Trump 'not ready' for China trade deal, dismisses recession fears
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[August 19, 2019]
By Howard Schneider
WASHINGTON (Reuters) - U.S. President
Donald Trump and top White House officials dismissed concerns that
economic growth may be faltering, saying on Sunday they saw little risk
of recession despite a volatile week on global bond markets, and
insisting their trade war with China was doing no damage to the United
"We're doing tremendously well, our consumers are rich, I gave a
tremendous tax cut, and they're loaded up with money," Trump said on
But he was less optimistic than his aides on striking a trade deal with
China, saying that while he believed China was ready to come to an
agreement, "I'm not ready to make a deal yet."
He hinted that the White House would like to see Beijing resolve ongoing
protests in Hong Kong first.
"I would like to see Hong Kong worked out in a very humanitarian
fashion," Trump said. "I think it would be very good for the trade
White House economic adviser Larry Kudlow said trade deputies from the
two countries would speak within 10 days and "if those deputies'
meetings pan out... we are planning to have China come to the USA" to
advance negotiations over ending a trade battle that has emerged as a
potential risk to global economic growth.
Even with the talks stalled for now and the threat of greater tariffs
and other trade restrictions hanging over the world economy, Kudlow said
on "Fox News Sunday" the United States remained "in pretty good shape."
"There is no recession in sight," Kudlow said. "Consumers are working.
Their wages are rising. They are spending and they are saving."
Their comments follow a week in which concerns about a possible U.S.
recession weighed on financial markets and seemed to put administration
officials on edge about whether the economy would hold up through the
2020 presidential election campaign. Democrats on Sunday argued Trump's
trade policies were posing an acute, short-term risk.
U.S. stock markets tanked last week on recession fears with all three
major U.S. indexes closing down about 3% on Wednesday, paring their
losses by Friday due to expectations the European Central Bank might cut
The U.S. Federal Reserve and 19 other central banks have already
loosened monetary policy in what Fitch Ratings last week described as
the largest shift since the 2009 recession.
Markets are expecting more cuts to come. For a brief time last week,
bond investors demanded a higher interest rate on 2-year Treasury bonds
than for 10-year Treasury bonds, a potential signal of lost faith in
near-term economic growth.
White House trade adviser Peter Navarro on Sunday dismissed the idea
that last week's market volatility was a warning sign, saying "good"
economic dynamics were encouraging investors to move money to the United
"We have the strongest economy in the world and money is coming here for
our stock market. It's also coming here to chase yield in our bond
markets," Navarro told ABC's "This Week."
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resident Donald Trump meets with China's President Xi Jinping at the
start of their bilateral meeting at the G20 leaders summit in Osaka,
Japan, June 29, 2019. REUTERS/Kevin Lamarque/File Photo/File Photo
For bond markets, the sort of movement Navarro described is often
driven by trouble - in this case the possibility that the trade
battle with China is lasting far longer than expected and becoming
disruptive to business investment and growth.
The U.S. economy does continue to grow and add jobs each month.
Retail sales in July jumped a stronger-than-expected 0.7%, the
government reported last week, and Kudlow said that number showed
that the main prop of the U.S. economy was intact.
But manufacturing growth has slowed and lagging business investment
has become a drag.
A slowdown would be bad news for Trump, who is building his 2020 bid
for a second term around the economy's performance. He told voters
at a rally last week they had "no choice" but to vote for him to
preserve their jobs and investments.
The president and his advisers have repeatedly accused the Fed of
undermining the administration's economic policies. On Sunday,
Kudlow again pointed the finger at the central bank, describing rate
hikes through 2017 and 2018 as "very severe monetary restraint."
The Fed hiked rates seven times over those two years as part of a
plan to restore normal monetary policy following emergency steps
taken to battle the 2007-2009 global financial crisis and recession.
Even with those steps, the Fed's target interest rate has remained
well below historic norms, and policymakers have started cutting
rates in response to growing global risks.
Democratic presidential candidates on Sunday joined the many
economic analysts who have said the administration's sometimes
erratic policies on trade - at one point threatening tariffs on
Mexico over immigration issues - are to blame for increased
uncertainty, disappointing business investment and market
"I'm afraid that this president is driving the global economy and
our economy into recession," Democratic candidate Beto O'Rourke said
on NBC's "Meet the Press."
Speaking to CNN's "State of the Union" on Sunday, Democratic
candidate Pete Buttigieg criticized the administration for failing
to deliver a deal with China.
"There is clearly no strategy for dealing with the trade war in a
way that will lead to results for American farmers, or American
consumers," he said.
(Reporting by Howard Schneider; additional reporting by Humeyra
Pamuk and Ginger Gibson; editing by Michelle Price, Lisa Shumaker
and Rosalba O'Brien)
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