Barack Obama's Economic Adviser Says Donald Trump Is World's 'Number One Risk Factor' to Economy

The economic adviser for former presidents Bill Clinton and Barack Obama described President Donald Trump on Wednesday as the "number one risk factor" for the economy and said that if Trump "simply did nothing, the entire US and global economy would be in stronger shape than it is now."

Speaking with MSNBC's Lawrence O'Donnell on Wednesday after U.S. stock markets suffered their worst day of the year, with the Dow Jones industrial average falling 800 points, or three percent, Gene Sperling offered searing testimony of how Trump has handled the economy.

"I think what we're seeing Lawrence, is that our biggest fear with President Trump isn't just economic nationalism, it is economic narcissism," said Sperling, the director of the National Economic Council for Obama and Clinton. "It is this kind of drunk driving type of economic management. Now, when you drive drunk, you don't always get into an accident, but you dramatically increase the chances of something very bad happening. Donald Trump inherited, like he inherited wealth from his dad, he inherited an economy that was solid, that was improving."

When Obama left office, the economy was performing well. In the last 19 months of Obama's term, the economy added 3.9 million jobs. In the first 19 months of Trump's term, the economy added 3.6 million jobs. Trump has regularly touted his handling of the economy, often pointing to unemployment which is near a 50-year low level, at 3.7 percent.

The global economy, however, now appears poised for an economic downturn. Analysts are pointing to Trump's trade policies, while he's blaming the Federal Reserve.

The president's attempt to restructure global trade relations, particularly focusing on the U.S.-China trade dynamic has infused the global economy with uncertainty. With the U.S. 10-year to 2-year bond yields inverting on Wednesday, global growth slowing and five of the world's largest economies veering toward recession, experts are offering dire warnings about a possible economic downturn.

"What we've also seen is this reckless type of management on the trade side," Sperling said. "This is something where there could have been a smart way to do it. I agree we should be tougher on China. I agree we should take some short-term hits. But this kind of reckless back and forth has now been such an assault to not just the US economy but the global economy that now the number one single risk factor in economics in the world is Donald Trump personally. That's why I say economic narcissism."
Trump has claimed that his trade policies will benefit U.S. workers. But the shifting relations has caused uncertainty in global economies, stunting growth.

Data released on Wednesday emphasized the global impact of Trump's protectionist measures. Germany's economy shrank 0.1 percent between April and June. Chinese factory output dropped to its lowest level in 17 years. While Trump has focused his tariff policies on China, this has affected Germany, whose major car makers received a third of their revenue in China, as Chinese consumers hesitate to make large purchases.

"When demand goes down around the world, it hurts our farmers, it hurts our steel makers, it hurts our auto producers, it hurts our economy. So the risk that exists right now in the economy––in the global economy and the U.S. economy––lies squarely, squarely on Donald Trump's reckless, drunk driving approach to economic management.

While the economy is flashing warning signs that have some investors panicking and have caused fear among the general public, an official recession likely won't hit within the next few months. The stock market predicts recession between 6 and 9 months in advance. Consumer confidence is high and housing starts, which have declined by double digits year-over-year before recessions dating to 1960 are still up from last year.

Stock market
Traders work before the closing bell at the New York Stock Exchange (NYSE) on August 14 in New York City. JOHANNES EISELE/AFP/Getty Images