Obama Fed Chair Throws Cold Water on Liberals' 'Trump Recession' Hopes
On Wednesday, the Dow Jones Industrial Average dropped more than 700 points and the yield on U.S. 30-year Treasury bonds fell to a record low, sparking fears of an imminent recession. Yet Janet Yellen, former Federal Reserve chairwoman under President Barack Obama, said it is unlikely the U.S. economy is headed into a recession soon.
"Historically, it has been a pretty good signal of recession, and it think that’s when markets pay attention to it, but I would really urge that on this occasion it may be a less good signal," Yellen said on Fox Business Network. "The reason for that is there are a number of factors other than market expectations about the future path of interest rates that are pushing down long-term yields."
Obama's former Fed chairwoman said the 10-year Treasury yield, which stood at 1.623 percent on Wednesday (below the 1.634 percent two-year yield), may not be a good signal for an upcoming recession.
When asked if the U.S. economy was headed into a recession, she said, "I think the answer is most likely no."
"I think the U.S. economy has enough strength to avoid that, but the odds have clearly risen and they’re higher than I’m frankly comfortable with,” she added.
Yellen's prediction may sour the hopes of liberals, who rushed to share the news of an upcoming "Trump Recession" on Twitter.
"Why did the Dow drop over 700 points this morning & why is [Trump Recession] trending? Because the yield on the 10-year Treasury Note broke below the 2-year rate. This inverted yield curve has historically signaled an approaching recession," Rep. Ted Lieu (D-Calif.) tweeted. Democratic star Rep. Alexandria Ocasio-Cortez (D-N.Y.) retweeted him.
"I’m going to give you a 30 year lesson... Democrats fix the economy Republicans f**k it up," HuffPost writer Tony Posnanski tweeted. "Stop being fooled by a racist liar. 2020 we have a lot of work to do."
Others mocked Trump for his bankruptcies, suggesting that a "Trump Recession" should not be surprising.
Some tweeted a clip from The Simpsons, in which President Lisa Simpson says, "we've inherited quite a budget crunch from President Trump."
It seems liberals are hoping for a recession, and Yellen's remarks may have dashed those hopes. Even so, these economic indicators are not good.
The U.S. economy has been overdue for a recession for a long time, and Trump's policies like the 2017 tax cuts may have staved it off. A quick recession and a strong economic bounce-back may be the best thing for Trump's 2020 prospects, but it is possible that the economy will continue to grow over the next two years.
Even if a recession comes soon, the remarkable thing is less that it happened under Trump but that it has not happened yet. Economic growth was extremely sluggish under Barack Obama and it seems Trump unleashed the economy. Under Trump, the economy has enjoyed its longest economic expansion in U.S. history. A short recession and a quick bounce-back would not erase that legacy.
Follow the author of this article on Twitter at @Tyler2ONeil.