White House officials pushed back on Sunday against concerns
that economic growth may be faltering, saying they saw little risk of
recession despite a volatile week on global bond markets, and insisting
their trade war with China was doing no damage to the United States.
“There is no recession in sight,’’ White House Economic Adviser, Larry Kudlow, said on Fox News Sunday.
“Consumers are working. Their wages are rising.
“They are spending and they are saving…I think we are in pretty good shape.’’
U.S. stock markets tanked last week on recession fears with all three
major U.S. indexes closing down about three per cent on Wednesday only
to pair their losses by Friday due to expectations the European Central
Bank might cut rates.
For a brief time last week, bond investors also demanded a higher
interest rate on two-year Treasury bonds than for 10-year Treasury
bonds, often construed as a sign of lost faith in near-term economic
growth.
However, Trade Adviser Peter Navarro on Sunday likewise dismissed
last week’s warning signs, saying “good” economic dynamics were
encouraging investors to move money to the U.S.
“We have the strongest economy in the world and money is coming here for our stock market.
“It’s also coming here to chase yield in our bond markets,’’ Navarro told ABC’s This Week.
That sort “flight to safety” is typically driven by concerns of
global economic trouble – in this case, the possibility that the Trump
administration’s tariff battle with China may dampen business investment
and growth worldwide.
The tariffs on Chinese goods, Navarro said, “are not hurting anybody here’’.
The U.S. economy does continue to grow and add jobs each month.
Retail sales in July jumped a stronger-than-expected 0.7 per cent,
the government reported last week, and Kudlow said that number showed
that the main prop of the U.S. economy is intact.
But manufacturing growth has slowed and lagging business investment has also become a drag.
Globally, flagging global trade appears to have pushed the German economy toward recession and dampened growth in China.
A slowdown would be bad news for President Donald Trump, who is
building his 2020 bid for a second term around the economy’s
performance.
He told voters at a rally last week they had “no choice” but to vote for him in order to preserve their jobs and investments.
Despite talking up the economy, the president and his advisers have
repeatedly accused the U.S. Federal Reserve of undermining the
administration’s economic policies.
On Sunday, Kudlow again pointed the finger at the central bank,
describing rate hikes through 2017 and 2018 as “very severe monetary
restraint”.
The Fed hiked rates seven times over those two years as part of a
plan to restore normal monetary policy, following the emergency steps
taken to battle the 2007-2009 global financial crisis and recession.
Even with those steps, the Fed’s target interest rate has remained
well below historic norms and policymakers have started cutting rates in
response to growing global risks.
Democratic presidential candidates on Sunday joined the many economic
analysts, who have said the administration’s sometimes erratic policies
are to blame for increased uncertainty, disappointing business
investment and market volatility.
“I’m afraid that this president is driving the global economy and our
economy into recession,’’ Democratic candidate, Beto O’Rourke, said on
NBC’s “Meet the Press.”
The China trade war and the imposition of tariffs were “hammering the hell out of farmers across this country’’. (Reuters/NAN)
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