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Recently, concerns about another recession have grown. Since some experts say that the effects of the “Great Recession,” the prominent recession that began in 2008, are still felt today, mere talk of another recession can be enough to alarm voters, economists, and politicians alike. However, President Trump and his administration insist that no recession is coming.
Following unusual volatility in global bond markets last week, Trump dismissed the notion of an oncoming recession, saying on Sunday that the U.S. and its consumers are “doing tremendously well.” Larry Kudlow, Trump’s top economic adviser, rang a similar bell the same day, saying that the U.S. economy is showing no signs of a recession.
Despite these comments from Trump and Kudlow, economic volatility such as that seen last week often portends a recession. Even if last week’s global bond fluctuations don’t lead to a recession, 94 percent of economists believe the U.S. will face a recession sometime between now and 2021.
Kudlow, who heads the National Economic Council, countered recession claims by pointing to growing U.S. retail sales. In July, domestic retail sales grew by 0.7 percent, whereas in June, they only grew 0.3 percent. These figures, Kudlow said, indicate that consumers are able and willing to spend, suggesting that the economy is in good shape.
In December 2007, as concerns arose about what would eventually become the Great Recession, Kudlow made similar comments about the economy. On Sunday, Kudlow distanced himself from these 2007 comments, admitting his improper prognosis while also reaffirming his belief that the U.S. will not face another recession soon.
Kudlow’s confidence in the economy may contrast views that Trump holds in private. According to some reports, despite Trump’s public insistence that fears of a recession are unfounded, the president is actually quite worried that the economy may be in bad shape come Election Day 2020. Trump has made the promise of a strong economy a cornerstone of his reelection campaign, meaning that a recession could prove damaging to his prospects for a second term.
Many of the economists who predict a recession would blame Trump’s policies if such a downturn did indeed arrive. These economists say that the tariffs that Trump has imposed, in addition to the increased budget deficits on which his administration has operated, can easily lead to a recession.
In particular, experts point to the long-running trade war between the U.S. and China as a potential source for another recession. Currently, the Trump administration is set to impose a 60 percent tariff on $300 billion of Chinese imports starting December 15. This tariff would impact nearly every product that the U.S. imports from China, placing a massive burden on consumers and corporations alike.
The same group of economists surveyed about recession prospects was similarly worried about economic talks between the U.S. and China. Only five percent of these economists expect negotiations between the two world powers to result in a comprehensive trade deal. Another 25 percent expect, as has been the case throughout the trade war thus far, no agreement at all.