Although billionaire bond fund manager Jeffrey Gundlach doesn’t think the U.S. economy is in imminent danger of recession, he does say that there are some worrying signs for President DonaldTrump ahead of the 2020 election. How Trump avoids a recession will impact his reelection chances.
As we’ve noted here before, a recession would all but make Trump’s reelection impossible. But if the president can avoid an economic meltdown, the current witch hunt and impeachment rhetoric could very well propel him to another win in 2020. Obviously, we don’t know when the next recession will strike with a vengeance, but that it will and when (not if) it does, it’s important to be prepared for it, as most Americans, currently, are not.
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“If you have a recession, a negative sign in front of GDP, especially nominal GDP, that would just be horrific,” Gundlach, the CEO and chief investment officer of the Los Angeles-based DoubleLine Capital, which has $140 billion in assets, told FOX Business. “I think there is just nothing for Trump to run on if the economy is negative.”
But Gundlach sees only positive signs for the president in the economy, even though many negative indicators have surfaced as well.
The U.S. services sector grew in August for the 115th consecutive month while job growth has remained decently strong and consumer spending remains healthy (but is mostly new consumer debt). In addition, new and existing home sales saw a nice bump in August, probably thanks to a reduction in interest rates in July. But while leading indicators are still positive, they have fallen from 6.6 a year ago to 1.1 in August. A drop below zero could have big implications for the economy.
“There’s [sic] some numbers rolling off in the next few months, it will mean there’s a good risk of the leading indicators going to zero,” he said. “And the reason why that matters is there hasn’t been a recession in decades of economic tracking, there has not been a recession ever without leading indicators first going negative.” But, Gundlach concedes that the stakes are high for the president, as a recession, or two consecutive quarters of negative growth, occurring before Election Day could be the death blow that prevents him from winning a second term.
However, some of the “derangement” from the liberal leftists over the recent impeachment proceedings could also help solidify a win.
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Gundlach also suggests Trump cut payroll taxes. “If you cut payroll taxes it absolutely helps the economy because that’s money that’s all at the middle-class level and it’s all going straight into the paycheck,” Gundlach said. “So that might actually help to put a monkey wrench into these indicators…if the economy is left alone.” Trump could also do the right thing and stimulate the economy on his own (without the Federal Reserve’s interference) by eliminating his tariffs on Chinese goods. “What if we just pull all the tariffs in I don’t know March, we just eliminate them?” Gundlach asked, rhetorically.
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We’ve been in a recession since the 2008 ‘financial crisis’ aka Bush’s and Obama’s bailouts of Wall Street and never recovered from it. Where have these so-called experts been?
I’ve been on a fixed income since summer of 2012.
I deal with inflation by doing more with less.
Official “Recessions” really don’t affect me.
In my entire life I’ve never been laid off or fired.
I worked in Aerospace for many years and the guys laid off
were generally the guys you wanted to rid of in normal times,
but couldn’t because you needed the bodies, the manual labor.
I have yet to see a recession where prices went DOWN!
I don’t believe in negative growth, so this recession talk
is purely political, from a government and media dominated by Democrat operatives.
It is meaningless, except to Democrat low intelligence voters.
That is the real problem, the gorilla in the room, our Democrats.
That is the Millstone about our necks.
You are correct rellik except for negative growth… that’s not a recession – that’s a depression… and it’s a very real thing.
In a depression (and to a lesser degree, in a recession) cash is absolute king. There is a lesson there but I suspect you already understand it. 🙂
End all taxation on personal income under $250k earned as an employee.
With all the money in the hands of the earners, personal spending, thus corporate sales would go up 20%, and you could end all entitlements for those 18-62, because there would be millions of job openings.
Society would be worthy of existence when all earn, all work for their livelihood. The way things are society sucks, and it is the people, the bottom 50%’ers that are the problem.
I had to keep pulling their weight my entire working life.
I got no freebies.
Yet I see the young people today, their 48 inch bellies, their $$$$ in debt, time and money available for drugs sports and FOOD!! yet no one works a yobb.
Bert, you nailed it that time. I’m semi-retired now. Before I moved out of Memphis I also used to see young whales and blimps who could barely move around and knew they didn’t work but as you said they were drowning in debt, had all kinds of free time and money for food, sports, drugs, etc. It always burned me that some of my tax money was going to these freeloaders. I finally got into position where I could just say to hell with it all and relocated to the BOL. I’m not missing the city one damn bit. I’ll start working in one of the family businesses in Nov and putting in less hours than I used to. At 62 I think I’ve earned it. I’ve already paid most if not all of my dues. I’m sick of giving up a chunk of change in taxes every year for lazy scumbags who won’t do for themselves.
The Deplorable Renegade
I’m 1957 model here too. You described the visible parasites however the recipients of QE via banking bailouts with their associated bonuses we (the taxpayer) paid to them is unseen yet huge.
You succeeded, in this Communist country, without any corporate welfare being afforded to any degenerates, living the lap of luxury.
typo — in the lap of luxury
The management will usually be Communist royalty — an appointee or state interest. You’re telling NEETS that was a meritocracy, were productivity allows you to work through the ranks.
At present, you are not personally capable of offering a salary and a contract to any of these people, who you say, do not want a secure and honest job.
Where is it, now, and who is getting it? Do you have it?
Interest rates are raised on hopeful (to populists) news and lowered on bad news, expanding and contracting the currency supply in opposition to the will of the people.
The original justification for this system was to stabilize us against boom and bust cycles, except capital is forever booming and labor is forever busted.
It is a sorely-misguided person, intending to work faster than interest can be compounded, like the slave “earning” his freedom, in spite of the odious debts of his upkeep.
A President can tweak the economy but in an overall sense they are insignificant. The money supply direct via M1 or backdoor via M2, controlled by the bankers sets direction. Their meddling exhausts, crashes, recessions, depressions (a rose by any other name) occur and the aforementioned then resume.
One plus one hasn’t equaled two in some time.
The economy is not all that great.
I love flank steak, it’s low in fat, tastes great etc. I buy it whenever I can at a low price and it is the lowest priced steak money can buy.
I usually have been buying it for $5 – 6 a pound, today I paid $9/# today. It was a wakeup call. This is an alert moment.
Pack up on long term foods, it’s getting expensive.