Rising trade tensions with China, a waning economic outlook, and questions about rising interest rates pose new challenges for President Trump . President Donald John TrumpConway's husband replies to the Trump Tweet to Cohen: "Apart from being a completely Scottish-free & # 39; strategist behind Warren's political rise to a meeting with O'Rourke: The Appellate Court's appeal challenges Trump's bid to resume the asylum ban MORE as he prepares for his re-election campaign.
Mocking negotiations between Washington and Beijing over tariffs and other trade barriers shook financial markets last week, terrifying traders as they prepared for a possible recession in 201
Although the world's two economic powers have agreed to work out a deal by the end of February, the feud is now tense with wider concerns about the long-term strength of the US economy.
Friday's salutary employment report from the Labor Department showed encouragement Signs of a rising wage increase from November onwards are the reasons why the Federal Reserve raised interest rates in December and caused Wall Street turmoil. The Dow Jones Industrial Average lost 558 points at the end of the trading session on Friday, down 2.2 percent, while the Standard and Poor's 500 index and the Nasdaq index fell 2.3 percent and 3 percent, respectively.
The contrast, however, presents Trump with serious messaging issues, which has named stock market performance as the preferred reporting map for its administration. While the President frequently denounced the Dow as he rose in 2017, he was concerned about the long-running demise of US stocks mum.
And despite persistently low unemployment, which is currently at a 49-year low of 3.7 percent, economists say you see growing signs that the Trump economy is trending downwards.
Diane Swonk, Chief Economist at Grant Thornton, predicts that recession will begin in the first half of 2020, half a year earlier than originally expected. If right, Trump will face the Herculean task of ensuring re-election as the economy shrinks.
"Election years do not prevent recessions from taking place," Swonk wrote in a research letter last week. "Recessions are known to be hard to hit. No one knows exactly which straw will tear the back of the camel, only that it will pile up. "
Analysts are watching the series of economic risks by the end of 2018, with Trump's trade policy at the top of the list. The President has threatened to withdraw the US from the North American Free Trade Agreement if Congress does not agree to a revised trade agreement with Canada and Mexico, and has sent out mixed signals for a possible deal with China.
Trump sent shares up Monday as he declared a "big leap forward" with Chinese President Xi Jinping after meeting them in Argentina last weekend in the group of 20. The President said his government and China had agreed to work out an agreement within the next 90 days to increase the purchase of American agricultural products in Beijing and suspend US car tolls if the US restricts further tariffs.
Negotiations are unclear, causing uncertainty in the market leading to concern and then sell-off.
Initial optimism over the deal faded on Tuesday when Trump, who calls himself "Tariff Man" on Twitter, warned of heavy consequences for China if Xi failed to meet his demands. Canada's arrest of a leading Chinese technology expert on behalf of the US has also angered Washington's relationship with Beijing.
"Investors have a number of concerns, from slower corporate earnings growth to higher interest rates, but the potential of an escalating trade war is high on the list," said Mark Zandi, Chief Economist at Moody's Analytics, in an email to The Hill. "The president seems to believe his negotiating tactics will win the day, but they undermine confidence and delay the end of the war."
A tentative, even modest agreement between Trump and Xi could stop the bleeding on Wall Street. Further angry tweets and abandoned talks could further impact Trump's preferred economic barometer.
Trump's tariffs on imported steel, aluminum and Chinese goods, as well as foreign retaliation against US agricultural exports, have been broken by some US companies. The US trade deficit reached $ 55.5 billion in October, its highest level in a decade, and US companies paid $ 6.2 billion in customs duties, as a pro-trading group analyzes federal data ,
The economic crisis of Trump's trade struggles will weigh on the Fed in two weeks as the Bank's Political Decision-Making Committee meets to discuss raising interest rates. The Fed is expected to raise interest rates in December, but could possibly signal an impending pause when considering the path of the economy.
The Fed has gradually raised interest rates since 2015 as the economy rebounded and unemployment fell.
Trump The US Federal Reserve and its chairman, Jerome Powell, have broken with most of his party because of these rate hikes in order to sue the central bank for economic damage. Rising interest rates are also affecting stock market performance, making it more difficult for Trump to boost the economy.
The US created 155,000 new jobs in November, falling short of economists' expectations. The continuing declines in housing sales, exports and corporate investment have also set off alarms regarding the long-term prospects for the economy.
However, the employment report also showed that wages rose 3 percent on an annualized basis, a gratifying increase after years of modest gains
Traders viewed this data as supporting a Fed rate hike, and the Dow closed at a loss of more as 500 points. US equities have fallen back into negative territory for the year and are suffering the worst week of losses since March.
But federal data on unemployment insurance, production output and inflation to be released next week may complicate the Fed's decision and increase the chances of more market volatility.
"This keeps the Fed on course to raise interest rates later this month, but also supports a likely downgrade of 2019's rate hikes for committee projects from three to just two," said Curt Long, chief economist at the National Association of Federally Insured Credit Unions. "The November job report was robust but not inspiring."