Trump’s prediction of ‘massive recession’ puzzles economists

Donald Trump’s prediction that the U.S. economy was on the verge of a “very massive recession” hit a wall of skepticism on Sunday from economists who questioned the Republican presidential front-runner’s calculations.

In a wide-ranging interview with the Washington Post published on Saturday, the billionaire businessman said a combination of high unemployment and an overvalued stock market had set the stage for another economic slump. He put real unemployment above 20 percent.

“We’re not heading for a recession, massive or minor, and the unemployment rate is not 20 percent,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

The official unemployment rate has declined to 5 percent from a peak of 10 percent in October 2009, according to government statistics. But a different, broader measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment is at 9.8 percent.

Coming off a difficult week on the campaign trail, in which he acknowledged he made a series of missteps, Trump’s comments to the Washington Post might be some of his most bearish on the economy and financial markets.

“I think we’re sitting on an economic bubble. A financial bubble,” he said.

While calling it a bubble might be a stretch, the fall in corporate profits and the recent rally in stock prices has pushed up the market’s valuation, and stocks on balance are about 15 percent pricier at the moment than their long-term average valuation.

But a cataclysmic economic downturn originating in the United States appears to be a remote possibility.

“There is a very low probability of a massive recession, less than 10 percent,” said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo. “If it happens, it would be because of what is happening overseas, especially in China and Europe.”

While some economists agreed that the stock market may be overvalued, few saw that as foretelling a recession.

“Nobody can predict what the stock market is going to do,” Rajeen Dhawan, director of Economic Forecasting Center at Georgia State University, said. “I cannot predict a stock market crash, so I cannot predict a recession. I don’t see any of the reasons for a recession going forward unless there is a huge problem with the market or there is some catastrophic world event which is beyond the scope of economics.”

The Democratic National Committee criticized Trump for making his remarks, saying they “undermine our economy.”

Trump’s success with voters, despite sometimes saying things only to contradict them later, has also alarmed many leading figures within his own party. Some of them are openly plotting to try to prevent him from becoming the nominee at the party’s national convention in July.

Reince Priebus, the Republican National Committee chairman, said on Sunday that voters were “afraid” of their economic situation when asked about Trump’s remarks on CNN’s ‘State of the Union’ show.

“When people are afraid and when they’re angry, sometimes people say things that they regret,” he said, apparently referring to Trump’s remarks. “The truth is that people are concerned about the future, and every candidate is going to communicate their message differently.”

He also played down speculation that party leaders will seek to dislodge Trump by helping someone who is not yet even a declared candidate prevail at the convention, which becomes governed by complicated voting rules if no candidate arrives with a clear majority of votes.

“I think that our candidate is someone who’s running,” Priebus said, referring to Trump, U.S. Senator Ted Cruz of Texas and Ohio Governor John Kasich. The candidates will next face voters on Tuesday in Wisconsin, where recent polls tend to show Cruz holding a small lead over Trump.

(Additional reporting by Richard Cowan and Susan Cornwell; Writing by Jonathan Allen; Editing by Mary Milliken and Jonathan Oatis)

State Department says halts review of Clinton emails at FBI request

The U.S. State Department has suspended plans for an internal review of whether classified information was properly handled in former Secretary of State Hillary Clinton’s emails at the request of the FBI, a spokeswoman said on Friday.

Clinton, the front-runner in the race for the Democratic Party nomination in the Nov. 8 presidential election, has apologized for using a private email server for official business while in office from 2009 to 2013 and said she did nothing wrong. The Federal Bureau of Investigation is probing the arrangement.

On Jan. 29, the State Department said 22 emails sent or received by Clinton had been upgraded to top secret at the request U.S. intelligence agencies and would not be made public as part of the release of thousands of Clinton’s emails. It said that none of the emails was marked classified when sent.

At the time, the department also said it would conduct an internal review on whether the information in the emails was classified at the time it passed through Clinton’s private clintonemail.com account run on a server in her New York home.

The State Department consulted the FBI about this in February, and in March the law enforcement agency asked the State Department to halt its inquiry.

“The FBI communicated to us that we should follow our standard practice, which is to put our internal review on hold while there is an ongoing law enforcement investigation ,” State Department spokeswoman Elizabeth Trudeau told reporters.

“The internal review is on hold, pending completion of the FBI’s work,” she added.” We’ll reassess next steps after the FBI’s work is complete.”

