Economy, the Trade War, and the Question of Recession

Written by: Cash101 Staff
08/28/2019

economy-collage

Today we are hearing mixed views about the economy. Some say the recession is inevitable, while others pinpoint certain successes as being a sure sign of a strong economy; the President says one thing, while Wall Street investors are quick to leave the market because of only the news and people are starting to ask recession questions. It was only a few months ago that President Donald Trump levied taxes on imports on China. Of course, now there is news that China may choose to retaliate. What do we make of all these conflicting news reports? At least at present, it is still news and hopefully, the economy will remain strong, but that is only a hope. e investors on Wall Street don’t act favorably when bad news is in the air and as a result of President Donald Trump’s recent news of the next round of trade tariffs broke and resounded thru Wall Street the Dow plummeted a few points, as well as the S&P 500, also edged down 2.9%.

China & Germany Woes

TO make matters worse there were reports that China’s manufacturing had slowed down and this has only happened once in nearly two decades. On the other hand, Jack Ma’s Alibaba was showing strong returned and analyst said this is a good sing of Asia’s strong economy and that the people are willing to spend. Germany also showed slow growth in car manufacturing sales, which depend largely upon sales to China, which slowed down readily after President Trump Tariffs started to show results throughout the Chinese economy. Now the United States is starting to feel the economic pinch in the aftermath of other countries economies slowing down.

Merrill Lynch

Merrill Lynch chimes in and said that with auto production losing its momentum and auto sales losing a continual rise there may be an odd chance of 1 in 3 that the United States may face a recession within the year. The signals that the auto industry is sending is sure signs of the shadow of a recession below the horizon of the economic downturn in various sectors, especially hit are the auto industry which depends on a lot on trade for its economic health and growth. If all of this is as inevitable as news is sending signals there is no wonder that people are beginning to rekindle their doubts about the value of a trade war because of the many signs reverberating thru the economy in the aftermath of its initial impacts.

Interest Rates Lowered

The recent interest rate being cut was an attempt to support the downturn that the economy had to face because of the trade war and tariffs levied against China. Also, says the chair of the Federal Reserve, Jerome H. Powell, that the cut in interest rates was also in response to the signs of global growth moving south simultaneously with the tensions building between China and the United States because of the increased taxes against China. Furthermore, another interest rate cut may take place before the end of the year.

Politics and Economics

President Donald Trump still holds to the opinion that the economy has reached record heights since his first terms of office. His presidential campaign for 2020 is using this very strong opinion of his office causing the US economy to reach heights of unemployment as much as 3.7%, a high for recent years, for his re-election in 2020. Of course, there is a split in the consensus of the people who 100% affirm President Trump’s statement.

Market Analyst

The market analyst has shown that the US economy has shown lower growth over the two recent quarters and are afraid that if the decline in growth continues a recession will surely be imminent. A major analyst reporting for Fact Set said that those companies that were most affected in the decline of revenue and growth were those in the global economy, trade, and semiconductor sales, which depend heavily upon manufacturing in China. While these signs of a slowing in growth in these major industries are a sure sign that they depend upon imports and trade, is it a clear sign of a recession that is imminent?

Data Results

Some are pointing to certain results of the data interpreting them as an earnings recession, but sales in the present in the economy shows that the American people are spending and show bow sighs they feel a recession on the near economic horizon. Although one would be economically and uncautiously remiss if the above data taken from the impacts that the trade war has had on the global as well as the economy within the United States, were not taken seriously and analyzed more thoroughly to prepare for what direction the economy may turn in the months ahead.

Upcoming 2020 Elections

Also, there is much more room for conjecture to assess the effects of the 2020 presidential election will have on the overall economy. In the past, the presidential elections have shown that they are not great changes in the economy, but presidential candidates can impact the economy if they promise certain policies that could deeply impact the economy. For example, if one of the 2020 election were to promise to veto the trade war once in office and return the relations with foreign powers to its original state, then they could affect Wall Street investors.

Germany Auto Industry Influenced

Germany is concerned about how to continue selling its cars to Chinese customers, but Chinese customers are still reluctant to shuck out large amounts of cash for premium German cars while the trade war seems to be in a state of tension. The German car manufacturers depend upon Chinese purchases for a third of their economy. In summary, there is news that is causing a serious buzz that America is heading for a recession and analyst, as well as Wall Street, are doing there best either to avoid it or prepare for its. Even the Federal Reserve is throwing in to support the economy if it reaches such an economic standstill or worse downturn.


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