ARI SHAPIRO, HOST:
At the White House this Christmas morning, President Trump delivered an annual message to U.S. troops overseas.
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PRESIDENT DONALD TRUMP: Hello, and merry Christmas. Very special people. Thank you very much.
SHAPIRO: Before that, the president spoke to reporters about the partial government shutdown, now in its fourth day, and the economy.
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TRUMP: I have great confidence in our companies. We have companies, the greatest in the world, and they're doing really well. They have record kinds of numbers. So I think it's a tremendous opportunity to buy.
SHAPIRO: While the president asks investors to buy, many are selling. The Dow saw its worst Christmas Eve close in history, and the S&P 500 is down 20 percent from its September peak. We're going to discuss what this all means for the economy more broadly with Catherine Rampell of The Washington Post. Hi.
CATHERINE RAMPELL: Hey. Great to be here.
SHAPIRO: Let's start with the latest, the Dow's worst Christmas Eve close ever. Analysts say this is now more than just a correction, possibly a bear market. At the same time, we often say the stock market does not equal the economy. So should people be worried?
RAMPELL: You are absolutely right to emphasize the fact that the stock market is not the economy. Nonetheless, there are a number of unforced errors that affect both the stock market and the economy - and we're seeing that in the numbers recently - including a lot of concern over the ongoing trade war, for example. We still have tariffs, of course, steel and aluminum tariffs, on products coming in from Canada, from Mexico, from lots of other countries.
So those kinds of factors filter through both to manufacturers who operate in the United States, farmers who are trying to sell their products abroad to China and other nations, as well as, of course, to the investors who hold stock in the companies that make those kinds of products.
SHAPIRO: OK. So on the one hand, there are worrisome signs with stocks, with trade and manufacturing, with tariffs. On the other hand, unemployment is around a 50-year low right now. So how do you balance those two things, and what does it mean for the overall picture of the economy?
RAMPELL: So right now the headline numbers for the economy - including unemployment, including GDP growth, things like consumer spending - they still look relatively strong. In some cases, historically strong, as you point out. The question is, I guess, how sustainable those numbers will be. We are in one of the longest expansions on record. So statistically speaking, you know, we are sort of overdue for a turn of some sort.
SHAPIRO: One of the most significant laws that the last Congress passed was this massive tax cut. How does that factor into the economic picture when you look at it today?
RAMPELL: Well, right now it looks like the tax cut gave us a nice, sort of one-time fiscal stimulus - both the tax cut and, of course, the increase in government spending that was passed earlier this year. And as a result, we've seen more money in consumers' pockets, their ability to spend more money. The question is how sustainable those consequences will be. And if you look at basically every single outside forecaster - outside of the White House, that is - they all say that the consequences of that one-time stimulus will fade.
SHAPIRO: When you put this all together - tariffs, stocks, unemployment, et cetera - are experts more optimistic or pessimistic looking ahead to 2019?
RAMPELL: I would say that they're worried. Most economists are not forecasting an immediate recession. And by immediate, I mean next year. If you actually look at this recent Wall Street Journal survey of Wall Street economists, more than half of them are expecting a recession by 2020. But again, we're very far into a recovery right now so maybe that's not so surprising.
SHAPIRO: That seems really striking that more than half of the economists in the survey think that within a couple years the U.S. could be in a recession.
RAMPELL: Yes. It is striking. In a sense, it's not all that surprising, given that we're about to break the record for longest expansion ever - ever recorded in history. So of course, at some point, the economy is going to turn. That's what business cycles do. That's why they're called cycles. The question is, you know, how worried should we be about that? What will ultimately push us into a downturn, and how equipped are we to handle that downturn when it inevitably comes? And honestly, that's what I'm much more worried about, given how much political dysfunction we've seen so far.
SHAPIRO: Catherine Rampell covers the economy for The Washington Post. Thanks so much.
RAMPELL: Thank you. Transcript provided by NPR, Copyright NPR.
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