On Wednesday, the stock market had its worst day this year when the bond market yield curve inverted, which usually signals a recession. This means that short-term U.S. bonds are now worth more than long-term bonds, meaning confidence in the economy long-term has tumbled. An inverted yield curve has predicted every recession in the last 50 years.
According to The Washington Post, the Dow Jones industrial average plummeted 800 points and growth has become sluggish in Germany, the United Kingdom, Argentina, and China. During the Great Recession, leaders around the world worked together to combat economic problems. Now, that teamwork is nowhere to be seen.
President Trump, meanwhile, insists that the economy continues to thrive while at the same time pushing blame for any failures on to the Federal Reserve Board Chair Jerome H. Powell.
Adding to the economic concerns, the U.S. government is careening into a massive deficit and business investment is slowing due to uncertainty resulting from Trump’s trade war.
White House officials are now concerned that the economy is weakening much more quickly than they expected. Instead of working on how to confront this issue, Trump has instead pushed blame on to the Fed.
On Twitter, Trump wrote: “China is not our problem, though Hong Kong is not helping. Our problem is with the Fed. Raised too much & too fast. Now too slow to cut…Spread is way too much as other countries say THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!”
Hours before the Twitter posts, Trump insisted that the inverted yield curve was a positive thing because there was “Tremendous amounts of money pouring into the United States. People want safety!”
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