Recessions often get labeled with memorable, if unimaginative, nicknames.
The last, the most crippling dip in 75 years, came to be called the “Great Recession.” The bleak titles of earlier economic setbacks included “The Dot-Com Bust,” “The Double-Dip Recession” and “The Oil Shock.”
When will we know when the next economic decline has arrived?
Calling a recession is more the work of historians than prophets.
The Boston-based National Bureau of Economic Research (NBER), the nonpartisan official arbiter of the business cycle, never rushes to sound the demise of economic growth.
NBER’s Business Cycle Dating Committee, composed of eight notable academic economists, resembles a group of coroners who declare a patient dead months after the funeral.
They’re slow with resurrections, as well. Their announcements marking new life in an economy can come long after businesses and the job market have regained their footing.
The Great Recession of 2008-09 became official in December 2009 — a year after the downturn started. The start of the recovery was proclaimed in September 2010 — 15 months after the U.S. economy started growing again.
At least, we can guess what the next economic downturn will be called: The Trump Slump.
The odds of a recession in the next year, in the view of forecasters, have been rising over much of 2019. If one comes, it will have Trump’s Kentucky Fried Chicken-stained fingerprints all over it.
It’s not the “best economy ever,” as the president claims. He’ll likely need vigorous gains in jobs and wages to get re-elected, however. Ironically, Trump’s policy blunders already have slowed, and even threaten to reverse, pocketbook gains of the last 10 years.
The lowest unemployment rate in 50 years surely means that the Trump presidency has brought an era of unprecedented prosperity. Right?
Since Trump took office, the U.S. economy has generated 1.5 million fewer new jobs than in the last three years of the Obama administration.
Manufacturing employment accounted for only 49,000 jobs gained in the last year, compared with nearly 2.1 million added jobs overall in the same period.
And mining? Trump brushed aside clean-air and -water regulations to “save” the U.S. coal industry. Mining production fell 1.3% in September. Mining jobs were down 5,000 from a year earlier.
Wages continue to grow, in the service industry in particular, as companies compete for a dwindling pool of job candidates. No signs of recession there.
Consumer spending, which accounts for 70% of economic activity, continues to rise. Personal consumption expenditures rose 2.9% in the third quarter.
In that case, what’s to worry about? Plenty.
Economic growth in Europe and Asia is slowing, curbing demand for U.S. exports. At the same time, rising barriers to international commerce darken the outlook for prosperity, at home and abroad.
Trump’s tariff war with China, the White House on-again, off-again trade disputes with Canada and Mexico, and threats to raise tariffs on imports from Europe represent a multibillion-dollar tax on U.S. consumers.
Two years of escalating trade disputes have cost jobs in field and factory.
A major importer of soybeans, China has retaliated by turning to U.S. rivals to satisfy its demand. Trade disruptions, along with bad weather, have triggered waves of farm bankruptcies in Minnesota and across the nation.
Instead of “Making America Great Again,” Trump put farmers on the government dole.
Like a child trying to glue together a vase he broke before anyone would notice, Trump cobbled together $28 billion in taxpayer handouts to farmers. That’s twice the cost of the bank bailout in the Great Recession — and all to counter a financial calamity largely of his own making.
Most of the payments ended up in the hands of farmers with vast acreage, not mom-and-pop operators.
Meanwhile, import duties that Trump promised would revitalize manufacturing have done nothing of the kind. Steel companies, one of the supposed beneficiaries of protectionism, have continued to lay off workers. Manufacturing, across the board, has sputtered.
Industrial production fell in the first and second quarters and rose at an anemic annual pace of 1.2% in the third quarter. Even after discounting the effects of a monthlong General Motors strike, the manufacturing index fell 0.2% in September.
Who wants to invest in a new factory or replace aging equipment when no one knows what Trump will do next (including Trump)?
A September survey of prominent economic forecasters by Bankrate.com found they placed the odds of a recession next year, on average, at 41%. Far from a sure thing, but not the odds that would encourage a game of Russian roulette.
“Odds of a recession between now and the November 2020 election are 25 percent,” Bob Hughes, senior fellow at the Institute for Economic Research, told Bankrate.
“The risk of a recession is increasing. Erratic policy is raising uncertainty and anxiety, which may disrupt activity and destroy consumer and business confidence, leading to recession.”
Mike Fratantoni, chief economist for the Mortgage Bankers Association, put the chance of a 2020 recession at 50/50.
“As signs of a broader global slowdown in economic growth emerge, along with ongoing trade disputes between the U.S. and some of its key trading partners, business and consumer confidence have been shaken, which may reduce future business investment and consumer spending,” he said.
Stock market investors recently have showed cheer at new government economic statistics released in October, showing that consumer spending continues to prop up employment.
The news seemed to cool recession fever, at least until the next batch of economic statistics comes out.
The GDP, the measure of the dollar value of all goods and services produced in the U.S. economy, rose 1.9% in October. That was a bit better than expected but far from Trump’s forecast of 4%, 5% or even 6% annualized growth.
GDP is an important yardstick of how the economy is doing. But it’s not the only measure.
A pileup of unfavorable trends — continued trade wars, slower job growth and faltering business investment — could make the U.S. economy more vulnerable to reversals than at any time in the last 10 years (the longest era of economic growth on record).
Trump seems to sense the dangers, if not understand his part in them.
On Twitter and in public pronouncements, he’s hammered the Federal Reserve to lower interest rates to keep the engine of the economy lubricated with cheap money. The Fed complied last month but said further cuts are in doubt.
He pushed through a $1.9 trillion tax cut in 2017 that was supposed to supercharge economic growth. Instead of plowing tax windfalls into investment, hiring and higher wages, Corporate America used the money to lift dividends, to buy back stock, and to fuel mergers and acquisitions.
Most Americans caught on to the bait-and-switch.
That tax cut was such a flop — apart from the “Let them eat cake” country-club set — that Republicans skirted the topic in the 2018 congressional election. Remember? The one where Democrats retook the House majority.
Undeterred, Trump lately has talked of bribing — I mean, incentivizing — middle-class families with another tax break. The latest example of the president’s “great and unmatched wisdom.”
If the economy’s so great, why more stimulus? I almost forgot. There’s a presidential election on Nov. 3, 2020.
Whatever’s next, Trump has blunted the nation’s ability to recover from the next recession. The billion-dollar deficits he’s piling up will make a surge in government spending a harder sell in Congress. And with the inflation-adjusted interest rates near zero, the Fed will have almost nowhere to go to counteract an economic free fall.
One thing’s clear. If the economy flourishes, Trump will get too much credit. If a recession comes, he can’t get enough blame.
Mike Meyers, a former Star Tribune business reporter, is a writer in Minneapolis.