Washington – Now in its 10th year, America’s economic expansion still looks sturdy. Yet the partial shutdown of the government that began Saturday has added…
Washington – Now in its 10th year, America’s economic expansion still looks sturdy. Yet the partial shutdown of the government that began Saturday has added another threat to a growing list of risks.
The stock market’s persistent fall, growing chaos in the Trump administration, higher interest rates, a U. S.-China trade war and a global slowdown have combined to elevate the perils for the economy.
Gregory Daco, chief U. S. economist at Oxford Economics, said he thinks the underlying fundamentals for growth remain strong and that the expansion will continue. But he cautioned that the falling stock market reflects multiple hazards that can feed on themselves.
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“What really matters is how people perceive these headwinds – and right now markets and investors perceive them as leading us into a recessionary environment,” Daco said.
Many economic barometers still look encouraging. Unemployment is near a half-century low. Inflation is tame. Pay growth has picked up. Consumers boosted their spending this holiday season. Indeed, the latest figures indicate that the economy has been fundamentally healthy during the final month of 2018.
Still, financial markets were rattled Thursday by President Donald Trump’s threat to shut down the government unless his border wall is funded as part of a measure to finance the government – a threat that became reality on Saturday. As tensions with the incoming Democratic House majority have reached a fever pitch, Trump warned Friday that he foresees a “very long” shutdown.
The expanding picture of a dysfunctional Trump administration grew further with the surprise resignation of Defense Secretary James Mattis in protest of Trump’s abrupt decision to pull U. S. troops out of Syria – a move that drew expressions of alarm from many Republicans as well as Democrats.
How markets and government officials respond to such risks could determine whether the second-longest U. S. expansion on record remains on course or succumbs eventually to a recession:
A closer look at the risks:
It has been a tumultuous few days even for a White House that has been defined by the president’s daily dramas.
