On The Money: Rising recession fears pose risk for Trump | Stocks suffer worst losses of 2019 | Trump blames 'clueless' Fed for economic worries

On The Money: Rising recession fears pose risk for Trump | Stocks suffer worst losses of 2019 | Trump blames 'clueless' Fed for economic worries
© Aaron Schwartz

Happy Wednesday and welcome back to On The Money, where things are looking pretty dicey, folks. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL-- RECESSION FEARS SURGE: Fears of an impending recession reached new heights Wednesday as warning signs of a slowdown flashed across the U.S. and around the world.

U.S stocks suffered their worst day of losses this year after turmoil in the U.S. bond market and dour economic data from Germany and China raised the odds of a worldwide contraction.

After more than a decade of consistent growth, the U.S. economy faces the most daunting challenge yet to its record-breaking expansion. The darkening economic clouds threaten not only the robust U.S. job market and consumer spending, but also President TrumpDonald John TrumpGraham: America must 'accept the pain that comes in standing up to China' Weld 'thrilled' more Republicans are challenging Trump New data challenges Trump's economic narrative MORE's chances of riding those waves to a second term in office. I explain why here

 

What happened: While unemployment and consumer spending have remained strong, the toll of Trump's trade war and other global setbacks is now all but certain to slow-- and possibly shrink--the U.S. economy before the 2020 election.

 

  • Growth in the U.S. has slowed throughout the year, while recent data showed the economies of the United Kingdom and Germany shrinking. Industrial production in China also sunk to a 17-year-low under the weight of Trump's trade war, according to data released Wednesday.
  • Central banks and financial markets have been bracing for recessions in trade-sensitive Europe and Asia for months. But the inversion of the U.S. Treasury bond yield curve Wednesday sent shockwaves throughout financial markets, signaling a potential recession in the U.S.

 

The political risk: A strong economy is crucial for any incumbent president seeking re-election, but stretching the country's record run of property is particularly important for Trump. While Trump himself remains widely unpopular beyond his base, his stewardship of the economy receives solid marks.

The president was quick to blame the Federal Reserve for Wednesday's stock plunge, heaping scorn on his favorite economic scapegoat.

"We are winning, big time, against China," Trump tweeted shortly before the Dow Jones industrial average closed with an 800-point, 3-percent loss.

"Our problem is with the Fed," Trump continued. "We should easily be reaping big Rewards & Gains, but the Fed is holding us back."

 

The bottom line: While unemployment and consumer spending have remained strong, the toll of Trump's trade war and other global setbacks is now all but certain to slow-- and possibly shrink--the U.S. economy before the 2020 election.

"I don't think the economy is going to be behind the president's back as he makes his way to the next election," said Mark Zandi, chief economist at Moody's Analytics, in a Wednesday interview. "Maybe not a recession, but it's going to feel a lot uglier a year from now."

 

READ MORE ABOUT THE LOOMING RISKS TO THE ECONOMY:

 

GOOD TO KNOW

 

ODDS AND ENDS

  • The Federal Communications Commission (FCC) took a step toward approving the $26 billion merger between T-Mobile and Sprint on Wednesday, circulating a proposal that would allow the companies to combine and sell off assets to Dish so that it can enter the wireless industry.
  • The Department of Labor proposed a rule Wednesday allowing "religion-exercising organizations" with federal contracts to raise religious exemptions if accused of bias in their hiring practices.