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The stock market slumped today after a report that a mini trade deal between the U.S. and China may not be finalized anytime soon. The Dow Jones Industrial Average tumbled more than 250 points after Reuters reported that negotiations over a phase one trade deal could drag into next year. Markets pared their losses later in the day, and a White House spokesman insists progress towards a deal is being made. But with trade tensions weighing on the U.S. economy, President Trump is once again trying to blame the Federal Reserve. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: President Trump often treats the stock market as a scoreboard of his personal performance, especially when stocks are up. Speaking to a business audience in New York last week, Trump boasted the Dow has jumped more than 50% since the 2016 election, and the Nasdaq's gains are even bigger.
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PRESIDENT DONALD TRUMP: And if we had a Federal Reserve that worked with us, you could have added another 25% to each one of those numbers. I guarantee you that.
HORSLEY: Trump has complained repeatedly that the Fed was too quick to raise interest rates last year and too slow to cut them this year. While the central bank has cut rates three times since July, Trump notes other countries have done more to encourage borrowing, in some cases, even pushing interest rates below zero.
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TRUMP: Give me some of that.
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TRUMP: Give me some of that money. I want some of that money. Our Federal Reserve doesn't let us do it.
HORSLEY: Trump renewed that argument this week when he summoned Fed Chairman Jerome Powell to the White House for a meeting, where the president says he protested the level of interest rates. Trump described the meeting with Powell as cordial, but Kathy Bostjancic of Oxford Economics warns the president's tone could change quickly.
KATHY BOSTJANCIC: In some sense, it looks like he's setting the Federal Reserve up as the fall guy if the economy does go south.
HORSLEY: One of the biggest weights on the economy has been the president's own trade policy, which Bostjancic says has paralyzed business investment while also depressing exports and manufacturing. At its last meeting in October, the Fed's rate-setting committee cut interest rates by a quarter percentage point but also signaled that's likely to be the last cut for a while, unless the economy worsens. Powell told lawmakers last week the central bank will take its cues from the economy not the president's browbeating.
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JEROME POWELL: Politics plays absolutely no role in our decisions. We use the best data, the best analysis we can muster. We're human. We'll make mistakes, but we won't make mistakes of character or integrity.
HORSLEY: Economic growth is already slowing to an annual rate of less than 2% during the summer and fall. Many forecasters expect even slower growth in the final months of this year. While the Fed is likely to leave interest rates where they are in December, Bostjancic says conditions may have changed by the spring of the presidential election year.
BOSTJANCIC: Our view would be that as we get into 2020, the data is going to be disappointing in that there would be another rate cut, but it wouldn't come until the March meeting.
HORSLEY: Unless a preliminary deal is struck with China by mid-December, the administration is threatening to impose new tariffs on another $160 billion worth of imports, including popular consumer items like cellphones and laptops. At a Cabinet meeting this week, Trump told reporters he's feeling no pressure.
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TRUMP: If we don't make a deal with China, I'll just raise the tariffs even higher.
HORSLEY: Even if the U.S. and China do reach a partial deal, analysts say trade tensions are likely to linger in the New Year. That would be a drag on the U.S. economy. But if the slowdown gets bad enough, the Fed may be forced to cut interest rates like the president wants.
Scott Horsley, NPR News, Washington.
(SOUNDBITE OF BRIAN REITZELL AND ROGER JOSEPH MANNING JR'S "ON THE SUBWAY") Transcript provided by NPR, Copyright NPR.
