Yesterday WDTLAY posted about Trump’s farcical promise to eliminate the national debt in his eight years as President. In that same interview in the Washington Post he predicted a “very massive recession.”
He cited high unemployment and an overvalued stock market as a “financial bubble,” with a serious recession looming. “First of all, we’re not at 5 percent unemployment. We’re at a number that’s probably into the twenties if you look at the real number,” he said in regard to the unemployment rate of 5% released by Bureau of Labor Statistics. A broader measure of unemployment that includes part time employees and those that have become discouraged and stopped looking for work is pegged at 9.8%.
The above graph, from the Bureau of Labor Statistics, shows that unemployment is approaching its pre-recession lows of 4.4%, though currently at 5%.
In an article at Huffington Post, Harm Bandholz, chief U.S. economist at UniCredit Research, said “We’re not heading for a recession, massive or minor, and the unemployment rate is not 20 percent.”
Many economists would agreed that the stock market may be in a period of slight overvaluation due to the recent rally. The market as a whole has been estimated to be 15% higher than its long term averages, but hardly a catastrophic overvaluation that Trump’s hyperbolic statements would suggest.
In an article at CNBC, Rajeen Dhawan, director of Economic Forecasting Center at Georgia State University, said “I cannot predict a stock market crash, so I cannot predict a recession. I don’t see any of the reasons for a recession going forward unless there is a huge problem with the market or there is some catastrophic world event which is beyond the scope of economics.”