“I think people read these statements the wrong way. He isn’t making an analytical prediction about the stock market. He is making a threat: Vote for me or I will burn it to the ground,” tweeted the economist Austan Goolsbee, who chaired the Council of Economic Advisers under President Barack Obama.
It would certainly be a hard switch from Trump, with his tariffs and his ultimatums, to someone else. The confidence the President has in his own gut is not hurt by the fact that he has not yet gotten burned for setting fires he’d like to take credit for putting out.
But there are fires aplenty he’ll need to tend to, all of which could impact the economy, which is the centerpiece of his reelection campaign.
Trump vs. the Fed
Trump is also sending some very mixed messages.
This is the dichotomy of Trump’s economy, which he simultaneously wants to be the best ever — but also in dire need of assistance.
Bucking all precedent, he’s pressured the Fed Board of Governors to cut rates to give him more leverage in a trade war, complaining that China props up its tech industry and Europe is moving to drive down the value of the euro.
“Frankly, if we had a different person in the Federal Reserve that wouldn’t have raised interest rates so much, we would have been at least a point and a half higher,” referring to the GDP.
Powell has steadfastly refused to respond to Trump’s badgering.
“I don’t think it’s appropriate for me to comment on the President,” he told “60 Minutes” back in March.
And he does not see the Fed as part of the trade war.
“My duty is one that Congress has given us, which is to use our tools to achieve maximum employment and stable prices and to supervise and regulate banks so that they treat their customers fairly and so that they’re strong, well-capitalized and can perform their critical function in good times and bad,” said Powell. “That’s my job. And I think for me to get into responding to any elected official would be a distraction from that job.”
In dire need of a trade deal
But Trump feeds on the conflict, be it with China, Mexico, their central banks or the Fed.
“No, none — none — really none. If we pull off the trade deals, which I think I will, we have a lot of power.”
The constant theme of Trump’s presidency is no one knows what he’ll do on any given subject, although he’s shown a tendency to zig when most people say zag.
The uncertainty about what he’ll do if the economy slows down may be contributing to some small cracks in American confidence in the economy.
He officially kicked off his reelection bid with a rally Tuesday night in Florida. As Trump sells his reelection to his followers, he’ll point to the strong “Trump economy” and he’ll happily take credit for the decade of economic expansion, which will set a record next month.
None of this means that Trump won’t be able to land a China trade deal or the Fed won’t lower interest rates. The US will enter record territory and 10 straight years of GDP growth next month.
The problem for Trump may be how he can continue to brag about the economy if his trade war or his immigration policy or a standoff over government spending starts to hurt it.