The Fed thinks economic growth will slow as Trump's 2020 re-election bid approaches - Recent News from USA
President Donald Trump in the Cabinet Room of the White House, December 13, 2018.

The Fed thinks economic growth will slow as Trump's 2020 re-election bid approaches

The Federal Reserve on Wednesday reinforced the notion that U.S. economic growth will likely slow as President Donald Trump’s 2020 re-election bid approaches.

While the central bank did not raise fears about an imminent recession, it projected a weaker economy in 2019 than Trump has grown used to this year. The president, who has often pointed to economic numbers as evidence of his success, may not have as much good news to highlight as voters get closer to deciding whether to put him in the White House for a second term.

On Wednesday, the Fed increased the target range for its benchmark funds rate by a quarter point to 2.25 to 2.5 percent. It marked the fourth rate hike this year. The increases have rattled investors and angered Trump. Stock markets fell following the bank’s decision and during Fed Chair Jerome Powell’s afternoon news conference.

As part of its decision, the Fed said “economic activity has been rising at a strong rate.” Still, its projections for future gross domestic product growth were likely not what Trump wanted to see. The Fed trimmed its GDP growth estimate for 2018 to 3 percent, down 0.1 percentage points from September, and cut its 2019 growth outlook to 2.3 percent, down 0.2 percentage points from its last meeting.

The Fed’s long-term growth estimate, however, ticked up to 1.9 percent from 1.8 percent.

Economists, executives and a broad swath of Americans have started to worry more about economic growth slowing. Respondents to the CNBC Fed Survey now see the highest chance of recession that they have during any point in Trump’s presidency.

A recession may not hit during Trump’s first term in office or during the heat of his 2020 re-election campaign. But the president, who is relatively unpopular compared with his predecessors and saw his Republican Party get clobbered in House elections this year even amid a strong economy, can ill afford economic damage.

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