Stephen Moore, Trump’s former White House economic adviser, told Newsmax in a recent interview that he was confident that if former President Donald Trump had been re-elected to a second term, the US economy would not be now. in what he described as a “mild recession“. .”
In the interview that aired Aug. 25, Moore was asked to comment on revised gross domestic product (GDP) figures released earlier in the day, which confirmed the U.S. economy contracted in the second quarter.
While the figure was revised up slightly to minus 0.6% from a previous estimate of minus 0.9%, government data showed the US economy has seen negative growth for two consecutive quarters. , the common empirical definition of a recession.
Even though the two-quarter rule is not the official definition of a recession in the world’s largest economy, many economists, including Moore, have insisted that the United States has in fact fallen into a recession. .
“We’re in a mild recession right now, there’s no doubt about that,” Moore told the outlet.
“Worse and worse, no better”
More concerning, however, is the direction the economy is heading, he added, pointing to deteriorating economic data in housing, manufacturing, consumer spending and business confidence.
“I have to say things are getting worse, not better,” Moore said, saying that if Trump had been re-elected and his policies guided US economic policy, the situation would be reversed.
“I believe if we stuck with Trump’s policies, the US economy would be booming right now,” Moore told the outlet.
“There’s no reason the US economy shouldn’t skyrocket beyond belief except that Biden has put in place all these taxing and spending and regulatory policies that hurt the economy. economic growth,” he said.
Moore’s view builds on previous remarks made on EpochTV’s “Fresh Look America” show, in which he said that if Trump were still in power, “we’d have the economy in full swing. boom right now.”
Key to his thesis that the United States would be in a much better economic position under Trump’s policies is the fact that the former president has sought to unblock domestic energy production, unlike Biden’s crackdown. against fossil fuels.
Under Trump, the United States had both low unemployment and low inflation, while enjoying energy independence, he said.
“Now we have a president who has to go hat in hand to the Saudis and beg them to produce more oil. It’s humiliating, it’s a threat to American national defense, it makes the country feel like it’s weak,” he said.
Fight against inflation
Moore’s remarks come as inflation hit multi-decade highs, in part due to soaring energy costs, prompting the Federal Reserve to raise rates to ease price pressures.
Markets are bracing for Friday’s keynote address from Fed Chairman Jerome Powell at the Kansas City Federal Reserve’s annual monetary policy symposium in Jackson Hole, Wyoming.
Around the same time last year, Powell insisted that the jump in inflation was likely to be “transient”, a prediction he later admitted was wrong.
The Fed has since embarked on an aggressive tightening cycle to ease inflationary pressures, which have shown signs of easing, as well as growing signals of economic weakness.
Despite a number of weak spots in the US economy, the labor market remains resilient and inflationary pressures remain elevated, prompting Fed officials to send hawkish signals about the future path of monetary policy.
As the Fed seeks to shape market expectations, a number of Fed officials have sought in recent days to insist that they will raise interest rates and keep them high until that inflation is eliminated from the economy.
Some analysts believe Powell will reinforce that position in his highly anticipated Jackson Hole speech.
“Many will have marked Fed Chairman Jerome Powell’s speech today as the highlight of the week,” ING analysts said in a note.
“A likely scenario is that he will approve of the tightening of financial market conditions and therefore also the upward trend in market rates of late, given that the Fed is still far from getting inflation under control,” they said. declared.
Investors lowered their expectations that the Fed could turn to a slower pace of rate hikes as inflation remains at an annual rate of 8.5%, well above the 2% target of the Fed.
At the time of writing, interest rate futures implied a 62.5% chance of a 75 basis point rate hike in September.
The Atlanta Fed’s interest rate likelihood tracker shows that markets expect the federal funds rate to peak near 3.8% in the first quarter of 2023, before forecasting further cuts to rate.