US NewsCan Donald Trump create a recession?

© Getty Can Donald Trump create a recession?

Editor's note: The opinions in this article are the author's, as published by our content partner, and do not represent the views of MSN or Microsoft.

The past week has seen economic turbulence of a most peculiar kind. In the past, markets have tumbled and economies have gone south due to such things as the failure of a prominent financial institution or the crash of a currency. Financial crises usually have visible and specific triggering events; recessions come upon us with less drama, for example with declining home purchases leading to construction layoffs and widening unemployment. Other than war, economic turbulence has usually come from the economy.

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Donald Trump has formidably strong support among working-class voters, who showed up for him in a big way on Super Tuesday. The Biggest, Greatest, Most Terrific Recession . A Donald Trump presidency would cause the U.S. economy to collapse.

Trump 's tax plan would cut taxes for most Americans and businesses. While his tax plan alone could help create jobs, there's a big tradeoff: Trump would But Romney ended his speech with a warning: "If Donald Trump 's plans were ever implemented, the country would sink into a prolonged recession ."

This week, we almost had crisis by whipsawing Tweet. Escalation and de-escalation of the trade war with China sent many grizzled market veterans to a new level of incredulity and simple confusion. Which way is this going? Who knows?

© Thomson Reuters U.S. President Donald Trump attends a joint press conference with French President Emmanuel Macron (not seen) at the end of the G7 summit in Biarritz, France, August 26, 2019. REUTERS/Christian Hartmann

There are signs of a weakening economy, but this weakening occurs in a fairly healthy picture overall. Manufacturing is sending signs of trouble, with the bellwether Purchasing Managers' Index below the recessionary threshold of 50 last week. The yield curve is inverted, often a signal from financial markets that investors are expecting the economy to slow. But retail sales were strong, and consumption has been solid for quite some time.

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Former U.S. Secretary of Labor Robert Reich explains how Trump ’s trade war with China could be putting the U.S. on the path of recession . » Subscribe to

Trump 's policies have raised the risks of a new global recession , and seriously weakened the government’s ability to deal with it when it comes. U.S. President Donald Trump talks to the media in the Roosevelt Room of the White House on Nov.

It has been said that expansions do not die of old age, they are killed. But that phrase referred to the Federal Reserve's behavior pattern: Faced with rising inflation as the economy grew rapidly, the Fed would raise interest rates to keep inflation in check, giving an overheated economy a cold bath. Recession was the result.

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Now, we have a president who desperately wants a pre-election economic boost but is engaged in a volatile and seemingly unpredictable set of trade wars. Claims that Chinese negotiators want talks have little traction after the stream of exaggerations and reversals of the last three years.

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The negatives of Trump’s demagoguery now clearly outweigh the positives of his leadership.

According to economists, our economy is on track for another recession in about 18 months. The reason? The massive tax cuts, soaring deficits, and trade

President Donald Trump reacts at the end of his speech at a campaign rally, Thursday, Aug. This week should start bringing answers, especially if the election is blowout for one side or the other.The good news for investors is that the recent correction could have created a solid buying opportunity, at

In this not very brave new world, it is hard to imagine how corporate leaders can make the long-term investment decisions that would drive economic growth forward. But that does not necessarily mean that a recession is around the corner, either.

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There could yet be a precipitating event that ignites a financial crisis. Or a face-saving agreement with Xi Jinping. Wildly varying scenarios can be imagined.

Other than pursuing the trade war, the president's main tactic has been to attempt to pressure the Federal Reserve to lower interest rates further. But Chairman Powell's measured speech at the Fed's annual Jackson Hole gathering last week confirmed that the Fed is not rushing to the rescue. Central banks are more often expansion killers than expansion creators, due to their fear of inflation. Additionally, although the Fed can react rapidly to fast-developing events, as it did in 2007-2008, the long lag between Fed interest rate changes and the actual effects on the economy make it hard to recognize a coming recession soon enough to do anything that would actually prevent a recession from ever happening. The Fed does best at responding after the crisis hits.

Trump says he would 'certainly' invite Putin to attend next year's G-7 summit

President Trump on Monday said he would "certainly" invite Russian President Vladimir Putin to attend next year's Group of Seven (G-7) summit when it's hosted by the United States. "Would I invite him? I would certainly invite him. Whether or not he could come psychologically, I think that's a tough thing for him to do," Trump said during a press conference at the close of this weekend's G-7 summit in France. Russia was expelled in 2014 from what was then the G-8 over its annexation of Ukraine's Crimean Peninsula. It has faced additional international backlash for interfering in the 2016 U.S.

© Thomson Reuters U.S. President Donald Trump attends a joint press conference with French President Emmanuel Macron (not seen) at the end of the G7 summit in Biarritz, France, August 26, 2019. REUTERS/Christian Hartmann

The Fed's own view of the economy remains fairly positive. President Trump seems to view things exclusively through a reelection lens, so his comments have little weight at the Fed. Many economists do think that increased inflation is unlikely, leaving the Fed some room to support continued expansion. But the Fed is aware that it has little ammunition, since the Federal Funds Rate is already quite low by historical standards. The Fed is reluctant to cut now, when the need is not obvious, since it could find itself with few arrows in its quiver if a crisis or deep recession occurred.

US President Donald Trump gestures during a joint-press conference with French President Emmanuel Macron in Biarritz, south-west France on August 26, 2019, on the third day of the annual G7 Summit attended by the leaders of the world's seven richest democracies, Britain, Canada, France, Germany, Italy, Japan and the United States. (Photo by Ludovic MARIN / AFP) (Photo credit should read LUDOVIC MARIN/AFP/Getty Images)

The bizarre goings on at the G7 confirm that we are in new territory. Should a significant financial crisis occur, it is hard to imagine the U.S. co-operating with other countries to respond the way it did in 2008.

At this point, there is economic danger brewing both at home and abroad. I do not want to overstate the degree to which the global economy can be directed by political leaders. But the picture of a rudderless, directionless world is not comforting.

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