Donald Trump has had spectacular mess-ups ….
Real Estate Deals….
Isa he now working on the same fate for the American economy?
First a tax cut/give away….
Second a oversized budget to go along with it….
The partial government shutdown was supposed to be a brief non-event for the economy. Now it’s starting to look like a serious crisis that could nudge the U.S. toward recession and threaten President Donald Trump’s economic message during his reelection campaign.
Across Wall Street, analysts are rushing out warnings that missed federal paychecks, dormant government contractors and shelved corporate stock offerings could push first-quarter growth close to or even below zero if the shutdown, which is wrapping up its fourth week, drags on much longer.
Their broader fear: The protracted impasse could convince consumers and businesses that the federal government will spend all of 2019 on the brink of crisis — whether on the border wall, trade with China or the debt limit. That could choke business investment and consumer spending, bringing an end to one of the longest economic expansions on record.
Recessions don’t just happen, after all. They are usually triggered by largely unforeseen shocks to the system, like the tech over-investment and dot-com crash of the late 1990s or the credit crisis of 2008. The government shutdown is not there yet. But the longer it drags on, the closer it gets.
“You can take the ruler out right now and calculate the exact impact from missed paychecks and contracts and you don’t have to go many months to get to zero growth,” said Torsten Slok, chief international economist at Deutsche Bank. “But this is not just some linear event. It can get exponentially worse in very unpredictable ways, from government workers quitting, to strikes, to companies not going public. It’s no longer just a political sideshow, it’s a real recession risk.”
Part of the reason for the increased alarm is that economists and Wall Street forecasters were already worried about the direction of the economy in 2019 as stimulus from the big tax-cut bill fades, growth slows outside the U.S. and Trump’s trade battles send shock waves through the stock market. Consensus estimates for growth this year were already down to under 3 percent before the shutdown.
Now some are slashing their estimates even further….
image…Maryland resident Rosa Marquez displays her bills while standing near other furloughed security officers and custodians outside Senate Majority Leader Mitch McConnell’s office. An extended shutdown could push first-quarter growth close to or even below zero. | M. Scott Mahaskey/Politico