WAPO OP ED: The Trump economy house of cards collapses. Dana Milbank, 6 21 [View all]

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https://www.washingtonpost.com/opinions/the-trump-economy-house-of-cards-collapses/2019/06/21/00412398-9429-11e9-aadb-74e6b2b46f6a_story.html?utm_term=.deaa6739ff39

The Duke University survey of chief financial officers recently found that 69 percent of U.S. CFOs expect a recession by the end of next year, brought on by weaker global economic growth and the effects of Trump-initiated protectionism. Similarly, JPMorgan Chase’s economic monitor this week put the chance of a recession within 12 months at 45 percent, up from 20 percent at the beginning of 2018.

In other traditional indicators of looming recession, 10-year Treasury yields have fallen below 2 percent (for the first time in Trump’s presidency) and the “yield curve” has inverted, meaning investors expect short-term instability. Business investment is slowing. The Morgan Stanley Business Conditions Index had its largest drop ever this month and stands at its lowest level since December 2008, right after the crash. Rail traffic has dropped considerably, as shipments contract.

His tax cuts did briefly accelerate growth and wage gains, particularly for low-paying jobs. But hucksterism has met reality. As CNBC put it this week: “The Trump economy is starting to look more and more like the Obama economy.” After the “sugar-high,” the economy has returned to relative stagnation. But it’s worse than the status quo ante. The wasteful stimulus, applied at a peak of the business cycle, added trillions to the deficit. And Trump’s badgering of the Fed has likely kept interest rates lower than they would have been, less than half of where they were before the last downturn. This means the government has fewer fiscal and monetary tools to use when the next recession comes, raising the risk of a longer and deeper one.