Unemployment rates are the lowest they’ve been in 50 years, wages are increasing, and the economy’s expansion is the longest-running on record. So it may come as a surprise that journalists are reporting that the overall mood at last weekend’s annual meeting of economic forecasters was one of concern and pessimism. Instead of praising President Trump’s economic policies for the impact on the economy as the Trump administration would surely prefer, experts at the conference warned that a few economic indicators signal that trouble may come for the economy soon. Though by traditional standards the economy has been healthy and strong for the duration of Trump’s presidency, government budget deficits and the weakness of central banks among other factors concern experts who fear that the when the current expansion ends, as it inevitably will, the negative consequences could be drastic and painful.
This sentiment is mirrored by the “Global Economic Prospects” report released on Wednesday by economists at the World Bank, who described the global expansion as “fragile” and built upon a shaky foundation. Though this report predicts a continuation of economic growth throughout 2020, it also warns of a potential economic downturn posed by the ever-present risk of trade wars between the Trump administration and other countries as well as changing markets in countries like China and India. While trade-related tensions between the United States and China appear to be lessening for the time being, it’s hard to know whether Trump will sign a trade deal with the foreign country as expected given how unpredictable his behavior has become, particularly in the aftermath of impeachment and a potential war with Iran.
In European nations, technology companies that are largely based in the United States face new taxes, which Trump has responded to by threatening tariffs on French imports, posing a threat to the global economy. And according to research published by the American Economic Association, the economic fight between China and the United States has resulted in lower wages for workers in both countries. While the economy is predicted to continue to grow, the rate of growth is forecasted to slow to 1.8 percent this year and 1.7 percent next year, according to the World Bank. And the combination of the tax cuts passed in 2017 and increased spending have ballooned the national deficit to almost $1 trillion a year, a figure that worries economists around the world.
Interest rates in advanced economies have been dropping as a result of trends like the aging of the population, meaning central banks have less power than they would otherwise to grow the economy in the event of a recession. These low rates are expected to continue for the foreseeable future, causing economists grief. Economists like Valerie A. Ramey of the University of California have called on Congress to pass bills increasing spending on infrastructure and research and development in order to stimulate the economy. Though Trump campaigned on plans to improve the nation’s infrastructure, such plans have not materialized, meaning the potential economic gains caused by infrastructure spending have not been realized. Overall, economists say that policymakers will have to act strongly in order to combat the effects of an upcoming recession, the immediacy of which grows more likely by the day.