- Economic data points to a recession, and no one should be surprised.
- Yes, it is late in our economic cycle, and it does matter. But President Donald Trump's policies are also to blame here.
- Trump promised to get economic thought and go full protectionist. Economists warned him that this would hurt the global economy, but he didn't listen.
- Feel free to pass the White House and scream "I told you so!"
- Visit the Business Insider website for more stories.  When Donald Trump became the 45th president of the United States, he vowed to start an economic experiment.
Ignoring the last decades of economic liberalization, multilateralism and transparency, Trump promised to shut down the economy, renegotiate our trade agreement nation by nation, and focus the US economy on a relatively small sector, manufacturing, which accounts for less than 20% of economy.
For some, this experiment was a refreshing turn from the steady ploy toward globalization that Americans have experienced for the last 50 years. For others ̵
Protectionism, as experts well know, is bad news. They reminded Trump that steel tariffs have only hurt the United States – but Trump beat them on our allies anyway. He was warned about his tax policy; to disrupt the North American Free Trade Agreement, our trade agreement with Canada and Mexico; about tearing up the Trans-Pacific Partnership, a major trade deal forged by the Obama administration and backed by members of both parties; and about confronting China alone. But Trump did it all anyway.
And this is how the world found out what happens when the most powerful country in the world takes 100 years of economic knowledge and flushes it down the toilet. Experiment, on.
Here we are, three years into the Trump administration's experiment, with a recession that is dying at the door of the US economy. How do we know?
- The annoying yield curve is constantly turning, showing us that investors are worried about what's around the corner for the US economy.
- For the first time in a long time, Wall Street waited with a breath for one digit, from the ISM Service Survey, which told us that 80% of the US economy had slowed to levels not seen since 2016.
- The service crisis came in the midst of a decline in production, which has been with us since last year and just reached its lowest point since 2009.
- People have lost interest in buying big ticket items like washing machines.
- Finance executives across the country feel more expensive than they have done in three years.
The number of jobs remains strong – even though hiring declines – and consumer confidence is still fairly steady. But let me remind you that there are hanging indicators. When a recession comes, the consumer is the last to know.
Running with scissors
Recessions are cyclical; it is a fact. But there are things you can do to speed them up, and the Trump administration has made every effort to do so. His policy has basically been the financial equivalent of running at breakneck speed with a pair of very sharp scissors.
Trump ran on a platform to ignore the rules of the economy and turn personal complaints into politics. Now we know what it can do for the most powerful economy on the planet.
The trade war has disrupted agriculture and production, tearing up supply chains and costing the government NOK billion in aid. Uneven policies have led Wall Street to exhaust and frustrate our allies. The world is now a place where the United States cannot be trusted, and it is a world where growth is slowing. Just about every respectable economist in the game told Trump that this would happen, but he and his allies did not want to hear it.
So now we are here, at a moment when the World Trade Organization says it could produce "a destructive cycle of indictment." When there is no trust between counterparts in markets and everyone gets desperate, it can have unintended consequences. Monetary and fiscal policy will shift as countries try to get used to a slower-growing world, which, according to the WTO, could "destabilize volatile financial markets" and "produce an even greater decline in trade."
Sometimes rules are rules for a reason.