World

Trump dismisses fears of a recession in US

By AAP Newswire

President Donald Trump says the US economy is "doing very well" and dismissed concerns of recession, after last week's steep drop in the financial markets.

"I don't think we're having a recession," Trump told reporters as he returned to Washington from his New Jersey golf club. "We're doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they're loaded up with money."

Larry Kudlow, Trump's top economic adviser, also played down fears of a looming recession and predicted the economy will perform well in the second half of 2019. In Sunday television interviews, he said that consumers are seeing higher wages and are able to spend and save more.

"No, I don't see a recession," Kudlow said. "We're doing pretty darn well in my judgment. Let's not be afraid of optimism."

A strong economy is key to Trump's re-election prospects. Consumer confidence has dropped 6.4 per cent since July. The president has spent most of the week at his golf club in New Jersey with much of his tweeting focused on talking up the economy.

Kudlow acknowledged a slowing energy sector, but said low interest rates will help housing, construction and auto sales.

He also defended the president's use of tariffs on goods coming from China. Before he joined the administration, Kudlow was known for opposing tariffs an economic analyst. He said Trump has taught him and others that the "China story has to be changed and reformed."

"We cannot let China pursue these unfair and unreciprocal trading practices," Kudlow said.

Democratic presidential candidate Beto O'Rourke said the US needed to work with allies to hold China accountable on trade. He said he fears Trump is driving the global economy into a recession.

"This current trade war that the president has entered our country into is not working," O'Rourke said. "It is hammering the hell out of farmers across this country."

Last month, the Federal Reserve reduced its benchmark rate - which affects many loans for households and businesses - by a quarter-point to a range of 2 per cent to 2.25 per cent. It's the first rate cut since December 2008 during the depths of the Great Recession. Federal Reserve Chairman Jerome Powell stressed that the Fed was worried about the consequences of Trump's trade war and sluggish economies overseas.

In return, Trump has been highly critical of Powell as he places blame for any economic weakness on the nation's central bank for raising interest rates too much over the past two years.

Trump acknowledged at least a potential impact from tariffs when he paused a planned 10 per cent hike for many items coming from China, such as mobile phones, laptops, video game consoles, and clothing, for the Christmas season.