Earlier this week, as Reuters reported, the yield curve inverted for the first time since 2007. A strong and reliable predictor of recession, the curve had inverted before each recession in the past five decades.
The American manufacturing sector is already in recession, according to a new report from The Hill, which poses a number of questions about President Donald Trump’s re-election chances.
Trump, who campaigned on economic protectionism, winning the states of Pennsylvania, Wisconsin, and Michigan, promised to revitalize the economy and bring manufacturing jobs back into the country.
But, the manufacturing sector is shrinking. In the first quarter of the year, it contracted 1.9 percent. In the second quarter, it contracted 1.2 percent, and in July, it shrunk by 0.4 percent. A recession, as the publication notes, occurs when an economy shrinks in two consecutive quarters.
The significant slowdown is evident in the job market; in 2018, manufacturing jobs grew at an average rate of 22,000 a month, but in 2019 they are growing at a rate of 8,000 new jobs a month.
Some have blamed the tariffs Trump has imposed on Chinese imports for what the American economy is going through. The manufacturing sector has also suffered because of the levies, given that it partially relies on Chinese imports, so companies have been effectively forced to raise prices.
President Trump is reportedly paranoid that economists are biasing their data against him to prevent his re-election in 2020 https://t.co/wJJ64SZswm— Newsweek (@Newsweek) August 16, 2019
The China trade war is merely the tip of the iceberg, however. Along with trade, technology and automation are destroying jobs, according to Urban Institute fellow Stephen Rose.
“A lot of people try to blame it on trade, and that’s not unimportant, but an important thing to understand is what’s happened with productivity. In the past manufacturing was key for non-college educated men. Today there’s been more of a shift to other jobs,” Rose explained, adding that he expects the manufacturing sector to continue shrinking.
Analyses have suggested that a significant portion of Trump’s 2016 voters — including those in key battleground states — works in manufacturing, which, in turn, suggests that the president is likely to lose their support if the economy continues under-preforming, according to The Hill.
Some Democrats running for president are seizing on the opportunity to attack the seemingly vulnerable incumbent. Massachusetts Senator Elizabeth Warren, for instance, discussed the prospect of recession in a recent Medium post, laying out her own plan to save and improve the economy.
As The Inquisitr reported, President Trump has repeatedly attempted to reassure the American public that nothing is wrong, accusing the media and his political opponents of presenting false data about the economy.
In private, however, Trump has reportedly expressed concern about the state of the economy, and he is growing increasingly anxious about his re-election chances.