A U.S. State Department official who spoke on condition of anonymity said the State Department had really only done “administrative work” on its review but had held off while waiting for a response from the FBI.

“It took a little bit of time for the FBI to respond to our request for advice and in the interim we did not pursue the review out of prudence,” said the official, who declined further comment on the State Department review.

The government forbids handling of classified information, which may or may not be marked that way, outside secure government-controlled channels, and sometimes prosecutes people who remove it from such channels. The government classifies information as top secret if it deems a leak could cause “exceptionally grave damage” to national security.

Two judges have allowed a group suing for Clinton’s records to seek sworn testimony from officials. On Tuesday, one judge said there was “evidence of government wrongdoing and bad faith” over the arrangement.

Trump struggles to contain abortion fallout as White House rivals pounce

Republican front-runner Donald Trump’s campaign sought on Thursday to contain the fallout from his comments on punishing women for having an abortion, characterizing the flap as a “simple misspeak” as his White House rivals pounced on the controversy.

The billionaire businessman rowed back rapidly on Wednesday from his statement that women should be punished for having abortions if the procedure is banned in the United States. The comments triggered a flood of rebukes from both sides of the abortion debate, and his campaign tried to address the repercussions.

“You have a presidential candidate that clarified the record not once but twice,” Trump spokeswoman Katrina Pierson told CNN, describing the initial comments as a “simple misspeak.” She described Trump as “pro-life with exceptions” and pointed to Trump’s two statements that followed the MSNBC interview as an accurate depiction of his views.

“We shouldn’t make this a 24-hour headline when we have things like terrorism going on in the world,” she said.

Trump, leading in the race to win the Republican nomination for the Nov. 8 presidential election, pulled back from his initial comments within an hour, first issuing a statement that U.S. states should handle abortion issues and later saying doctors who perform abortions are the ones who should be held responsible.

Trump’s latest controversy threatened to further erode his standing with women voters, many of whom have been offended by his use of vulgarities and insulting language to describe women during the presidential race.

The abortion flap erupted as Trump campaigned in Wisconsin ahead of the state’s critical primary on Tuesday. An opinion poll released on Wednesday showed Trump’s top rival, U.S. Senator Ted Cruz of Texas, has moved ahead of him by 10 percentage points in Wisconsin.

Trump visited Washington on Thursday for a private meeting hosted by his top backer in the capital, U.S. Senator Jeff Sessions of Alabama. Critics have questioned Trump’s suitability to be commander in chief after a series of controversial foreign policy statements.

In recent interviews, Trump has declared NATO obsolete, said Saudi Arabia is too dependent on the United States and said Japan and South Korea may need to develop their own nuclear programs because the U.S. security umbrella is too costly to maintain.

In the same MSNBC town hall where he made the abortion comments, Trump refused to rule out the potential use of nuclear weapons in Europe or the Middle East to combat Islamic State militants. “I would never take any of my cards off the table,” he said.

Many establishment Republicans have labored to block Trump from the Republican presidential nomination at the July convention in Cleveland, worried that he will lead the party to a broad and overwhelming defeat in November.

Trump’s Republican rivals said his abortion comments were just the latest in a series of controversies that raise questions about his suitability for the White House.

“It just shows that he’s really not prepared to be president of the United States,” Ohio Governor John Kasich told reporters at a New York news conference arranged so that he could address the controversy.

Kasich said the president should not be constantly rowing back on a series of “wild-eyed suggestions.”

“I have to tell you that as commander in chief and leader of the free world, you don’t get do-overs. You need to be able to get it right the first time,” Kasich said.

Opposition to abortion, which was legalized in a Supreme Court ruling more than 40 years ago, is a central plank in the platform of most conservative politicians. But conservatives have questioned whether Trump, who once supported access to abortions, is sincerely committed to his anti-abortion stance.

Cruz said on Wednesday that Trump had clearly not thought through the issue and later called his comments “unfortunate” and “wrong.”

(Writing by Susan Heavey; Editing by Doina Chiacu, Frances Kerry and Jonathan Oatis)

Draft of Puerto Rico legislation could be improved: White House


The draft bill introduced in the U.S. Congress on Tuesday to steer Puerto Rico through its economic crisis represents a constructive, good-faith effort but could be improved, the White House said on Wednesday.

