On the back of continued tariff disagreements between the United States and some of its biggest allies, as well as a disastrous trip to the United Kingdom, economists are predicting that Donald Trump is likely to cause a significant US recession within the next year if he is reelected as President in the 2020 US Primaries.
The President suggested in a late night tweet that the US economy could see a significant dip if he was not reelected as the leader of the free world, but market experts and economists are warning that his actions could already be sending America’s already fragile economy into a downturn.
Who Is Right?
In his distinctively hyperbolic manner, the President warned that if he was removed from office, the economy would suffer a ‘market crash – the likes of which has not been seen before’.
But economists were quick to point out that the US economy is already beginning a slide into a recession and, for the most part, is still trying to recover from the effects of the 2008 crash, resulting in the collapse of Lehman Brothers.
If we examine the US stock market, there is some truth to the President’s claims; it’s worth has risen about 27% since his inauguration.
However, continued attacks on foreign trade, including significant disputes with China and Mexico, have sparked fears of a trade war and increased uncertainty at the NYSE. Many believe that a trade war could soon be approaching, something that would spell disaster for a country that relies heavily on trade between itself and the southern border.
The head of JPMorgan this week also estimated that, in the likely event a trade war goes ahead, the economy would quickly fall into recession, with American consumers being hit the hardest.
Though it’s difficult to predict when a recession will occur, experts are beginning to see warning signs that mirror those leading up to the 2008 crash.
American businesses – particularly those based in agriculture and farming – are also increasingly concerned; 600 of them signed an open letter to the President arguing that tariffs on China would only hurt American businesses further – an idea the President seemingly has yet to grasp.