Rudin Group / Flickr Steve Mnuchin...
Rudin Group / Flickr

Since August, the stock market has been continually falling, with tech stocks taking by far the biggest hit. In fact, the Nasdaq—which is tech stock-heavy—has fallen 22 percent since August. The drop appears to be fueled in large part by trade uncertainty, driven by the ill-advised Trump trade war. Economists are predicting the U.S. economy could very well be in recession again by 2020. It took the Obama administration eight years to build a strong economy and it’s taken Trump two years to drag us back down. In fact, the Dow Jones had the worst week since 2008 and stocks overall are headed for the worst December since the Great Depression. With trade uncertainty, the Fed raising interest rates, and the government shutdown, there are signs of troubled times ahead.

With that in mind, it’s sort of incredible what the Trump administration did in response. On Sunday, with no prompting whatsoever, U.S. Treasury Secretary Steve Mnuchin took a break from his plush, five-star vacation spot in Mexico (oh, the irony) to release a statement saying that he personally called the six largest banks in America to make sure they were totally cool with plenty of cash on hand. Mnuchin assured everyone the six largest banks had “ample liquidity for lending to consumer, business markets, and all other market operations.” (See the full statement below.)

Ummmm … hello? This was not a concern for the general public before this statement. What message did the Trump administration think they were sending when the Treasury secretary takes time out from his vacation, on a Sunday, to tweet a statement saying, “No need to panic, everything is fine”?

Needless to say, the statement caused many people to start wondering if the Trump administration might be looking at economic indicators the rest of us haven’t seen, and they are beginning to panic themselves.

The responses were swift and troubling, including an immediate drop when the markets opened on Monday morning. CNN reports executives at the largest banks were completely baffled and troubled by both Mnuchin’s calls and his public statement.

It was totally out of left field and an odd thing to do,” the person said, describing the timing of the call — on a Sunday before markets opened — as strange. All were taken aback by the public nature of Mnuchin’s tweet.
On Monday, shares in JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS), Bank of America (BAC) and Citi (C) all lost ground.
“This is the type of announcement that raises the question of whether Treasury sees problems that the rest of the market is missing,” Cowen & Co. analyst Jaret Seiberg wrote in a note to clients. “Not only did he consult with the biggest banks, but he is talking to all of the financial regulators on Christmas Eve. We do not see this type of announcement as constructive.”

Speaking of not constructive, even as the market remained volatile this morning, Donald Trump just couldn’t keep his mouth shut. Sitting in the White House instead of Mar-a-Lago because of a government shutdown he demanded, Trump further agitated the market by tweeting negatively about the Fed. Someone needs to take his phone away.

Attacking the Fed on Twitter on Christmas Eve caused yet another immediate drop:

Something is afoot with the Trump administration and the economic indicators they are looking at as we barrel into 2019 and head toward 2020. When Trump announced his candidacy, he made “economic anxiety” (and racism) the cornerstones of his campaign. The economy was healthy and growing throughout the 2016 campaign. What will 2020 look like for Trump if we are in another full-blown recession, one caused by his incompetent leadership? Will his followers abandon him when real economic anxiety sets in? Either way seems like a good time for all of us to tighten our belts and buckle up. We are on course to graduate from the Trump School of Economics now—and that’s a degree that usually ends in bankruptcy.

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This is a Creative Commons article. The original version of this article appeared here.


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