 2020 range it will be personal debt slowing down the economy.

Trump is really not also talking about overseas how world economy growth has been dragging big time and that will weigh heavy on US economic grow picture. Trump should have been working on reducing the debt and limiting spending.

 

[tinker_190]

The notion that Trump had really nothing to do with it is a full out lie as much as his supporters will spew it out at every chance they can even playing the media behind it narrative. I posted 6 months ago that we will be in a full out recession in 12 to 18 months and will be accelerated by the massive corporate tax breaks. I even brought out that personal debt has grown since President Trump took office. Especially new car loans and spending without anything more then a temporary sugar high from some companies offering employees a one time bonus and many employees where surprised to find out their taxes went up even with the supposed tax break.

Banks and Wall Street will continue to play up Trump economy much like Wall Street did under Bush 2. The sky was falling in 2007 and 2008 and all you could hear that the economy was never better. Faang stocks continue to perform well but clouds are moving it especially with Chinese trade but personal debt is reaching a new limit and that will slow spending especially towards driving the economy to new highs. No one really talking about personal debt and that's going to be the new issue especially since 2008 was the housing bubble in 2020 range it will be personal debt slowing down the economy.

Trump is really not also talking about overseas how world economy growth has been dragging big time and that will weigh heavy on US economic grow picture. Trump should have been working on reducing the debt and limiting spending.

I agree with a lot of this. I personally don't think the tax cuts, in terms of driving deficits, would be felt nearly as quickly as 2-3 years out from the change itself.

Agree on your point about personal debt growth. Student loan debt is a huge drag on personal spending as well. Agreed on your points about the tendency to sell wolf tickets on the economy when it's about to go under. Agreed on the solution being reducing debt and limiting spending - unfortunately that is a HARD sell to the public to win an election.

To touch on the sentiments about China and Trump's policy - I think the thing Trump is focused on is the rise of China as a big geopolitical opponent with bad intentions, possible 20th century style ambitions. We have seen examples of organ harvesting and concentration camps there, as well the social credit score system. We see what they are doing in HK to counter protesters. Finally, and maybe the lynchpin of how Trump is trying to counter this, is knowing about the Made in China 2025 plan and global overland trade route ambitions. The markets are never going to like it when policy rocks the boat.