'Temporary pain': Fox guest says recession may be looming — but Americans will be better off
President Donald Trump's policies are already having a negative effect on the economy and one analyst believes a recession could be around the corner if downward trends in financial markets and employment continue.
However, one guest on Fox Business host Charles Payne's "Making Money" insisted in a Wednesday segment that even if an economic crash happens on Trump's watch, Americans will be better off in the long run. The Independent's Charles Baragona posted a clip of economist Danielle DiMartino Booth arguing that even if the Trump administration's budget cuts and mass firings initially cause economic havoc, the potential rebound would justify it.
"We have to loo back at history, right? Ronald Reagan was remembered as one of the best presidents in history. People forget that when he came into office in 1981 that he slashed federal headcount and actually pout the economy back into the double-dip recession of 1980 and 1981," Booth said. "That did not last for long, and deregulation and other things that paralleled the beginning of his administration ended up taking over and brought the economy out of recession. We might just be in for some short-term pain here, which the prior administration was not willing to take and put the country on much weaker footing because of it."
READ MORE: Economists fear Trump's mass layoffs will trigger 'deep, deep recession' — and soon
"No doubt about it, and I agree with you 1,000%," Payne said. "When you change something that's like this, a lot of cash floating around, now maybe there's a little temporary pain."
As Booth mentioned, Reagan presided over a recession early on in his presidency. While the U.S. economy shrank between January to July of 1980 (during the final months of Jimmy Carter's presidency), it briefly rebounded before plunging back into a recession between July of 1981 and the end of 1982. According to Pew Research, the unemployment rate reached 10.8% in December of 1982.
While Booth argued that Reagan led the economy back from recession through deregulation, The Week's Jeff Spross reported in 2016 that Reagan actually bolstered the economy by increasing government spending. That higher level of spending was a sharp departure from Reagan's stated ideology of shrinking the government and cutting spending.
"Over the 24 months that followed the start of Reagan's recovery, government spending per person — combining federal, state, and local levels — grew almost 15 percent," Spross wrote. "More than anything, Reagan planted the seed of the idea of small government as an ideological goal, but it never bore fruit on his watch ... So Reagan may have presided over an enviable recovery with an enviable increase in government spending. But he arguably also helped usher in the grand ideological reorientation in American politics that gave us the new era of stagnant spending."
Watch the segment below, or by clicking this link.
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