Democrats, President Trump, Donald Trump discussed on Ballots and Dollars
The politics that affect your pocketbook. I'm rick newman and i'm alexis assists christopher's. Today we are waving to the public and talking about the r word recession like you said that eh. I haven't changed a lot lately my we're because it looks leo family standards. The democrats are running on the recession platform. They're trying to scare era saw onto thinking and there's going to be this horrible. Recession and of course trump is telling us. If you don't vote for me. We're sure as heck gonna fall into a recession a little unsettling just a little bit. I mean because if you're if you're opposed to <hes> president trump <hes> there's an incentive for you to hope there is a recession because a recession would basically sink his presidency. He might be sunk without a recession. His approval rating is so weak <hes> but <hes> if there is a recession it would almost certainly pave the way to a replacement and we we know from history. It's almost impossible for an incumbent president to get reelected. If there is a recession that people feel and if they're watching people get laid off and the unemployment rate is going up and people are starting to hoard money because they're afraid of what's coming the president does not get reelected <hes> but <hes> we were not in a recession right now almost certainly and i will actually <hes> stick my neck out and i i am going to forecast that. We are not going to have a recession before the twenty twenty election. I think that they're just is not another going wrong. It's not as if every too much going right. I think there's just not enough going wrong <hes> to cause a recession <hes> by you know within the next from now we're talking fifteen months or one that at least feels like a recession by the time voters go to the <hes> voting booths in november of twenty twenty well of course it depends on who you talk to when talk about strategies everyday here at yahoo finance and some of them in my sort of anecdotal consensus here is that we're we'll probably see some mm sort of mild recession and they do stress mild in putting a time frame you two or three of twenty twenty is what they're saying that it will be within and that and and my question is if it if it is at that time and it is very <unk> from you think so. I think trump survives that how because there's not enough pain for enough people to say this is horrible. We need to put somebody else in that in office because of what they've got and they figure figure you know what this is as bad as it's gonna get then. Let's just stick with what we know okay. So what are the characteristics of your hypothetical recession a year from now well okay. The unemployment rate is three percent three point percent now. What does it what does it go up to five point seven. I don't i'm not gonna have a recession with unemployment. I mean we've had used to the almost normal for a non recessionary but if you look at the definition of a recession to back to back quarters of negative or flat growth so we could have negative could've point one growth what what does that really mean to the average person probably not a lot and if they're not feeling it in their day to day lives. Are they really going to take it out on president trump to the extent that he doesn't get reelected well. Let's play this out. <hes> i think they would and here here's why i think they would <hes> so if let's say you're right and we go from three point point seven percent unemployment now. Let's say it does go up to something that's still under six percent but to get from three point seven to five point seven to go up by a couple of percentage points that means we have to have not not just <hes> hiring stagnates but we have to lay people would be losing their jobs and i think i think one layoff has a huge multiplier effect effect on confidence because first of all companies don't lay off one person they <hes> they feel they have to cut back layoff. I mean depending on the size of the company. Obviously they lay off a couple a couple of hundred or maybe even a couple thousand if you're a big company <hes> and if we are in a recessionary scenario well laid off people are not finding it easy easy to go just get a job at the next company down the street so and i think when ordinary people start to hear about layoffs even if it doesn't directly effect them or it may affect them but they're not the personally off it works that has a very pronounced effect on confidence and confidence is people. It's at it's that intangible thing which is people's willingness nisa spend money <hes> and if you know of consumer spending drops by ten percent so it's not hard to imagine or let's even five percent <hes> that has a big effect on the economy me and then it becomes son is kind of self fulfilling so if you start to see slowdown a slowdown in consumer spending that's the biggest part of the economy <hes> then you're going to have more layoffs by companies company saying we need to prepare. I mean companies tend to be they can get rid of people easily here in the united states and they tend to be proactive or preemptive about that so if they think bad times are coming. They want to <hes> short their balance sheets ahead of time so you get in that cycle where i think it's hard to even if it's a mild recession we don't know it's going to be a mild recession when we're in the middle of it <hes> and i think people saw some people are still very scarred by the last recession which was terrible so do you think that maybe some democrats are actually going to bed at night. Wishing and <unk> hope for a recession. That's seen a little unpatriotic to me yeah. I think some people are conflicted on this. <hes> who amongst the candidates do you think maybe praying extra hard for that recession boy. I don't know because i'm only thinking about may five candidates. I wanted to chance so that's by <hes> elizabeth warren warren elizabeth warren bernie sanders comma harrison buddha judge who is kind of just barely hanging in there <hes> it would benefit look it would benefit anyone of them and it would also it would benefit democrats everywhere if there were a recession because it would make it more likely that the democrat will win in two thousand twenty and not only that when the democrat wins in the general election. There's a cocktail effect. The democrat tends to pull <hes> members com. You know more members of congress with him. Because more people just vote straight down on the down the ticket and you get more democrats voting in the first place so i think it's not