As the stock market kicked off the week with a hefty sell-off — 600 points down on the Dow Jones industrial average — President Trump immediately blamed Democrats on Twitter: "The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!"
His finger-pointing could be a preview of how he will react to what many economists predict will be a period of slower economic growth, more market volatility and maybe even a recession.
Trump is presiding over the best economy in a generation, with strong growth and abundant job opportunities, but it wasn't enough to prevent midterm losses for his party.
Trump suffered the worst midterm performance in the House for a Republican president since 1974, in the aftermath of Watergate.
After adjusting for economic and stock market strength, it was the worst midterm performance for a president's party in a century, according to Michael Cembalest of JPMorgan Asset and Wealth Management.
"Based on the hand the GOP started with, they should probably have been able to retain the House. Sometimes, however, money can't buy you love," Cembalest wrote in a research note.
Most economists are predicting that the economy will be weaker — or even in a recession — by the time voters go to the polls in 2020. For Trump and the GOP, the economy was probably a tail wind in these midterms, but it could turn into a substantial head wind by then.
Campaigning during a recession is tough, as George H.W. Bush learned in his failed 1992 reelection bid. The economy had fallen into a light downturn in late 1990 and early 1991, enough to give voters pause — especially suburban women, a group that Trump's GOP struggled with in the midterms.
The president will have to decide: Does he take further action to boost growth, or does he blame others for any slowdown?
Pessimism is growing on Wall Street about future prospects for earnings and the economy.
More than a third of top economic forecasters now predict a US recession in 2020, according to the latest Blue Chip forecast, and 44 per cent of fund managers in the latest Bank of America Merrill Lynch survey expect global growth to slow in the next year, the worst outlook for the world economy since November 2008.
The list of head winds is expanding: higher borrowing costs, a strong dollar, a weakening global economy, an escalating tariff war, and fading fiscal stimulus from the tax cuts and extra government spending.
"Our forecast has [economic growth] stalling — that is, zero growth quarter on quarter — in the first half of 2020," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note to clients. "Gravity can't be defied forever."
What business leaders and Wall Street investors want is a swift resolution to the US-China trade war and possibly an infrastructure bill to infuse more cash into the economy late next year, just as the boost from the giant tax cuts passed last year fades. They want dealmaker Trump to come back with force in 2019.
But so far, Trump has been on the defensive, ramping up criticism of likely new House Speaker Nancy Pelosi (D-Calif.) for stalling his agenda and Federal Reserve Chair Jerome H. Powell, Trump's own appointee, for raising interest rates too quickly, the president says, and dampening growth.
Traders blamed the stock market drop Monday on the global slowdown and ongoing tariff woes as even Apple, long one of the strongest-performing companies, showed signs that its sales may be slipping.
Trump's top economic advisers sounded upbeat this week that deals can be done with China and Democrats in Congress, even though the president struck a more hostile tone on Twitter.
"The president has said he's more than willing to discuss, negotiate and talk to Ms. Pelosi if she becomes the speaker," Larry Kudlow, Trump's top economic adviser, said Tuesday on CNBC.
"We're looking at infrastructure in many different ways. The president is a former construction man, a real estate man."
Commerce Secretary Wilbur Ross echoed that sentiment at a Yahoo Finance All Markets Summit on Tuesday.
"The president is very keen to have an infrastructure program. The only real issue is how you pay for it," said Ross.
As for China, Trump and President Xi Jinping are scheduled to meet this month at the Group of 20 summit in Buenos Aires, but the two sides remain far apart on their demands.
"If Trump could pull off a trade deal with China where they would make real concessions, I think you'd see the market go through the roof and the economy would soar. All those people saying the economy couldn't last until 2020 would have egg on their face," said Stephen Moore, an economic adviser to the Trump campaign.
But Moore said it remains a "wild card" whether Trump will make such a deal with China.
For now, Trump's economic advisers say the president's reelection prospects are strong.
The White House is projecting 3 per cent growth for years to come, a contrast to most independent forecasters, who think the economy will slow to around 2 per cent growth by 2020 or possibly dip into a recession.
Greg Valliere, the chief global strategist at Horizon Investments, who writes a daily political newsletter, says talk of a recession is "grossly premature."
But he said Trump may feel pressure to cut deals if the stock market has a prolonged slide or the economic numbers come in softer than expected next year.
Unemployment is low, wages are growing somewhat, and consumer sentiment is at some of the highest levels in almost two decades.
Consumer spending drives the bulk of the US economy, so as long as most Americans remain upbeat about their financial situations, the prospects of staying out of a recession are good.
"Trump will have plenty at his disposal to get the economy stronger as he seeks reelection. He could go for more stimulus or cut a deal with China that would make the markets happy," Valliere said.
But even an infrastructure bill might not be enough to lift the economy after it has grown for almost a decade and as people look for signs of stress in anticipation of a downturn. The GOP tax cuts were supposed to spur a boom in business investment, but that came in at less than 1 percent in the third quarter of this year, a surprise to the White House.
Housing is already experiencing a slowdown as mortgage rates move higher and buyers dry up.
"There are early signs of a slowing economy already. Housing is a yellow light," said Stephen Gallagher, chief US economist at Societe Generale, who predicts a recession in 2020.
"If businesses pull back a little next year and hiring slows down, consumers will start to feel it. And then it's a vicious cycle: Business pull back and consumers pull back until the economy falls into a recession."
Election analysts say the economy usually plays a strong role in presidential election outcomes, although the 2016 election bucked that trend as Democrat Hillary Clinton wasn't able to win the electoral college despite unemployment under 5 per cent by the time voters went to the polls.
In this year's midterm campaign, Trump recognised that his tax cut wasn't resonating with voters and pivoted his message to immigration and cultural issues in the final weeks before the vote, a strategy he might employ again in 2020.