Coming Recession

Robert Reich in his substack post this morning predicts a coming recession and speculates that the Trump regime is purposefully planning it.

Economists at JP Morgan peg the chances of a recession at 60%. It's been growing slowly over the last few weeks and is now more likely than not.

What is behind the risk of recession is, of course, the Trump tariffs which impose a tax on imported goods. Consumers end up paying more for almost everything they buy, even if it is made in America.

President Trump is pushing Federal Reserve Chair Jerome Powell to lower interest rates to encourage spending, thus slowing or averting a recession. Powell won't do this because lowering interest rates will fuel inflation. He can't fight both inflation and a recesssion at the same time.

The main goal of the Federal Reserve is to control inflation. Last week Powell said "Our obligation is to keep longer-term inflation expectations well-anchored and to make certain that a one-time increasae in the price level does not become an ongoing inflation problem."

The Federal Reserve Board is set up as an independent body tasked with setting the "federal funds"interest rate which banks charge to each other. The Fed" as it's called for short is supposed to be an independent body; Trump has no business publicly (or privately) trying to influence the Board's decision on interest rate. It's designed that way for the good reason to keep politics out of the decision making. Trump is of course calling Powell's decision "PLAYING POLITICS".

So if interest rates remain steady and inflation continues to rise, a recession is likely.

Recessions are great opportunities for those with money to make even more. People with limited income are forced to sell shares or companies for whatever they can get for them to pay the rent and buy food. Those with money can buy them up at bargain basement prices and increase their wealth when the economy picks up again. A recession also gives a government an excuse to cut wages, government services, and environmental standards, all of which compound the problems of lower income people.

A recession early in Trump's first year is also politically beneficial. Trump is hoping that people will forget about it by the time the next election rolls around. Here is the formula: cause a crisis, blame your opponents, fix it, claim the credit.

But I'm not confident that this recession will turn around by 2028, and probably not by the 2026 midterm elections. Major recessions can take 5-10 years to recover.

Source

https://robertreich.substack.com/p/why-trump-and-his-billionaires-welcome