just <hes> democratic candidates <hes> presidential candidates but probably lots of democrats whether they're lower sort <hes> tier candidates or voters <hes> i think people also think of a recession as as in the abstract i think of it as something that will be like a thing that cable news talk about but won't really affect them <hes> but it will. I mean a recession will affect ordinary people <hes> lots of them. I mean totally normal in a recession that we have several million job losses <hes> and we have we do have protective measures in place for some of them extended unemployment insurance and things like that but that doesn't doesn't mean you're made whole when you lose your job. You're not <hes> you suffer a permanent setback when you lose your job especially in a recession when you hard. It's easy to get it not easy to go get another job. Nonetheless <hes> i think it is so obvious that a recession would sink trump for good <hes> and it would just give democrats a higher comfort level right now that they can beat him. <hes> and i guess the good news about this. Is that no matter whether you wanna re if even if you do you hope there's a recession. There's not anything anybody can actually do to trigger a recession ordinary. The only people who could potentially <hes> have enough power to actually contribute to the onset of a recession the president himself through bad policy trumpet actually be doing that went through lots of tweets straight stock market and bashing and then also the federal reserve so policy mistake is one of the things that can cause or contribute to a recession <hes> you are. I can't make policy mistake that would affect the economy and despite by what trump thinks by the way i think there may even be some truth in trump's accusation that the media wants him to fail even if it means that the country fails in a certain way i i think there is he he he <hes> generates such intense emotional feedback that i think that's actually fairly fairly normal and i think that's probably more widespread than a lot of people in a lot of journalists would acknowledge. It's possible that i mean i think it's possible. Maybe implausible that the media is rooting for trump to fail at least portions of the media are he certainly thinks so but i also think that trump is completely wrong when he says the news. He calls us fake news but he's wrong. We're real news that we can actually <hes> eventuate a recession. I don't think the media. I don't think the media has the power that not even talk talk ourselves into talk other people into it. <hes> the public is very skeptical of the media and <hes>. They don't believe us if we're bullshitting they. They don't believe us <hes>. You don't think you leaders keep hearing on the news recession recession. It's coming. It's coming that doesn't sort of i mean because they're human to hear it. Are they hearing it from the news media <hes> i don't think matters to smart business leaders anyway because they they have probably the best set of eyes into what's actually happening in the economy this forest. There's anybody has right. I mean they see the business activity. They know what their customers do. I mean yeah. I mean you know businesses measure capacity down to three decimal points points and they can tell it did factory capacity up go up by or output or whatever did it go up by a tenth of a point down by tenth. <hes> i have a friend who works in cardboard he he can tell what's happening in the whole economy by <hes> by the capacity level cardboard plants are operating at because cardboard boxes are used for for shipping consumer packages when they fall off into the ninety percent or even the eighty percent range. That's bad news what's already in a recession or some of the s. and p. five hundred sectors we do. You have an earnings recession in particular sectors. If you look at tech for instance materials industrials they're all either flat or negative growth right now. Some of the brighter later spots have been healthcare for obvious reasons and also the banks at least for now till we get more negative yields around the world and then their profit margins get squeezed but at least for now financials naturals are still the place to be so at some point if enough of those about half of the s. and p. Five hundred sectors are now in a quote unquote earnings recession if more of them start to experience that that has to hit regular americans on main street. I'm not sure about that. <hes> and i wonder i wonder if that phrase is is not <hes> kind of inaccurate because <hes> a recession in the overall economy is declining is when the economy actually shrinks <hes> that is not the same as when corporate profits shrink because when corporate profits shrink you still have prophets you just have a less profits than you had before <hes> and in a way that's almost normal because there are various factors that affect companies. I mean prophets. Don't always it's not normal for profits always to go up without interruption <hes> in a if we had perfect information and made perfect decisions that would probably be the case but it's not the case <hes> so if profits go down companies are still profitable official at current levels of employment so that can affect stocks and it could affect hiring plans plans aren't v the <hes> the <hes> the stock market mechanism which is the pass through is well in order to placate investors and keep the stock up their with profits down. We have have to cut costs and that means we have to cut labor and that means jobs <hes> not so you know what happens in the stock market sometimes stays in the stock market and only we sometimes spreads to the broader economy so all in earnings recession certainly affects stocks <hes>. I'm not sure i don't i don't think it's i don't take as a matter of faith eight that it also affects a real communist same way i mean by the way i do you think it has affected stocks. I mean if the recession yeah not and you know what the manufacturing sector for sure so we are so we are seeing a re what is considered a manufacturing recession which is a decline in output for two quarters in a row but there's a lot of hiring has is not decline. I mean so we've added some manufacturing jobs. The last job is using this decline in a few thousand additional jobs in manufacturing so puzzling there is if <hes> if the companies are still hiring people that means they think the decline in output his temporary and they're and they think think the fruit future looks pretty good which is why they would still be bringing people on. They could be wrong if they think that they could be wrong..