Businesses are getting nervous, and that could make a recession a reality

Updated 1944 GMT (0344 HKT) March 12, 2019

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Mark Zandi is chief economist of Moody's Analytics. He was an advisor to John McCain's 2008 presidential campaign and supported Hillary Clinton in the 2016 presidential election. The opinions expressed in this commentary are his own.

Perspectives mark zandi

The economy is throttling back. Way back. That's the message in the near stall out of job growth last month. Job creation probably isn't as bad as February's disappointing numbers suggest — unusually poor weather played a role in limiting job growth to just 20,000 — but it is weaker than just a few months ago. Businesses are nervous, and sentiment is at risk of breaking if anything goes wrong.
And plenty could go wrong. A recession could materialize swiftly if businesses lose faith, and there is a good chance they will. While businesses aren't running for the bunkers just yet, there's a trade war threatening to escalate, and government budget and debt battles are looming. There is a growing sense that our economy is faltering while its fate is in the hands of a dysfunctional president and Congress.
It is increasingly difficult to keep faith that the long-running economic expansion has much longer to run. Businesses are struggling to find qualified workers to fill the record number of job openings. Sales aren't as strong as they were, but business executives are loath to stop hiring. They fear that if sales revive, they'll be caught short without the workers they need.
It may be surprising that the economy is having trouble of any kind. After all, President Trump and the Republican Congress passed massive tax cuts and big increases in government spending about a year ago.
The tax cuts juiced growth, but only temporarily. The sugar rush from the tax windfall peaked last spring, when annualized real GDP spurted higher. Growth has since faded, and the economy has come to a near standstill. Retailing has faltered, housing has flatlined and the trade deficit has ballooned.
The economic benefit of the tax cuts is spent. President Trump's claim that the cuts would spark a game-changing and sustained acceleration in growth appears specious. For stronger long-term growth, the lower taxes needed to boost business investment. But investment since the tax cuts isn't much different than it was before.
    The president also argued that the cuts would pay for themselves. Not happening. The Treasury has borrowed hundreds of billions of dollars more from global investors to pay for the big checks it cut primarily to wealthy households and big corporations.
    Tax revenues are falling and the nation's finances are a mess. The federal budge