This was a nasty day on Wall Street. Also, on Main Street, for anyone who owns stocks or mutual funds. A 3% drop in a single trading session would grab one's attention under any circumstances, as an iPhone screenshot shows.
However, these aren't normal economic times. Nothing is normal, so long as Donald Trump is president. Which makes it more likely that a recession is on the horizon, given that everything Trump touches turns to shit.
Economic analysts dance around the issue of Trump's massive incompetence by saying things like "trade wars are undermining corporate confidence." A more honest statement would be, "Trump's idiotic love of tariffs, exacerbated by the fact that he doesn't even understand how tariffs work, is screwing up the world economy."
Tariffs on Chinese goods are paid by the importing companies, not by the Chinese.
So tariffs basically are taxes on Americans. This is why Trump just put off imposing more tariffs on Chinese imports until after the Christmas buying season. He and his re-election campaign don't want to be blamed for toys and other stuff that cost considerably more than they would without the Trump tariff tax.
But tariffs are just the tip of the Trump incompetence iceberg.
He's also making a mess of foreign affairs, immigration, fiscal policy, and so much more. Example: somehow Trump and his GOP cronies have managed to orchestrate a massive increase in the federal budget deficit, even though the economy has been quite strong up to now.
Our country is on the verge of trillion dollar annual deficits. Yes, trillion. Yet the deficit hawks in the Republican party have thrown in their Tea Party towel, yawning away as Trump embraces huge debts with no reasonable way to repay them.
Which was Trump's business strategy, of course.
It's no wonder Trump refuses to make his tax returns public. Almost certainly they'd show that his reputation as a savvy businessman rests on nothing but smoke and mirrors, a fantasy that his gullible supporters eat up without questioning how they're being conned.
Corporate CEOs, by and large, have a clearer understanding of Trump's weaknesses. This is one reason a recession is more likely now. There's always been economic ups and downs. But never before has the United States been led by such an incompetent, sleazy, fact-fearing, lying president.
Thus Trump has introduced an extra risk factor into calculations of where the national and world economies are heading: himself.
There's no rhyme or reason to Trump's decisions. He doesn't listen to experts. He doesn't have an overarching political philosophy. He doesn't have a coherent vision. He just does what his Twitter-inflamed mind urges him to do, long-term consequences be damned.
So American corporations are sitting on large amounts of cash, unwilling to spend the money because they have no idea what craziness Trump is going to unleash next. It won't be surprising if many, or most, Wall Street types endorse whoever wins the Democratic presidential nomination, given how bad Trump is for business and investment interests.
They want some assurance that the usual business/investment cycle isn't going to become a topsy-turvy Trumpian thrill ride fueled by his boundless ego and narcissism.
Up to now Trump has gotten by on the momentum of the Obama economic recovery. But good times can't last forever when an Idiot-in-Chief inhabits the White House.
Today may mark the beginning of a Trump recession. That'd be bad for Americans. However, since a recession would markedly decrease Trump's re-election chance, in the long run it would be good for the country, since civilization as we know it wouldn't survive four more years of Trump.
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Since you wrote your comment the markets have recovered. The U.S. economy is strong, but there will be volatility in markets. Stocks still should trend higher (with dips). Traders love these dips in the markets. They are an opportunity to buy what the panicked are selling and make a profit.
“Tariffs on Chinese goods are paid by the importing companies, not by the Chinese. So tariffs are a tax on Americans.”
That statement is incomplete and indicates ignorance. Tariffs obviously will cause the price of Chinese goods to go up, ultimately to the consumer, thus slowing the purchase of them. That is the whole idea. To cause the purchaser to look elsewhere for a better deal thus putting pressure on the Chinese to negotiate more fair trading practices or lose market share. Simple.
This is a negotiating tactic. Not a long term policy position. Trump says his goal is to get the Chinese to play fair. If successful, this will benefit U.S. business and consumers in the long run. Trump is trying to correct a situation that creates a trade imbalance and intellectual property theft that hurts the U.S.. Previous administrations have not had the courage to address this issue. Trump is the first to take it on. He feels the U.S. is ultimately in a stronger position than China and will prevail in the long run.
Tariffs over an extended period have the potential to increase corporate costs and raise consumer prices for some products and slow GDP, but relative to continued strong consumer and business spending as well as increased Federal spending they are not enough to send the U.S. into a recession. It’s just not a big enough chunk of the entire U.S. economy.
Recession may ensue in the event of strong inflation, global economic slowdown, bubble stock valuations or corporate earnings collapse. This is not the case with the exception of sub par growth in Europe and some other countries, but this not bad enough at this time to upset the U.S. economy which is rolling right along.
Trump is not a fool. One may disagree, but he is not a fool. Of course if one actually believes the biased media against him then they may think he is. But that would be foolish. Wouldn’t it?