One thing President Donald Trump has avoided during his tenure, so far, is a crisis.
But we’re getting a hint of how he might handle one, and it’s not reassuring. When a key economic indicator warned of a recession recently, Trump reverted to form, blaming the Federal Reserve and the news media. He is also reportedly questioning whether the data revealing the health of the economy is even valid.
This is consistent with Trump’s rejection of expertise and science and his belief that he alone has the answers. Tariff Man knows better! And if you disagree, maybe a recession will be your fault, too!
Tough challenges require steady, disciplined and competent leadership. Instead of that, Trump is pumping out blame and denial. For these reasons, this week’s Trump-o-meter reads FAILING, the second worst reading.
Trump may luck out and avoid a recession. Forecasters at JPMorgan, Bank of America and the New York Federal Reserve all place the odds of a recession within 12 months at around 33%. Trump himself is a factor. If his trade war intensifies, with more tariffs and more retaliation from China, it will harm growth and raise the odds of a recession. A trade détente, on the other hand, would improve growth and lessen the odds of a recession.
Trump doubts the data
But it’s not clear Trump understands the damage his own trade war is doing. Trump reportedly doubts some of the data that shows the economy is slowing, according to the Washington Post. And Trump himself keeps insisting the U.S. economy is going gangbusters. Reality check: it’s growing at around 2%, which the stock market is at roughly the same level it was at 18 months ago.
If a recession does develop, this raises the prospect of a president who refuses to believe it and does nothing to avert or escape it. Or, he acknowledges there’s a recession but blasts the Fed for causing it. If Trump did that, he’d be attacking the credibility of the one institution best empowered to fight a recession, and that is not how you rebuild confidence amid a downturn.
If there’s any good news here, it’s that Trump gets panicky when the stock market drops by 5% or more. That’s one data point he continues to believe in. And markets are sure to let Trump know when there’s a recession for real.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman