Commerce Secretary Wilbur Ross says liberal news organizations are ratcheting up recession fears in an effort to derail President Trump’s 2020 reelection bid.
“A lot of the left-wing media are trying very desperately to encourage consumers to trigger a recession,” Ross told “WSJ at Large with Gerry Baker.” “I think they realize that's probably the only way they can hope to beat President Trump in 2020.”
In mid-August, a widely followed recession indicator flashed a warning. The spread between the U.S. 2-year and 10-year yields turned negative for the first time since 2007, indicating bond buyers are more worried about the economy in the here and now than the distant future, which is ordinarily more worrisome because it's difficult to predict.
Such a development has occurred ahead of every U.S. recession over the past 50 years, sometimes leading by as much as 24 months.
While the possibility of a recession has whipped many media platforms and personalities into a frenzy, few were as explicit as HBO Real Time host Bill Maher.
“I've been hoping for a recession," he said three days before the yield curve inverted. “People hate me for it, but it would get rid of Trump so you shouldn’t hate me for it."
Maher's comments prompted outrage from some as recessions can cause job losses, diminish earning power, reduce 401(k) balances and in general hurt hard-working Americans.
Both Ross and Maher may be on to something when it comes to recessions, in that they don't bode well for elections.
President George H.W. Bush was the last president to lose a reelection bid. He was also the last president to oversee a U.S. recession in the 24 months leading up to the election.
Five of the last seven presidents who lost their reelection campaigns had recessions occur within the two years leading up to Election Day, according to LPL Financial Senior Market Strategist Ryan Detrick. Meanwhile, presidents are 11 for 11 in winning reelection if they manage to keep the U.S. economy out of recession in the last half of their first term.
Based on that, Maher may not get his wish.
Gross domestic product grew at an annualized 2 percent rate in the second quarter, the Commerce Department reported Thursday morning. While that was down from the 3.1 percent growth seen in the January-to-March period, it’s still a long way from the two consecutive quarters of negative growth that would define a recession.
“We expect GDP growth to slow from 2.3% this year to 1.4% in 2020, before a more favorable post-election policy mix generates a rebound to 2.0% in 2021,” a team of U.S. economists at the London-based Capital Economics wrote in a note sent to clients on Thursday.
“We expect the economy to avoid a recession, but the trade war and next year’s presidential election mean the outlook is more uncertain than usual,” they said.
On the upside, unemployment at 3.7 percent is hovering near a 50-year low.
And the stock market, which is viewed as forward-looking, has experienced robust gains this year.
The S&P 500 is up more than 18 percent, the Dow has gained 15 percent and the Nasdaq has advanced 21 percent.
You can catch the full interview with Commerce Secretary Ross on FOX Business Network at 9:30 PM ET Friday.