Watch your wallet
This piece by James Downie in the Washington Post sums up the current thinking by the White House's economic brain trust:
On NBC’s “Meet the Press,” host Chuck Todd asked Kudlow to assess Wall Street fears about the economy. “I don’t see a recession,” answered Kudlow. “And let me add just one theme, Chuck. … Let’s not be afraid of optimism.” He cited strong “consumer numbers,” low oil prices and low interest rates and predicted “the economy’s going to be very good in 2019.”
That may sound good. But given that we’re well into 2019, Kudlow’s silence about 2020 is concerning. Furthermore, Kudlow’s confidence has some eerie echoes with the last downturn, as Todd pointed out:
But, you know, you actually said that in 2007 right before the second-worst downturn in American history. This is what you wrote. “There’s no recession coming.” This is in December of ’07. “The pessimistas were wrong. It’s not going to happen. The Bush boom is alive and well. It’s finishing up its sixth consecutive year with more to come.”
Here’s the problem: Kudlow and others failed to see a recession coming because they refused to believe housing and other markets could really collapse. Others learned from that mistake; it seems Kudlow hasn’t.
As for Navarro, he was asked on CBS’s “Face the Nation” to explain a presidential contradiction: If tariffs don’t really hurt U.S. consumers, as Trump likes to claim, then why did he delay tariffs until Dec. 15 out of concern for hurting consumers? “I was there in the Oval Office when a group of business people came in and made the following very persuasive argument,” Navarro replied. “They had already bought everything that was going to be on our shelves, but they’d done it in dollar contracts, which means they weren’t able to shift the burden back to the Chinese.”
Assuming that those business leaders are telling the truth, it’s good that the Trump administration would finally recognize reality. Then again, why didn’t someone at the White House make any effort to find this out beforehand? Why go through the whole charade of these tariffs if they weren’t even going to hit China in the first place?
Whether another recession is coming is an open question: Strong consumer spending and low unemployment may continue to keep things afloat. But all Navarro’s and Kudlow’s answers offered was more evidence that, if the economy does go south, this administration is acting without thinking. Kudlow is wrong: No one is “afraid of optimism.” We’re afraid of the team in the White House.
Be afraid. Be very afraid.
In the past, there was always the chance that allies and trading partners could work together to try to mitigate the worst of a global downturn. It didn't always work out (austerity anyone?) but there were open lines of communication and the possibility was there for a somewhat softer landing.
Needless to say, that will not happen this time. Nobody trusts Trump and no one on the planet has any reason to want to work with the US on anything. So good luck everyone.