Arthur J. Villasanta – Fourth Estate Contributor
Washington, DC, United States (4E) – The U.S. economy seems well and truly on its way to sink into recession in 2020, making Donald Trump the first president since Jimmy Carter to face this re-election killing outcome.
Economists project growth to slow progressively from 2019 onwards as fiscal stimulus from lower taxes and higher spending wanes. Many predict the economy will fall into recession by 2020.
“A strong dollar, weaker growth abroad, mounting corporate debt, a slowdown in housing and the ongoing havoc that tariffs are wreaking on global supply chains are each taking a toll,” said Diane Swonk, chief economist for Grant Thornton LLP. “No one knows for sure which straw will break the camel’s back, only that they are piling up.”
She’s accelerated to the first half of 2020 her previous estimate for a recession. She earlier predicted this for the second half.
A previous and similarly gloomy forecast in October saw the National Association for Business Economics (NABE) report that two-thirds of forecasters it surveyed expect a recession by the end of Trump’s re-election year.
That outcome will represent a historically rare event – and a dangerous, if not fatal one, for Trump’s chances for re-election.
Economists and historians alike agree that an economic recession usually presages the defeat of an incumbent president. They pointed out that Dwight Eisenhower, Richard Nixon, Ronald Reagan and George W. Bush all saw recessions begin in the first year of their tenures. These recessions, however, ended by the close of their second year in office. Each was re-elected.
It will be different for Trump, however. His fate should parallel Jimmy Carter, the last president weighted down with a recession as he sought a second term. The results were disastrous for Carter and his Democratic Party.
Carter lost in a landslide to Ronald Reagan, who won 44 of 50 states. Republicans have since derided Carter as a symbol of economic weakness. That symbol will now be passed on to Trump.
Trump could avoid a recession, however. But his trade war with the rest of the world and its harsh tariffs are stoking business uncertainty at a time when the economy is experiencing strong growth.
A new survey from NABE this week revealed three-fourths of forecasters said uncertainty tilts toward downside risks. The group also projects 2.7 percent growth in 2019.
NABE survey head Gregory Daco of Oxford Economics estimates the odds of recession by 2020 at 35 percent.
Trump faces two massive downsides that limit his chances of forestalling the inevitable recession: his persistently low approval rating and the upcoming report from Special Counsel Robert Mueller.
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