Wall Street is getting seriously gloomy about the economy, with recession warnings mounting and stocks tumbling just as U.S. President Donald Trump prepares to fire up his reelection campaign machine.
Over just the last few of days, economists at Goldman Sachs, Morgan Stanley and Bank of America all warned that Trump’s bitter trade war with China is taking a bigger bite out of economic growth than expected.
The warnings came as stocks suffered another big dip on Monday, with the Dow closing off nearly 400 points, or 1.5 percent. The blue chip index closed at 25,897, over 700 points lower than it was in January 2018 before Trump’s trade fights began in earnest.
The collective wisdom now spreading across Wall Street is that no trade deal will be struck with China before the 2020 election; business investment will continue to sag; and a series of interest rate cuts from the Federal Reserve won’t be enough to juice more growth out of an economy now in its tenth year of expansion — the longest stretch in American history.
“It makes sense for everyone to be downgrading, because everyone assumed we’d have some kind of trade deal with China by now and we don’t,” said Megan Greene, an economist and senior fellow at Harvard’s Kennedy School of Government.
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