Will an economic slowdown hit the U.S.?

by | Aug 15, 2019 | Economy, Policy

Economists in the U.S. have begun showing anxiety over a possible economic downturn, even a recession. It’s too early to know if anxiety is warranted, or if the U.S. economy will continue its 10-year expansion.

But analysts have pointed to business investment slowing — despite the Trump tax cuts that were meant to be stimulative; the inverted yield curve; and the president’s trade war with China. 

“There are definitely warning signs,” Dr. John Diamond, director of the Center for Public Finance at the Baker Institute said in an interview. But Diamond cautions economic forecasting at this point is a “guessing game.”

Stocks plunged Wednesday over fears of a slowdown but recovered Thursday. 

“A major reason for the elevated risk of recession is President Trump’s deeply misguided trade war,” said Michael Strain of the conservative American Enterprise Institute. “If the president were to reach a face-saving deal with Chinese President Xi Jinping, the risk of recession would drop considerably.”

The Great Recession of 2008 hit the nation hard, but the Obama Administration helped get the economy back on track. Texas made it out of that recession relatively unscathed compared to other states.

“Texas is resilient,” said Diamond. “Texas is in good economic shape.” He noted the state, a big exporter to China, could potentially see a disproportionate impact from the trade war, however. 

On Thursday, Trump blamed the press for trying to “crash the economy,” an implicit recognition the economy might be a potential political vulnerability for the White House.

“Mounting signs of global economic distress this week have alarmed President Trump, who is worried that a downturn could imperil his reelection, even as administration officials acknowledge that they have not planned for a possible recession,” reported the Washington Post.

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