When Barack Obama was president and the economic statistics were good, then-candidate Donald Trump said they were fake. When Trump became president and inherited the exact same stats, they suddenly became real.
And move over, Illuminati, because this particular conspiracy is massive.
It’s led by the Federal Reserve, Democrats and the media, of course, or so say Trump and his Fox News minions. But it also includes the entire U.S. bond market, which flashed a warning sign last week when the Treasury yield curve inverted (meaning long-term bonds had lower interest rates than short-term ones, which usually predates a downturn).
Also colluding are the many farmers, retailers, manufacturers and economists who have been warning for more than a year that the burden of Trump’s tariffs is mainly borne by Americans, not China or other trading partners, and also that uncertainty over trade tensions can paralyze hiring, investment and purchasing decisions, which we need to keep the economy expanding.
The cabal even transcends borders. Besides Trump’s trade wars, after all, the main risk to the U.S. economy involves contagion from abroad. And right now, nine major economies are either in a recession or on the verge of one. Never fear, though: All nine countries’ statisticians are surely cooking their books to hurt Trump, too.
The White House has reportedly declined to develop contingency plans for a downturn because it doesn’t want to validate this “negative narrative.” This is, in a word, idiotic. As others have analogized, it’s like refusing to buy a fire extinguisher because you’re afraid of feeding a “negative narrative” that you might someday face a fire.
Administration officials decided the best way to deal with recession risk, which they of course aren’t personally worried about, was through a show of force on TV. There, Trump’s economic advisers assured Americans they definitely, certainly, cross-their-hearts-and-hope-to-die don’t see reason to worry.
White House trade adviser Peter Navarro’s strategy was to deny that the data show Americans are paying higher prices on tariffed goods (though we are) and also that the yield curve had recently inverted (though it did). On that latter point, Navarro said the curve was merely “flat” and therefore doesn’t signal a possible recession. In virtually identical language across interviews, he told audiences that he had authority in this matter because he “didn’t write the book on the yield curve,” he wrote “several books on the efficacy of the yield curve as a leading economic indicator.”
What Navarro failed to mention, though, is that these books say that both inverted and “flat” yield curves are usually signs of impending recession. One such book, from 2006, explicitly mocked business leaders for failing to prepare for the 2001 recession because they had ignored “the ominous progression of the yield curve” that began with the curve’s flattening.
So, yeah, you can add mid-2000s-era Navarro to the list of anti-Trump conspirators, too.
Trump’s National Economic Council Director Larry Kudlow hit the Sunday shows, too. For his part, he bizarrely pretended other troubling economic data (in this case, on consumer sentiment) didn’t exist. He also repeatedly told viewers: “Let’s not be afraid of optimism.”
And look, yes, it would be unhelpful for public officials to go on TV and tell everybody to panic, pull their money out of the market and stuff it under their mattresses. The White House obviously wants to project confidence instead.
But that confidence is convincing only if it’s credible — because, say, the White House has acknowledged how its own trade policies are contributing to recession risk and is committed to reversing them. Or because it has a competent team in place if recession strikes.
Neither is true.
Instead, Kudlow’s call for optimism has a whiff of Peter Pan logic about it: If only we believe in fairies hard enough, we can always save Tinker Bell — even when we’re sending her out into a hailstorm. If you believe, clap your hands; don’t let Tink die!
It’s hard to imagine nervous Americans are really this credulous. Then again, perhaps we were never the intended audience for such performances. Sure, maybe White House aides are trying to fool the public into believing recession warning signs don’t exist. But maybe they’re actually just trying to fool their boss.
A frightening conspiracy theory, indeed.