Trump risks recession – POLITICO
TRUMP RISKS RECESSION — I write at some length here this morning on President Trump’s risky decision to bypass running a midterm campaign based on the strong economy and tax cuts and instead opt for a divisive immigration and trade strategy that could wind up juicing GOP interest but undermining the economy in the short and long-term and potentially alienating swing voters. …
“On Monday alone, iconic motorcycle manufacturer Harley-Davidson said it would move some production out of the U.S. in response to Trump’s tariff fight with the European Union while the Dow … tumbled over renewed fears from the president’s expected new trade restrictions on China.
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“It’s all part of a high-risk trade and immigration strategy that has many Republicans, business leaders and even Trump’s former advisers deeply worried about both the politics and the economics of the president’s strategy.”
Here’s what former NEC Director Gary Cohn told me on Trump’s approach: “The economy is doing exactly what we thought and hoped it would do based on what the administration was able to accomplish in tax reform and the deregulatory agenda …
“Both were aimed at stimulating the economy through growth and job creation. And that’s happened in a very positive way. Anything else that derails or confuses the economic agenda is confusing for the system.”
RECESSION WARNINGS — Wall Street analysts are now ramping up their warnings of a potential recession given Trump’s aggressive trade moves. “Our calculations suggest that a major trade war would lead to a significant reduction in growth,” Bank of America Merrill Lynch economist Ethan Harris wrote in a recent research note. “A decline in confidence and supply chain disruptions could amplify the trade shock, leading to an outright recession.”
“The impact of Trump’s trade moves is starting to show up in economic data. For instance, a survey of manufacturing purchasing managers from IHS Markit – a closely tracked gauge of the factory sector’s health –dipped to a seven-month low of 54.6 last week.”
THE VIEW FROM DAIRY LAND — Pete Wiersma, a dairy farmer from Buhl, Idaho, worries about an upcoming labor shortage. “Most dairies have more cows than what the family can take care of themselves,” he said in an interview for this week’s edition of the POLITICO Money podcast (which drops Wednesday). “Most of our dairies in Idaho, we are very dependent on foreign-born workers. It’s the engine that makes the machine run. We’ve really noticed a drop-off in applicants.’”
MARKETS WAKE UP — Mohamed A. El-Erian on Bloomberg View: “Financial markets have long been able to ignore the spillover from political and geopolitical developments. Now, they seem a lot more sensitive to possible disruptions these events could cause to growth and corporate earnings, and with good reason: The threats seem to be spreading and the fortifications are weaker.
“Unless the possibility of a full-blown trade war turns into to an opportunity to fix longstanding defects in the global system, the defenses that have proved effective in recent years risk being overwhelmed” Read more.
MNUCHIN VS NAVARRO ON CHINA — Here was Treasury Secretary Steven Mnuchin’s tweet Monday morning on reports of pending trade restrictions on China: “On behalf of @realDonaldTrump, the stories on investment restrictions in Bloomberg & WSJ are false, fake news. The leaker either doesn’t exist or know the subject very well. Statement will be out not specific to China, but to all countries that are trying to steal our technology.”
Here was Peter Navarro on CNBC later in the day: “On Friday the Treasury is going to report to president about the issue related to China… with respect to other countries, there is absolutely nothing on the table”
Anyone wonder why markets might be a tad confused?
TOP CLICK — POLITICO’s Cristina Rivero and Taylor Miller Thomas have a great graphic for pros on what exactly is in the Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155 (115).
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WATERS MAKES DEMS ANXIOUS — POLITICO’s Zachary Warmbrodt: “Rep. Maxine Waters has won over a whole new generation of adoring fans in the Trump era who have rechristened the Los Angeles Democrat as the Resistance hero ‘Auntie Maxine.’
“But with her constant calls for President Donald Trump to be impeached — and her comments this weekend urging Democrats to challenge Cabinet members when they see them in public — Waters is making even members of her own party anxious. She urged her supporters at a rally to confront administration officials face-to-face in response to the separation of parents and children at the border.” Read more.
GOOD TUESDAY MORNING — Started a little debate on Twitter last night with my opposition to pitchers batting in the National League. Where do you stand? Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.
THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Patrick Temple-West on the Supreme Court’s decision that American Express’ practice of prohibiting merchants from offering consumers incentives to use rival credit cards does not violate antitrust laws. To get Morning Money every day before 6 a.m., please contact Pro Services at (703) 341-4600 or [email protected]
DRIVING THE DAY — President Trump meets with the Associated Builders and Contractors National Executive Committee at 11:30 a.m. and lunches with members of Congress at noon … Senate Banking has a hearing at 10:00 a.m. on “Legislative Proposals to Increase Access to Capital” … House Financial Services subcommittees hold hearings at 10:00 a.m. lead paint and mold in public and subsidized housing and at 2:00 p.m. on de-risking …
Case-Shiller Home Prices at 9:00 a.m. expected to rise 0.4 percent … Consumer Confidence at 10:00 a.m. expected to remain at 128.0 …
GOP SET TO FAIL ON IMMIGRATION — POLITICO’s Rachael Bade: “House GOP leaders — eager to move on from an immigration fight that has divided and distracted their members — could vote as soon as Tuesday on legislation that‘s expected to fail by a wide margin. Top negotiators and aides worked through the weekend on new language adding a provision championed by conservatives they hope will garner more support from the far-right for the GOP’s ‘compromise’ bill.
“The E-Verify proposal, which requires all companies to certify the legal status of their workers, is controversial for moderate Republicans and members with agriculture-centered economies. But top moderate negotiator Jeff Denham (R-Calif.) told Freedom Caucus Chairman Mark Meadows (R-N.C.) late last week that centrists would consider the matter if it would win their support. It’s unclear that it will make much of a difference, however.” Read more.
WHITE HOUSE REASSERTS “ZERO TOLERANCE” POLICY — POLITICO’s Ted Hesson and Andrew Hannah: “The White House scrambled Monday to reassert its ‘zero tolerance’ policy after a key DHS official said Border Patrol agents had stopped enforcing it. ‘We’re not changing the policy,’ White House press secretary Sarah Huckabee Sanders said at Monday’s daily briefing. ‘We’re simply out of resources. And at some point, Congress has to do what they were elected to do.’
“Earlier Monday, U.S. Customs and Border Protection Commissioner Kevin McAleenan told reporters in South Texas that Border Patrol, which McAleenan’s agency oversees, was no longer referring for criminal prosecution families caught crossing the border. …
“McAleenan said the suspension was temporary, but he didn’t say when prosecutions would resume. Several DHS officials have said privately that the president’s order made it impossible to continue zero tolerance, but McAleenan was the first to say so publicly.” Read more.