Trump goofs big time over US economy

Trump goofs big time over US economy

Sunday, April 3, 2016 10:11 pm


Donald Trump: trashed for loose talk on US economy

Donald Trump: trashed for loose talk on US economy

Donald Trump’s prediction that the U.S. economy was on the verge of a “very massive recession” hit a wall of skepticism on Sunday from economists who questioned the Republican presidential front-runner’s calculations and his knowledge of economics.

It is the second major gaffe by the Republican candidate in less than a week, after saying he would rewrite  a  70 year old policy of  the United States by allowing South Korea and Japan have nuclear weapons, if elected president.

In a wide-ranging interview with the Washington Post published on Saturday, the billionaire businessman said a combination of high unemployment and an overvalued stock market had set the stage for another economic slump. He put real unemployment above 20 percent.

“We’re not heading for a recession, massive or minor, and the unemployment rate is not 20 percent,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

The official unemployment rate has declined to 5 percent from a peak of 10 percent in October 2009, according to government statistics. But a different, broader measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment is at 9.8 percent.

Coming off a difficult week on the campaign trail, in which he acknowledged he made a series of missteps, Trump’s comments to the Washington Post might be some of his most bearish on the economy and financial markets.

“I think we’re sitting on an economic bubble. A financial bubble,” he said.

While calling it a bubble might be a stretch, the fall in corporate profits and the recent rally in stock prices has pushed up the market’s valuation, and stocks on balance are about 15 percent pricier at the moment than their long-term average valuation.

But a cataclysmic economic downturn originating in the United States appears to be a remote possibility.

“Nobody can predict what the stock market is going to do,” Rajeen Dhawan, director of Economic Forecasting Center at Georgia State University, said. “I cannot predict a stock market crash, so I cannot predict a recession. I don’t see any of the reasons for a recession going forward unless there is a huge problem with the market or there is some catastrophic world event which is beyond the scope of economics.”

 

“There is a very low probability of a massive recession, less than 10 percent,” said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo. “If it happens, it would be because of what is happening overseas, especially in China and Europe.”

While some economists agreed that the stock market may be overvalued, few saw that as foretelling a recession.

“Nobody can predict what the stock market is going to do,” Rajeen Dhawan, director of Economic Forecasting Center at Georgia State University, said. “I cannot predict a stock market crash, so I cannot predict a recession. I don’t see any of the reasons for a recession going forward unless there is a huge problem with the market or there is some catastrophic world event which is beyond the scope of economics.”

The Democratic National Committee criticized Trump for making his remarks, saying they “undermine our economy.”

 

 

 


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One Comment

  • abankula says:

    This guy is clearly a loose canon, unworthy to be president of United States. He talks before thinking about the implications of his statement. If elected, he will destroy America with his loose mouth, like he wants to destroy the world economy by forecasting a massive recession happening soon in the United States. Does he know the panic his talk can generate and trigger worldwide? Not only the Republicans should cage this guy, it should be the duty of all Americans

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