Fears of US recession

Donald Trump has tried to assure markets about the risk of the US falling into a recession. He says the economy is doing extremely well. White House economic adviser stated that there was no recession visible. Sometimes back financial markets indicated sign of recession. The US Federal Reserve reduced interest rates for the first time since 2008, and more cuts are anticipated. The US central bank was reacting to universal events such as the shrinkage in both the UK and German economies during the second quarter. The Germany economy diminished by 0.1 percent in the second quarter of the year. It could constrict again in the third quarter indicating a recession. Overall economic performance could again decline slightly, the Bundesbank stated in a monthly report. The principal reason for this is the continuing slump in industry. The US economy also slowed in the last quarter, increasing at an annualized growth of 2.1 percent. The US President has published about 40 tweets either blaming Fed chairman Jerome Powell or pushing for a rate cut. The US central bank should study reducing interest rates by one percentage point and induct some certain alleviation incentive measures, president Donald Trump has stated. He from time to time complained about a strong dollar, which is sadly harming other parts of the world. The remarks came hours after the president said the US economy is not falling into a recession. On the other hand the economy is doing “tremendously well”, he said. Mr Trump has published a line of vital tweets in recent months aimed at the Federal Reserve and its chief Jerome Powell. US-China trade war, dismal economic data from Germany, and misgiving over the UK’s exit from the European Union have unstable share markets. There are also concerns that the bond markets are exhibiting recession signals. It is now less expensive for the US government to borrow for 10 years rather than two – a sign that lenders worries short-term economic risks have increased. Mr Trump’s proposal that the Fed should consider a return to its crisis- period money-printing programme comes in spite of him urging a day earlier that the US economy was in better soundness. White House economic adviser said there were no recession signs. Consumers are working and their wages are increasing. At the same time they are spending and they are also saving. The Fed is under from Trump, but it is really hard to know how much of a direct effect that is having on policy.
Global stock markets decline around the world as worries about the US-China trade war and the global economy induced investors to dump shares. The three principal stock markets closed 3 percent lower overnight, European stocks fell worldwide, while Asian stock markets opened lower. Fragile data from Germany and China on helped a rush for safe assets like bonds and gold. Bond market moved to probable recessions in significant economies. The US central bank also came under fresh pressure from US President Donald Trump for not doing enough to support the world’s largest economy.There are worries that fresh attacks by Mr Trump on the Federal Reserve could diminish investor confidence on its capacity to make separate decisions. Analyst Oliver Pursche, from financial services company Bruderman, claimed the global picture was dangerous. Happening in Hong Kong and with Brexit and the trade war, it is all in controversy. Germany’s GDP shrunken in the second quarter, and that China’s industrial growth in July hit a 17-year low, had already scared markets in Europe. Disturbance related to pro-democracy protests have also calculated on the stock market in Hong Kong. Another concern was that bond markets are showing recession warnings. The recession signal from the bond market will only gather pressure on the Federal Reserve to give the president what he desire more rate cuts. Donald Trump complained Fed Chair Jay Powell for not cutting rates speedily enough.
President Trump was protecting his administration’s tariff war with China and hitting the Fed, calling the chairman not aware. But if Mr Trump gets what he it may come at an exorbitant price. It is not known that more rate cuts will abrupt the injuries from his continuing trade war with China which is creating doubt and increasing costs for businesses and consumers. In spite of the US delaying the 1st September imposition of tariffs on some Chinese imports into the US, it has done little to comfort worries. Starting with September last year, the US central bank had a comparatively bright prospect for the economy, anticipating that the incentive from the Trump administration’s massive $1.5 trillion tax cut package in 2018 would maintain growth and justify consistently higher interest rates. Mr Trump wants to make the economy a major part of his case for his 2020 re-election campaign.

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