Economy

The Trump Recession is Here

JM Ashby
Written by JM Ashby

I don't think anyone foresaw that this would be how it happens, but I think we all knew a recession would arrive at some point during the Trump era.

The Trump regime is still engaging in Happy Talk and Treasury Secretary Steve Mnuchin is still saying we won't see a recession, but the world's second largest investment bank, Goldman Sachs, is projecting that the economy will shrink by 5 percent during the second quarter of the year.

The world’s largest economy will shrink 5% in the second quarter after zero gross domestic product growth in the first three months of the year, the firm’s economists wrote in a note Sunday. They cut their full-year forecast to 0.4% growth from 1.2% on expectations for growth of 3% and 4% in the third and fourth quarters and strong gains in early 2021.

“The uncertainty around all of these numbers is much greater than normal,” the Goldman economists wrote. Consumers and businesses will continue to cut travel, entertainment, and restaurant spending, while supply chain disruptions and tightening in financial conditions will further dent growth, they said.

The idea that the economy will grow by 3 and 4 percent respectively at the end of the year seems dubious to me, but I digress.

Some people and especially Trump himself will probably say this is a 'virus recession,' not a 'Trump recession,' and that everything was fine until the virus arrived, but it was Trump's response to the virus that led us to this point. And Trump did not just fail to adequately respond to the virus, he tried to cover it up by hiding infections and telling the public there was nothing to see. Trump has done almost everything a government official could do to make matters worse.

Moreover, Trump severely weakened the underlying structure of the economy with a trade war that began in 2018 and is actually still ongoing today. Even now, as the economy grinds to a halt, Trump's tariffs on about $400 billion in foreign goods are on the books. Lifting those tariffs now may not make a significant difference, but they're not helping, either. Lifting the tariffs may be essential to restarting the economy when this is over, but there's no sign that Trump is considering that. At least not yet.

The market dropped by over 2,200 points this morning which triggered a brief, automatic halt to trading.

  • Draxiar

    Let us not forget that the the Fed lowered interest rates to 0% (arguably at trump’s demand to make him look good). Now when the recession hits full force that implement that has, in years past, been used to help mitigate economic downturns has been exhausted.

    As a small business owner dependent on retail sales most often in large gatherings I’m sick to my stomach thinking about what the impacts of Covid-19 will be. More importantly as a person with a parent in his 80’s and siblings near or at 60 years old I’m terrified for them and everyone that will be affected by this.

  • muselet

    The economy is demand-driven. In the next however many months, demand will be down for just about everything, worldwide.

    How long and deep the resulting (seemingly-inevitable, global) recession will be is unknown, and simply admitting the economy will tank would likely cause a sharper and deeper downturn. A certain amount of happy talk is reasonable, but Steve Mnuchin is emphatically not the right messenger, given his habit of glossing over the bits Donald Trump won’t like.

    On the bright side, the pandemic will eventually recede, the economy will eventually recover and, though it may not seem like it at the moment, we won’t have a lying madman in the White House forever.

    –alopecia

  • Ellen Kuhlmann

    well, also he’s been taking credit for the economy when it was good, so should get the blame when its not. He wasn’t responsible for the boom, and although he isn’t solely responsible for the downturn he has made it much worse.

    • muselet

      Jay Carney:

      Good time to recall that in the previous administration, we NEVER boasted about the stock market — even though the Dow more than doubled on Obama’s watch — because we knew two things: 1) the stock market is not the economy; and 2) if you claim the rise, you own the fall.

      –alopecia

  • mnpollio

    Let us not even title Trump as a “government official”. That is one thing that Trump shares with the average Republican. A complete disdain and utter contempt for the US government and its institutions, except insofar as how they can be corrupted to pad the pockets of himself and his exclusive circle of Bond villains.