‘Trump uncertainty brings risk of avoidable recession’

‘Trump uncertainty brings risk of avoidable recession’

NEW YORK
‘Trump uncertainty brings risk of avoidable recession’

The "disorderly" implementation of trade and government reform policies by the administration of President Donald Trump has raised the risk of a "largely avoidable" U.S. economic downturn, a top S&P economist has said. 

Uncertainty sparked by constant White House pivots on tariffs has potentially delayed business investments and prompted consumers to pull back on spending, said Paul Gruenwald, global chief economist at S&P Global Ratings.

Gruenwald said the drive to shrink government spending and reduce waste overseen by billionaire Trump advisor Elon Musk has also been more disruptive than needed.

He pointed to the "reinventing government" downsizing push in the 1990s under then president Bill Clinton, which he said was executed in a "predictable and orderly" manner.

"The objectives themselves, I think most of them have merit, but the way they're being implemented is very disorderly," Gruenwald told AFP.

"If this leads firms and consumers to hold back on their spending and demand pulls back, we could get a slowdown or even a recession that was largely avoidable," Gruenwald said. "That is a downside risk."

Gruenwald pointed to a spike in the US economic policy uncertainty index, a benchmark that has gotten more attention since Trump returned to the White House.

The index is currently at one of its highest levels in its 40-year history, below its highest-ever reading at the start of the COVID-19 pandemic, but above the level seen during most of the first Trump administration.

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