In an earlier post, I indicated that if POTUS is not careful with his dysfunctional tariff war, he could let the 'horses bolt from the barn' (global investments would begin to unwind fast) and to no return or let ''the genie out of the bottle" - once the trade war gets escalated to a level like now, it is difficult to unwind back without a loss of face for the President and an acknowledgement that he had been wrong - so it is difficult to see this impasse being resolved and with China looking more like "winning" (since the US markets experienced a jolt and now a possible recession would probably undermine Trump's electoral chances) one would think that China would be unlikely to appease to his demands, more so given that China also believes US interference in the HK situation. To salvage the situation, POTUS probably has another 3 months to do something about it before global investments start grinding quickly to a halt but based on the article below, he is delusional in thinking the latest statistics are all fake news designed to bring down his presidency and his aides are also thinking everything is still hunky dory. The reality is that everything POTUS does in relation to Winning is actually Winning for Himself (his electoral chances) - but when this fiasco starts to bite back at his electoral chances (incumbent presidents dont win if economy goes into recession), he may well start doing something to resolve the issue fast - perhaps there may yet be an unlikely but hopeful silver lining if it is in time and the horses have yet to bolt from the barn but unlike what Larry Kudlow said that the ball is in China''s court, the truth is that the ball is at Trump''s very own feet. The world will be watching.
Trump fretting over Downturn
AFR August 17 2019 Bridgewater, New Jersey | Mounting signs of global economic distress this week have alarmed President Donald Trump, who is worried that a downturn could imperil his re-election, even as administration officials acknowledge that they have not planned for a possible recession.
Mr Trump is banking on a strong economy to win a second term in 2020, and in recent weeks has impulsively lashed out at the Federal Reserve, pressured Treasury Secretary Steven Mnuchin to label China a "currency manipulator", and unexpectedly delayed tariffs on Chinese imports out of fear they could depress holiday retail sales.
Yet despite gyrations in the US sharemarket and economic slowdowns in other countries, officials in the White House, at the Treasury Department and throughout the administration are planning no new steps to attempt to stave off a recession.
Rather, Mr Trump's economic advisers have been delivering the President upbeat assessments in which they argue the domestic economy is stronger than many forecasters are making it out to be.
In turn, Mr Trump has sought to use his Twitter pulpit to drown out negative indicators.
On Thursday (Friday AEST) he promoted the US economy as "the Biggest, Strongest and Most Powerful Economy in the World" and, citing growth in the retail sector, predicted that it would only get stronger. He also accused the news media of "doing everything they can to crash the economy because they think that will be bad for me and my re-election".
Privately, however, the President has sounded anxious and apprehensive. From his golf club in New Jersey where he is vacationing this week, Mr Trump has called a number of business leaders and financial executives to sound them out - and they have provided him a decidedly mixed analysis, according to two people familiar with the discussions who spoke on the condition of anonymity.
Mr Trump has a somewhat conspiratorial view, telling some confidants that he distrusts statistics he sees reported in the news media and that he suspects many economists and other forecasters are presenting biased data to thwart his re-election, according to one Republican close to the administration who was briefed on some of the conversations.
Fed chairman Jerome Powell has been relentlessly bludgeoned by Donald Trump over rates.
"He's rattled," this Republican said. "He thinks that all the people that do this economic forecasting are a bunch of establishment weenies - elites who don't know anything about the real economy and they're against Trump."
Mr Trump has relentlessly bludgeoned Fed chairman Jerome Powell over interest rates and has told aides and allies that he would be a scapegoat if the economy goes south.
The sharemarket has slumped in recent weeks because of a number of factors. The US-China trade war has become increasingly acrimonious and is impacting both economies. Germany and the United Kingdom appear to be nearing a recession. Argentina's sharemarket has crashed. Meanwhile, a key predictor of future recessions in the bond market - an inverted "yield curve" - was triggered this week, which spooked investors even more.
White House officials said the fundamentals of the US economy remain very strong, citing low unemployment, high productivity, low inflation and strong retail sales. They said the recent turbulence may be connected to problems in other countries, and that there is no reason to recalibrate the administration's approach, which has relied on low taxes, deregulation and low energy costs.
"I think it's right to look at what is actually happening," National Economic Council director Larry Kudlow said. "To me, it's a pretty good story. Nobody likes to see market volatility. I get that. You get bears coming out of the woodwork. I get that. But we've been through that before."
The administration's economic message has been muddled, however, causing more uncertainty. While Mr Kudlow has been expressing public optimism that a deal could be reached with China, senior trade adviser Peter Navarro has been vigorously defending Mr Trump's tough tactics and promising a huge economic rebound later this year. Mr Mnuchin, meanwhile, has been largely absent from public view since the trade discussions with China worsened several weeks ago.
Lawrence Summers ... "When the economy turns down, one of the important resources we have is policymakers' credibility."
In the past, world leaders have come together to try to assure the public about a unified approach to confronting global economic turmoil. But Mr Trump has threatened to slap tariffs on Japanese and German cars and on French wine, and has encouraged newly minted British Prime Minister Boris Johnson's call to withdraw Britain from the European Union, even if it means a violent break-up that threatens the economic standing of multiple countries.
Lawrence Summers, a former Treasury secretary and National Economic Council director who helped lead the Obama administration out of the Great Recession a decade ago, said no president was immune to a recession and the government ought always to be planning for and guarding against one.
"When the economy turns down, one of the important resources we have is policymakers' credibility," Mr Summers said. "Ludicrous forecasts and economically illiterate statements have dissipated the credibility of the President's economic team."
Referring specifically to Mr Trump's actions, Mr Summers added, "It's banana republic standard to deny the statistics, bash the central bank, try to push the currency down and lash out at foreign countries."
Mr Trump has been closely managing his administration's moves. Two weeks ago, he exerted immense pressure on Mr Mnuchin to label China as a "currency manipulator", a move the Treasury secretary had repeatedly resisted because China's currency moves did not meet the Treasury's established criteria, three people with direct knowledge of the push said. Administration officials are not actively planning for a recession because they do not believe one will occur, and they worry that making such plans would validate a negative narrative about the economy and precipitate a crash, according to people involved in internal discussions.
Mr Trump is significantly more concerned about an economic downturn than his top advisers, according to a senior White House official. Although the economy sometimes has come up in senior staff meetings, the focus of those discussions has been on how best to promote positive trends rather than how to prepare for a downturn, a senior administration official said. Soured to his approach
Some conservatives who have previously praised Mr Trump's economic policy have soured on his approach to trade, however.
"The President doesn't understand the basics of international economics, and his erratic behaviour is likely slowing business investment, working against his signature corporate tax cuts, and hurting his own reelection chances," said Michael Strain, an economist at the right-leaning American Enterprise Institute.
Josh Holmes, a long-time adviser to Senate Majority Leader Mitch McConnell, said: "This president is in a much stronger position than for re-election than it is commonly believed if the economy holds. And if it doesn't, the inverse is true."
Public support for incumbent presidents and their party historically has collapsed during recessions, as occurred in 2008, when John McCain failed to convince voters to keep the White House in Republican hands.
Democratic pollster Peter Hart said Mr Trump could be at heightened risk because survey data show some voters overlook opposition to his leadership style and support him largely because of the strong economy.
"This president is so polarising and off-putting to so many voters that he is dependent upon the good economic numbers to sustain his style," Mr Hart said. "When you start to hit an economic downturn, there's no personal element that sustains him." Defied political gravity
But analysts explained that it was difficult to make any predictions, considering Mr Trump has defied the laws of political gravity before.
"A strong economy helps a president running for re-election; a weak economy hurts him," Republican pollster Whit Ayers said. "That's a standard truth in the history of polling. But because so much of his support comes from his cultural messaging, a weaker economy may not hurt him as much as it would hurt a more traditional president."
