A FABRICATED RECESSION?

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BRYCE ON POLITICS

– Is the timing too much of a coincidence?

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I have been hearing about an impending recession which my Democrat friends insist will happen either later this year or in 2020. The media reports likewise and I suspect these prognosticators will become louder as we get closer to the 2020 election. On the other hand, Republicans are at a loss as to what all the hubbub is all about, as our economy is still chugging along just fine. One cannot help but wonder if this is real or politically motivated.

First, let’s be clear what we mean by a recession. “The National Bureau of Economic Research (NBER) defines a recession as ‘a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales.’ A recession is also said to be when businesses cease to expand, the GDP diminishes for two consecutive quarters, the rate of unemployment rises, and housing prices decline.”

So far, none of this has occurred, nor are there signs it will.

The United States is currently the economic engine of the world. Our GDP is up, unemployment is down to record levels, and consumer confidence is up. It is true, people are concerned about a trade war with China, but this is something that needed to be corrected in any event, unless we prefer kowtowing to the Chinese. Some are suggesting Europe is behind, but the reality is only Germany is showing signs of changes in production. In Asia, there is concern regarding trade between Japan and South Korea, but it is likely these differences will be amicably resolved.

So where are the accusations coming from regarding a potential recession? One prominent source is Diane Swonk, the Chief Economist for Grant Thornton in Chicago. She recently told Fox Business’ Liz Claman, “I think (a recession) is highly probable. I do have a recession in 2020.” She sees Brexit and Japan/South Korea trade as contributing to it.

In sharp contrast, Sonal Desai, Ph.D., the Chief Investment Officer at Franklin Templeton Fixed Income claims, “the economic data show no evidence that either the United States or the global economy is approaching a recession.” She adds, “The markets and the Fed seem to be looking at each other, feeding each other’s fears, and completely ignoring what’s actually going on in the real economy.”

So, who are we to believe? One thing we should consider, Diane Swonk has made campaign contributions to Democrat candidates, and her father, Jim Swonk, was well known in the Livingston County Democrat Party, Michigan. In other words, she undoubtedly has sympathies for Democrats and the party may be trying to capitalize on her notoriety.

The biggest asset Donald Trump has going into the 2020 presidential election is our robust economy, and this is the Achilles heel of the Democrats. They have tried to gnaw away at his other accomplishments, but if the economy falters, they believe they can defeat him. This is why these rumors of recession are spreading, even though there is no factual basis to suggest it will occur. So, the drumbeat from the far-left and the media will be “Recession, Recession, Recession…” The Trump bashers believe if they say it enough times, people will believe a recession is actually in the works when, in reality, it is not. Meanwhile, American business will continue at a rapid clip, and workers will benefit from this prosperity.

For years, economics has had a role to play in politics, but I never dreamed it could be manipulated for political gain. It is rather sad when political strategists would rather put people out of work and cause misfortune for business, all for political gain. This goes beyond mere pessimism; it is just plain reckless and dangerous.

Interestingly, President Trump welcomes talk about a possible recession. He understands why the rumors are spreading, but it gives him a chance to tout how well his economic policies have worked. As usual, he fights fire with fire.

Keep the Faith!

2013 YEAR-END WRAP-UP

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Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 40 years of experience in the management consulting field. He can be reached at [email protected]

For Tim’s columns, see: timbryce.com

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