The Trump Effect

From CNBC:

Robert Shiller: Recession likely years away due to bullish Trump effect

Nobel-prize winning economist Robert Shiller believes a recession may be years away due to a bullish Trump effect in the market.

According to the Yale University professor, President Donald Trump is creating an environment that’s conducive to strong consumer spending, and it’s a major force that should hold off a recession.

“Consumers are hanging in there. You might wonder why that would be at this time so late into the cycle. This is the longest expansion ever. Now, you can say the expansion was partly [President Barack] Obama,” he told CNBC’s “Trading Nation” on Friday. “But lingering on this long needs an explanation.”

Shiller, a behavioral finance expert who’s out with the new book “Narrative Economics,” believes Americans are still opening their wallets wide based on what President Trump exemplifies: Consumption.

“I think that [strong spending] has to do with the inspiration for many people provided by our motivational speaker president who models luxurious living,” said Shiller.

Despite Shiller’s optimistic stance, he cautions not everything is rosy in the economy. His Shiller PE Ratio, also known as CAPE, tracks the price-to-earnings ratio based on average inflation-adjusted earnings over the last 10 years. He cautions it’s still at a concerning level.

“I’m not saying that I’m so bullish because I have a CAPE ratio that is bearish,” said Shiller, who predicted on “Trading Nation” last March there was a 50% chance the economy would tip into a recession within 18 months.

Yet, he’s sticking with the idea that the economy and markets should have a lot of runway left for gains if President Trump remains in office due to his pro-spending, pro-business narrative.

Shiller contends the next recession may not hit for another three years, and it could be mild.

“Let’s not make the mistake of assuming it’s right around the corner,” Shiller said. “If the economy is strong, which is what he built is case on, ‘make America great again,’ he has a good chance of getting re-elected.”

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15 Responses to The Trump Effect

  1. dentss dunnigan says:

    First …

  2. ExEssex says:

    I think Trump is done after one term either he’s removed from office
    Or he is defeated. He is a terrible leader and everyone knows it.

  3. grim says:

    And yet the sun rises, economy is great, apocalypse has not come.

    I think what this really illustrates is the meaninglessness of the American Presidency and the American Government.

    Leader of the free world? Right.

  4. Fast Eddie says:

    So, some are hoping Trump gets defeated because it has to do with ethics?

    LOL! Okay.

  5. ExEssex says:

    The world and the Country both need strong, sensible, American leadership.
    Trump is a grifter, devoid of leadership, and with no redeeming qualities.

  6. The Great Pumpkin says:

    Wow, Sch!ller is now jumping on the Pumpkin economic train?! Beat you to it by a mile, Mr. Sch!ller. Glad you are waking up and smelling the coffee.

    Remember who said it first before any expert…years before them. Greatest economic boom of our lifetime.

  7. ExEssex says:

    See, it’s Now pumpkins world. Just in time for Halloween .

  8. JUice Box says:

    “50% chance the economy would tip into a recession within 18 months.”

    378 days until the election. Schiller’s prediction means no recession before the election, as it’s still years away.

  9. The Great Pumpkin says:

    Like lemmings, here they come.

    “Worried about an imminent recession or trade wars? I believe the current market cycle could extend another four years”

    “Five more years for this cycle, redux
    Even amid talks of recession and trade concerns, this cycle still seems to have some legs”

  10. D-FENS says:

    Some iphone XR’s now being assembled in India near Chennai instead of China.

    A report last week said that a Foxconn facility had begun making the iPhone XR in India, and a new report today backs this.

    The Wall Street Journal’s Newley Purnell supported the report with a tweeted photo of an iPhone XR box printed with “Designed by Apple in California, Assembled in India”…

    The specific mention of the XR is part of a more general Wall Street Journal report on India’s push to attract manufacturers to move production there, given continued uncertainty in China

  11. D-FENS says:

    Plans to make iphone 11 there also.

    The company has just started commercial production of the iPhone XR locally at the Foxconn facility near Chennai after undertaking trials for several weeks, reflecting a move up the manufacturing value chain in India. Following this, Apple plans to start making the latest iPhone 11 series. Making the iPhone XR involves a higher level of technical skill, the executives said. Apple will export the devices to other markets after having tested the waters with the export of iPhone 6s and 7 models to Europe in the past few months.

    While Apple will be able to save around 20% in import duty through local manufacturing of the iPhone XR, the executives said this won’t lead to any price drops. Apple hasn’t cut prices on any of its locally made iPhones.

    Apple now has two of its big global contract manufacturers operating in India. Before Foxconn, Taiwan’s Wistron had started iPhone assembly in India near Bengaluru in 2017 but this was limited to older models.

    The US and China are said to be entering into a trade deal under which Washington is to suspend a proposed tariff escalation on Chinese imports that would have hit Apple, which assembles most its iPhones in that country. The ramp-up of India manufacturing will allow Apple to have an alternative base and derisk its production strategy, said the executives cited above.

  12. The Great Pumpkin says:

    What did I always say when expat would ask for evidence to support my call. Told him over and over, the economy is driven by consumption at a rate of 70%. Told him that an even bigger demographic group than the boomers was heading towards peak spending years as they get married and start families. I was told they wouldn’t start families or move out of Hoboken for places like Wayne. Well, guess what’s happening…

    “I say that while acknowledging that the weakness in manufacturing in the US, and for that matter everywhere, is self-evident. This was a sector that was suffering and slowing because of the withdrawal of policy support, and it got hit over the head with a two-by-four by the Trump trade conflict. The fact that it hadn’t slowed more was, in itself, a surprise. Given the easing of financial conditions and the impact of that on some sectors, manufacturing may stabilize, but the ongoing trade conflict will remain an issue.

    The strength of the consumer economy may keep things going

    The manufacturing slowdown is still only one small part of the story. The consumer segment of the economy continues to do well. In the US, and surprisingly in most large economies, low unemployment and improving incomes continue to support consumption. In fact, given relatively high savings rates, still decent income growth, and high household net worth, consumption will likely continue to be supported even if employment growth slows down.

    The bottom line is that manufacturing is a drag and the trade conflict is not helping, but there is enough support in the consumer economy for a recession to be still very unlikely, in my view.”

  13. The Great Pumpkin says:

    If you guys weren’t blinded by pure hate, you would see what the pumpkin sees…The Great Pumpkin is coming.

  14. leftwing says:

    Yeah, see y’all some time next week.

    I can’t deal with this fool any longer.

    Can’t we ban him? Hasn’t he violated something, somewhere?

  15. Libturd, seen crazy things done with ping pong balls. says:

    Don’t feed the lying troll.

Comments are closed.