At a daily briefing, White House spokesman Josh Earnest told reporters the bill could be improved by adding a mechanism to boost oversight of Puerto Rico’s government and by expanding the earned income tax credit.

(Reporting by Roberta Rampton and Susan Heavey; Writing by Megan Cassella; Editing by Dan Grebler)

Trump campaign manager charged with battery, Cruz wins Walker backing

U.S. Republican presidential front-runner Donald Trump’s campaign manager, Corey Lewandowski, was arrested and charged with misdemeanor battery in Florida on Tuesday, the latest chapter in a raucous White House race marked by threats, insults and physical confrontations.

Police in Jupiter, Florida, charged Lewandowski, 42, with intentionally grabbing and bruising the arm of Michelle Fields, then a reporter for the conservative news outlet Breitbart, when she tried to question Trump at a campaign event on March 8.

“Mr. Lewandowski is absolutely innocent of this charge,” Trump’s campaign said in a statement. “He will enter a plea of not guilty and looks forward to his day in court. He is completely confident that he will be exonerated.”

Campaign rallies for Trump, the billionaire businessmen who leads the race to become the Republican candidate in the Nov. 8 presidential election, have been marked by rowdiness and occasional clashes between protesters and supporters or security personnel.

Trump’s pugnacious campaign style, which includes personal insults directed at rivals and scathing criticism of protesters, has been criticized for encouraging physical altercations at his rallies.

The real estate mogul leads remaining rivals Ted Cruz, a U.S. senator from Texas, and Ohio Governor John Kasich in polls and in the number of delegates to the nominating convention, despite a concerted effort by the Republican establishment to stop him out of fear he will lead the party to defeat in November.

Cruz picked up an endorsement on Tuesday from Wisconsin Governor Scott Walker ahead of the state’s primary next week. Walker, who dropped out of the presidential race earlier this year, said he backed Cruz because he was a principled constitutional conservative.

“To me, I’m all in,” Walker said in a radio interview on WTMJ radio in Milwaukee, adding that he was not endorsing Cruz in an attempt to stop Trump. He said he planned to campaign for Cruz throughout the state.

“I just fundamentally believe if you look at the facts, if you look at the numbers, that Ted Cruz is in the best position by far to both win the nomination of the Republican Party and to then go on and defeat Hillary Clinton in the fall this year,” Walker said, referring to the Democratic front-runner.

Walker joins a number of other more mainstream Republicans who have backed Cruz as the best alternative to Trump, who has racked up a strong delegate lead but alienated many party leaders with his harsh views on immigration, Muslims and women.

Trump defended Lewandowski after he was charged on Tuesday. “Look at tapes – nothing there!” Trump said on Twitter, calling Lewandowski “a very decent man.”

Police released a video of the incident showing Fields walking alongside Trump and trying to question him. Lewandowski is seen grabbing her arm and pulling her backward. Previous videos of the incident had been obscured by people in the crowd.

At the time, Lewandowski called Fields “delusional” and said he never touched her.

He was charged with simple battery, defined under Florida law as intentionally touching or striking a person against their will. For a first offense, it is a misdemeanor in the first degree, which carries a maximum sentence of one year in prison or a fine of $1,000.

    A court date was set for May 4, according to the police report. Jupiter police said Lewandowski turned himself in to police, and he was issued a notice requiring him to appear in court and then released. He was not booked into the jail.

Trump’s rivals said Lewandowski’s arrest was a reflection of the campaign he worked for.

“Unfortunately, this abusive behavior seems to be part of the culture of the Trump campaign. Personal attacks, verbal attacks and now physical attacks have no place in politics or anywhere else in our society,” said Cruz spokeswoman Alice Stewart.

Kasich’s senior adviser, John Weaver, said on Twitter that “campaigns reflect the character of the candidate and if this person was on our campaign he would have been fired long ago.”

    Lewandowski’s lawyer, Scott Richardson of West Palm Beach, Florida, declined to comment on whether his client would step down as campaign manager. Lewandowski will also be represented by Kendall Coffey, a Miami lawyer, the campaign said.

    Fields resigned from Breitbart less than a week after the incident, citing what she said was the online news outlet’s refusal to stand behind her amid the allegations.

(Additional reporting by Ginger Gibson, Steve Holland, Megan Cassella in Washington, Jonathan Allen in New York; Editing by Jonathan Oatis)