How Trump’s Tweets May Cause a Recession

“They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far … Our great American companies are hereby ordered to immediately start looking for an alternative to China.”  Donald Trump tweeted at 7:59 a.m. on Sept. 3.

Less than 24 hours later, the Dow Jones Industrial Average fell 350 points.  

This was nothing compared to the terrifying 800-point drop after the phenomenon known as the “inverted yield curve” panicked investors. According to the Washington Post, an inverted yield curve occurs when markets set a higher interest rate for short-term bonds than long-term bonds. 

The inversion happens when investors believe that interest rates will fall soon, and it would be unwise to buy longer term bonds. The inverted yield curve has preluded every major recession in the past ten years, and is now causing many to fear that a recession will strike the U.S.

This is a mere hint of the roller coaster our president puts the market through with his careless tweets, such as claiming  that “we don’t need China and frankly would be far better without them.” However, according to Industry Week, “the U.S. depends heavily on China for providing low-cost goods that enable income-constrained American consumers to make ends meet.”

It is quite clear that President Trump has no idea how his economic policies impact the U.S. economy as he flip flops through every trade negotiation and leaves investors bewildered when he calls his own Chair of the Federal Reserve, Jerome Powell, an “enemy”. 

Powell has been indirectly attacking Trump’s economic strategy.  According to CNBC, Powell attacked Trump for his harmful trade policies: “I think it is the case that uncertainty around trade policy is causing some companies to hold back on investment.”

Powell is absolutely correct and Trump’s fluctuating policies are forcing businesses to hold back on long-term investments and slowing economic growth. Businesses are not sure what Trump will do next, and do not want to invest with the future so uncertain.

According to Moody Analytics, Trump’s trade war with China already cost the U.S. 300,000 jobs, which will grow to 900,000 jobs if the trade war continues into 2020. There is one solution to rescue the country from an impending recession. Vote Trump out of office in 2020.