Threat that’s left Trump ‘rattled’
Donald Trump has repeatedly downplayed the threat of a recession - but insiders claim the US President is privately "rattled".
That's according to several anonymous sources, who told The Washington Post Mr Trump was "anxious and apprehensive" and had secretly called "a number of business leaders and financial executives" to probe the economic outlook.
According to the publication, while Mr Trump continues to brashly talk down the likelihood of a downturn - claiming the US had "the Biggest, Strongest and Most Powerful Economy in the World" on Twitter just last week - behind closed doors, he's concerned it could cost him the 2020 election.
"He's rattled," a Republican source told the Post.
"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."
The Trump team are convinced a strong economy will be the key to an election victory - but despite troubling signs of a significant slump, his administration has apparently failed to plan for a recession.
Mr Trump has also allegedly claimed he doesn't believe economic statistics published by the media - or reports from economists and experts - because he thinks the information is untrue, and part of a conspiracy to scupper his re-election chances.
The news comes in the midst of a turbulent time for the US and wider world economy, with the US stock market tanking recently as the result of the escalating trade war with China, signs of a looming recession in the UK and Germany and the inversion of the "yield curve".
The yield curve is inverted when the yield or interest rate on short-term bonds is higher than that on long-term.
This inversion between the two maturities has preceded every US recession in the past 50 years, and it is widely believed to be a predictor of an impending financial crisis.
But Mr Trump immediately took to Twitter to defend his economic and trade policy, claiming "we are winning big time, against China".
He has also slammed Federal Reserve chair Jerome Powell for raising rates "too much & too fast" last year, and the Post reports Mr Trump plans to use him as a scapegoat if the economy worsens.
"Companies & jobs are fleeing. Prices to us have not gone up, and in some cases, have come down. China is not our problem, though Hong Kong is not helping. Our problem is with the Fed. Raised too much & too fast. Now too slow to cut," Mr Trump tweeted.
"Spread is way too much as other countries say THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!"
We are winning, big time, against China. Companies & jobs are fleeing. Prices to us have not gone up, and in some cases, have come down. China is not our problem, though Hong Kong is not helping. Our problem is with the Fed. Raised too much & too fast. Now too slow to cut....— Donald J. Trump (@realDonaldTrump) 14 August 2019
But a leading policy expert has criticised Mr Trump's economic credibility.
"Ludicrous forecasts and economically illiterate statements have dissipated the credibility of the President's economic team," former treasury secretary and National Economic Council director Lawrence H Summers told the Post.
"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."
Despite the grim warning signs, Mr Trump's top economic adviser Larry Kudlow has remained defiantly upbeat.
"I tell you what, I sure don't see a recession," Mr Kudlow told NBC News yesterday.
"We had some blockbuster retail sales, consumer numbers toward the back end of last week.
"And in fact, despite a lot of worries with the volatile stock market, most economists on Wall Street toward the end of the week had been marking up their forecast for the third and fourth quarter.
"We are doing pretty darn well in my judgment … Let's not be afraid of optimism. … I think there's a very optimistic economy going on out there."
On Sunday, Mr Trump also denied the possibility of a recession.
"I don't think we're having a recession," Mr Trump told reporters.
"We're doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they're loaded up with money."
Mr Trump's re-election panic seems to be well founded based on previous precedents.
Only one US President has managed to pull off a re-election during a recession since the Civil War, and that was William McKinley in 1900.
Jimmy Carter tried and failed in 1980, followed by George HW Bush in 1992.