Erratic Trump policies risk US recession, but the world is prepared

Most markets outside of America making the best out of chaos to stay on growth path

- Ovais Subhani

US President Donald Trump's policy zigzags have brought the world's largest economy to the brink, with markets flashing red and analysts sounding the alarm on the possibility of a recession that was unthinkable only weeks ago.

However, most markets outside of the US, including Singapore, are making the best out of the Trump-induced chaos. US stocks and its currency are in retreat, with analysts recommending investors flee Wall Street and seek opportunities in Europe and China.

After years of exceptional outperformance, the US stock market has lost US$4 trillion (S$5.3 trillion) in capitalization from the S&P 500's peak just in February, when Wall Street was cheering much of Mr Trump's agenda.

GDPNow, a closely watched real-time US economic gauge maintained by the Atlanta branch of the Federal Reserve, shows annualized growth in the first quarter shrinking by 2.8 per cent, a shock reversal from an expansion of 4 per cent it was tracking just a month earlier.

Mr Trump announced 25 per cent tariffs on Canada and Mexico soon after taking office, then suspended their implementation before reimposing them, and then taking back some of them—all within a month.

It isn't just investors and central bankers who have turned sour on recent developments in the US—Mr Trump's head-spinning back and forth on policy decisions since he took office on Jan 20 has left consumers bewildered too.

US consumer confidence—a gauge of consumer attitudes, buying intentions, holiday plans and consumer expectations for inflation—deteriorated at its sharpest pace in 3½ years in February, sliding to its lowest point in eight months, according to the US Conference Board, a non-partisan and non-profit business association.