Utah’s junior senator believes the U.S. is not headed for a recession but “we’ll see with time.”
Speaking at the Wasatch Business Series last week in Millcreek, U.S. Sen. Mitt Romney acknowledged that “we’re always sort of on the lookout for those things that might cause people to run like lemmings in such a way that we all pull back and cause our country to have a rough spell.”
“It’s probably easy to say yes,” Romney said about predicting an economic downturn, “but I don’t think that’s the case. My own view is, we’re not headed for a recession. Again, don’t take that to the bank because, again, irrational behavior is at hand here.”
Romney prefaced his remarks by saying, “I do this with some trepidation,” because recessions are the product of irrational behavior and thus difficult to predict — the latter comments echoing those made by former Federal Reserve Chairman Alan Greenspan.
Sometimes, Romney said, something happens in an economy and people then “pull back” by not buying equipment or software, not hiring extra workers, or holding off on buying property. “And if that happens all at the same time for a lot people, you have a recession,” he said.
The current concerns stem from an inverted yield curve — when long-term borrowing rates become cheaper than short-term rates — which recently happened in bond markets and often is a signal of a pending economic downturn or recession. Already, several nations are seeing that inversion and their economies are slowing, Romney said.
But Romney listed several attributes that shield the U.S. from a recession. Corporate tax cuts mean U.S. corporations — big and small — now have more money to spend and are using it to buy equipment, hire people, pay more dividends or provide payments to owners, he said.
Such a stimulative effect also has resulted from the nation taking in $3 million in taxes but spending $4 trillion.
“In your personal life, if you could spend 33 percent more than you take in and not have to pay it back, why, you could live pretty darn well, and we’re doing that as a country,” Romney said, noting that the U.S. is borrowing from the Chinese and others and is spending it. “And that spending allows us to have a little stronger growth than we otherwise would have,” he said.
Another element at work is that the U.S. has made it easier for companies that had left the U.S. to avoid taxes, to come back.
“So we’ve put a lot of gasoline, if you will, on the economic fire,” Romney said. “And my own belief is we’ll probably continue to have growth in our country and not fall into recession even though I think other parts of the world are going to have a recessionary environment. I certainly hope that doesn’t happen, meaning I hope other parts of the world don’t suffer like that, but we’ll see with time.”
Nearly three of four economists believe the U.S. will have a recession by 2021, according to a survey by the National Association for Business Economics. President Donald Trump said last week that “we’re very far from a recession.” Still, the president confirmed that he was weighing the idea of a payroll tax cut to boost the economy.
Trump also tweeted that the news media is trying to create a recession, “even though the numbers & facts are working totally in the opposite direction.”
Politico reported that Mick Mulvaney, Trump’s acting chief of staff, told Republican donors last week that if the nation were to have a recession, it would be “moderate and short.”
The Wasatch Business Series event was hosted by the Millcreek Business Council with support from the Utah LGBTQ+, South Salt Lake, Murray Area and Holladay chambers of commerce; the Sugar House Chamber; and the Utah Independent Business Coalition.