Welcome to the Trump Slump

Markets are spooked. Recession fears are growing. Will the president ever learn?

President Trump.
(Image credit: Illustrated | Chip Somodevilla/Getty Images)

Perhaps President Trump still thinks trade wars are "good." It's probably a safe bet he does, especially since he's been making this wrongheaded point for decades. But even a lifelong protectionist like the president must feel at least a wisp of doubt that trade wars are "easy to win." Certainly the battered stock market, Trump's preferred economic barometer, is suggesting they're not.

And now the real economy is sending a similar message. Apple has slashed its quarterly revenue forecast for the first time since before it started making iPhones. That shocking downgrade, according to CEO Tim Cook, is in part due to shrinking iPhone demand in China where the economy there is getting pinched by U.S.-China trade tensions. It's a story you're probably going to hear more about in the coming weeks, as even Team Trump is conceding. White House economist Kevin Hassett says, "there are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded ... until we get a deal with China." Backing up that forecast is the new Institute for Supply Management survey, whose index of national factory activity suffered its biggest drop since the height of the global financial crisis in October 2008. Although the index suggests the economy is still expanding — an important detail — manufacturing executives also said the trade conflict is hurting factory orders.

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James Pethokoukis

James Pethokoukis is the DeWitt Wallace Fellow at the American Enterprise Institute where he runs the AEIdeas blog. He has also written for The New York Times, National Review, Commentary, The Weekly Standard, and other places.