WASHINGTON - It takes a lot to kill an economic expansion, typically requiring a major shock to bring growth to a halt and trigger a US recession.
This week investors signaled that moment may have arrived, and one big question is whether that shock has come from President Donald Trump's trade war or a mistake by policymakers at the US Federal Reserve.
Earlier on Wednesday, White House trade adviser Peter Navarro told Fox Business Network the US central bank should cut rates by half a percentage point "as soon as possible," an action he claimed would lead "to 30,000 on the Dow." Causing even more concern: The yield on the 2-year Treasury note briefly went above the yield on the 10-year Treasury note, the sort of "inversion" that, when it proves durable, has preceded prior US recessions.
At that point the threat of a recession seemed distant unless some sort of outside event intervened to throw the economy off course - something like the collapse of the dot-com stock market bubble ahead of the brief 2001 recession, or the implosion of the US housing and credit markets ahead of the more serious 2007-2009 Great Recession.
If Fed policy suddenly seemed out of step, it was perhaps inevitable given the difficulty of keeping up with Trump's whipsaw approach to trade policy, and the growing sense that the fallout may be deeper and longer lasting than expected.
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