If you’re reading this, it means you read The Washington Post. You are a person of discriminating tastes — a sophisticated, dare I say well-informed observer of the political scene. You read Spoiler Alerts to learn even more about how the world works. So let me just blow your mind with two stunning observations from political science: (a) Incumbent presidents are less likely to be reelected during a recession; and (b) there are incipient signs that the U.S. economy is slowing down.

The latter point is beyond dispute. Both GDP growth and job growth remain positive, but the 2019 numbers for both are weaker than they were in 2017 and 2018. Those, in turn, were weaker than during the Obama era. This does not mean a recession is inevitable, but it does mean the economy is slowing down — hence the rising economic expectation of a recession.

President Trump is handling this news with all the maturity and decorum that we have come to expect from the 45th president — by which I mean the man is freaking out. Late last week, my Post colleagues reported that “mounting signs of global economic distress this week have alarmed President Trump, who is worried that a downturn could imperil his reelection, even as administration officials acknowledge that they have not planned for a possible recession.”

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Part of the problem is that Trump’s beliefs about the economy rest on biased information and conspiracy theories. Lest you think I am exaggerating, consider that the Associated Press’s Josh Boak and Jonathan Lemire reported Saturday that Trump is “skeptical about some of the weaker economic indicators. … His skepticism has been reinforced by White House officials who have long been inclined to only show Trump rosier economic assessments.”

This helps explain his more conspiratorial belief that the media is somehow trying to gin up a recession. The New York Times’s Maggie Haberman noted that beyond castigating other countries and the Federal Reserve, Trump “has accused the news media of trying to create a recession.” The Daily Beast’s Asawin Suebsaeng and Justin Baragona elaborated even further on this particular belief:

According to three people who’ve spoken to Trump about recessions and the American economy since 2017, the president has repeatedly voiced concerns—or bitter annoyance—about what he views as media outlets’ ability, or even alleged desire, to help create economic recession through self-fulfilling prophecy.
One of these sources said they’ve heard Trump say at least three times over the past two and a half years that the media would “love it if” a recession occurred during his first term, seriously harming his chances at re-election in 2020. Since his inauguration, the president has brought up the subject of possible recession, sometimes as an unprompted tangent, in various policy and messaging discussions, including on health care, taxes, and trade.
“[Trump] thinks recessions or booms are often self-fulfilling prophecies,” another one of the sources said. “He’s said when the media starts beating the drum about a recession coming, that negativity gets into people’s heads and they change their behavior: less purchasing, fewer entrepreneurs starting small businesses, people moving money out of the market, [and so on]. That’s why he’s so concerned about the coverage of a potential recession… He believes he can will the economy in a positive direction by feeding optimism to the ‘American spirit.’”

As crazy as this might sound, there is a kernel of truth buried deep within Trump’s conspiracy theories. John Maynard Keynes talked about the importance of “animal spirits” in driving investment decisions. If key economic decision-makers feel upbeat about the economy, they take decisions that often lead to more investment and consumption, which in turn generates real economic growth. After Trump’s election, economist Ken Rogoff speculated that Trump might have a positive effect on those “animal spirits.” And sure enough, one of Trump’s strengths as president was that his effect on expectations and confidence exceeded his effect on the hard economic numbers. Little wonder, then, that Trump dispatched his subordinates to talk up the economy over the weekend.

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Donald Trump is a salesman. So can he sweet-talk the economy out of a downturn? Probably not.

First, Trump is a bad salesman. He is not so much talking up the economy as trying to redirect blame toward the Fed, toward other countries, toward Democrats, toward anyone but himself. Furthermore, even when he tries to talk up his economy, he can’t find the right words. In his effort to do so Sunday, he said, “I mean, the world is in a recession right now — although that’s too big a statement.” This lack of clarity is not going to buck up investor spirits. Trump faces the same problem in trying to reduce trade war tensions. He is stuck between his core beliefs and what business executives want to hear. In this scenario, Trump is likely to say all things to all people, thereby sounding incoherent.

Second, this White House leaks so badly that there is no way Trump can maintain the long con of self-assurance. Indeed, between the start of me writing this column and now, my Post colleague Damian Paletta broke the story that “several senior White House officials have begun discussing whether to push for a temporary payroll tax cut as a way to arrest an economic slowdown, three people familiar with the discussions said, revealing growing concerns about the economy among President Trump’s top economic aides.” More news of White House preparations for a downturn undercuts Trump’s efforts to claim all is well.

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Third, the only tool Trump can deploy unilaterally is what Barry Eichengreen labeled “open mouth operations.” He can try to jawbone the Fed into lowering interest rates, but as noted last week, the Fed might not play. More significantly, as the New York Times’s Neil Irwin noted recently, this White House has no other bullets to fire. Any payroll tax cut would require a congressional buy-in. Lacking that, there ain’t much ammunition left:

In past recessions, the Fed had plenty of room to cut interest rates as a stimulus measure, and fiscal policymakers have been willing to pour money into weaker economies.
The Fed’s main target interest rate is just over 2 percent now, compared with 5.25 percent heading into the last recession in 2007. Other global central banks have even less wiggle room.
And a polarizing president and a divided Congress are unlikely to find much common ground in stimulating the economy. In early 2008, for example, as a recession took hold, the George W. Bush administration negotiated a $152 billion stimulus package with a Democratic Congress to try to lessen the damage.
It seems unlikely that President Trump, heading into a re-election battle, would find the same harmony with Democrats today.

Trump is not crazy to try to talk his way out of a slowdown. He’s just crazy to think it will work.

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