Donald Trump and his chief trade advisers insisted on Sunday the US is not facing a recession which markets appear to fear and which could prove costly at the polls next year.
In a 30-minute appearance before reporters in New Jersey, the president appeared impervious to danger. The characteristically freewheeling exchange covered his positions on trade, the economy, gun control and international relations.
“I don’t see a recession,” Trump said, preparing to fly to Washington. “We’re doing tremendously well. Our consumers are tremendously rich. They’re loaded up with money. Walmart is through the roof. We’re not going to have a recession – the world is in a recession right now.”
Competitors including Germany, the European union and the UK and “a lot of countries are not doing as well like we’re doing”, he said, adding again his contention that “the world is in a recession right now”.
Trump also repeated familiar claims that his policy of trade war with China is working rather than rebounding on US consumers and business, saying Beijing “wants to come the negotiating table”.
“China’s doing very poorly – the worst in 27 years – because of what I’ve done,” he said. “They are losing millions of jobs in China. We’re not paying for the tariffs, China is paying for the tariffs. Other countries maybe but in the case of China, China is eating the tariffs – at least so far.”
Analysts disagree with many of Trump’s claims but contrary opinions rarely change his thinking. In a familiar move on Sunday morning, senior White House advisers were sent out to preach the gospel of enduring prosperity.
Speaking to ABC’s This Week, trade adviser Peter Navarro defended US policy, predicted a “strong economy through 2020” and disputed a bond-market indicator of approaching recession that this week sent stocks into their largest one-day sell-off this year.
On Fox News Sunday, economic adviser Larry Kudlow insisted: “There’s no recession on the horizon. What’s wrong with a little optimism?”
On NBC’s Meet the Press, Kudlow was confronted with a similar statement made in his National Review column in late 2007 – right before a global recession. He “pleaded guilty” but pointed out other experts had made similar predictions.
Pessimism is spreading among Republicans. Trump’s approval rating remains stubbornly low and fear is rife that economic reversal will lead to electoral defeat.
Navarro, the leader of the White House’s controversial China policy, claimed the bond-market indicator – a reversed spread in yields between long-term and short-term bonds – had not in fact occurred.
“We did not have a yield curve inversion right now, by technical standpoints,” Navarro told ABC. “It is flat, not for bad reasons, but for good reasons.”
“I can tell you with certainty that we’re going to have a strong economy through 2020 and beyond,” he said.
Attempting to calm economic anxiety that on Wednesday triggered an 800-point selloff on the Dow Jones industrial average, Navarro predicted that the Federal Reserve will lower interest rates in mid-September.
“All what needs to happen here,” he said, “is for the Federal Reserve to do what it needs to do, which is begin lowering interest rates.” That would make the economy return to a “bullish cycle”.
Trump told supporters in New Hampshire this week they had “no choice but to vote for me” if they wanted to thrive. But an increasing number of Americans do not share such confidence.
According to an NBC/Wall Street Journal poll published on Sunday, Americans are growing more uneasy. A 49%-46% margin approves of Trump’s handling of the economy but that is down from 51%-41% in May.
More worrying for the administration are figures that show free trade, as opposed to a tariffs, supported 64%-27%, up from 57%-37% early in Trump’s presidency.
That could spell bad news for Trump’s China policy, which is partly blamed for pain in sectors including agriculture, a bastion of Republican support. On Tuesday, the administration said it would delay 10% tariffs on $300bn of Chinese imports set to go into effect on 1 September.
Trump has repeatedly claimed China is bearing the larger share of the tariff burden, a claim echoed by Navarro if not by most economic observers.
“Tariffs are hurting China,” Navarro told CNN’s State of the Union on Sunday. “China is bearing the burden by lowering the value of the yuan almost 12%. The pain is on them, not on us.”
Few studies bear that out. According to figures cited by CNN, researchers at Harvard, the University Chicago, the International Monetary Fund and the Federal Reserve Bank in Boston found in May US importers are shouldering about 95% of the price change from the tariffs while China is shouldering 5%.
The Federal Reserve Bank of New York, Princeton University and Columbia University found that US companies and consumers are paying $3bn a month in additional taxes because of tariffs on Chinese goods and on global metals imports.
Nowhere are the tariffs felt more keenly than by US soybean farmers. Such exports to China have dropped 70% from 27.7m tons in September 2017 to May 2018 to 7m tons in the same nine-month period in 2018 and 2019, according to an analysis by the University of Missouri.
“Words and Twitters and tweets, that doesn’t pay the farmers’ bills,” Gary Wertish, president of the Minnesota Farmers Union, told CNN last week. “That doesn’t solve the problem we’re dealing with.”
On CNN on Sunday, Navarro was presented with a comment from the president of the Iowa Soybean Association, Lindsay Greiner, who said government subsidies “are a poor remedy for trade”.
Navarro accused China of reneging on commitments.
“If you look at the arc of the negotiations, a hundred days after Mar-a-Lago [when Trump met Chinese president XI Jinping there in April 2017], they didn’t do anything. So we had an investigation, signalling to China: ‘Do things.’
“We had to add tariffs when they failed to do things.”
