Stephen Moore, former economic adviser to the Trump White House, told Newsmax in a recent interview that he’s convinced that if former President Donald Trump had been reelected for a second term, America’s economy would not now be in what he described as a “mild recession.”
In the interview that aired on Aug. 25, Moore was asked to comment on the revised gross domestic product (GDP) numbers released earlier in the day, which confirmed that the U.S. economy contracted in the second quarter.
While the number was revised slightly upward to minus 0.6 percent from a prior estimate of minus 0.9 percent, the government data showed that America’s economy experienced negative growth for two consecutive quarters, the common rule-of-thumb definition for a recession.
Even though the two-quarter rule is not the official definition of a recession in the world’s biggest economy, numerous economists—including Moore—have insisted that the United States has, in fact, fallen into a recessionary downturn.
“We are in a mild recession right now, no question about that,” Moore told the outlet.
‘Getting Worse, Not Better’
What’s more concerning, however, is where the economy is headed, he added, pointing to deteriorating economic data in housing, manufacturing, consumer spending, and business confidence.
“I would have to say that things are getting worse, not better,” Moore said, arguing that if Trump had won reelection and his policies were guiding U.S. economic policy, the picture would be reversed.
“I believe that if we had just stuck with the Trump policies, the U.S. economy would be booming right now,” Moore told the outlet.
“There’s no reason why the U.S. economy isn’t in an incredible skyrocketing fashion, except for the fact that Biden has put in place all of these policies in taxing and spending and regulating that hurt economic growth,” he argued.
Moore’s view builds on previous remarks made to EpochTV’s “Fresh Look America” program, in which he said that if Trump were still in power, “we would have the economy flying high right now.”
Key to his thesis that the United States would be in a much better position economically under Trump policies is the fact that the former president sought to unlock domestic energy production, in contrast to Biden’s crackdown on fossil fuels.
Under Trump, the United States had low unemployment and low inflation at the same time, while enjoying energy independence, he said.
“Now we have a president who has to go hat in hand to the Saudis and beg them to produce more oil. It’s humiliating, it’s a threat to America’s national defense, it makes the country look weak,” he said.
Moore’s remarks come as inflation has soared to multi-decade highs, driven in part by spiking energy costs, prompting the Federal Reserve to hike rates to quell price pressures.
Markets are bracing for Friday’s key speech by Fed Chair Jerome Powell at the Kansas City Federal Reserve’s annual monetary policy symposium in Jackson Hole, Wyoming.
Last year at roughly the same time, Powell insisted that the inflationary jump would likely be “transitory,” a prediction he later acknowledged was wrong.
The Fed has since embarked on an aggressive tightening cycle to ease inflationary pressures, which have shown some signs of abating, along with mounting signals of economic weakness.
Despite a number of weak patches in the U.S. economy, the labor market remains resilient and inflationary pressures remain high, prompting Fed officials to send hawkish signals about the future path of monetary policy.
As the Fed seeks to shape market expectations, a number of Fed officials in recent days have sought to hammer home the point that they will push interest rates up and hold them high until inflation has been squeezed out from the economy.
Some analysts believe Powell will reinforce that stance in his much-anticipated speech in Jackson Hole.
“Many will have marked Fed Chair Jerome Powell’s speech today as the highlight of the week,” analysts at ING said in a note.
“A likely scenario is that he will endorse the retightening of financial market conditions and thus also the trend toward higher market rates of late, given that the Fed still is a stretch away from getting inflation under control,” they said.
Investors have pared back expectations that the Fed could pivot to a slower pace of rate hikes as inflation remains at an annual rate of 8.5 percent, well above the Fed’s target of 2 percent.
At the time of reporting, interest rate futures were implying a 62.5 percent chance of a 75 basis-point rate hike in September.
The Atlanta Fed’s interest rate probability tracker shows markets are expecting a peak in the federal funds rate at close to 3.8 percent in the first quarter of 2023, before pricing in rate cuts again.