As I've written before, now that the Fed seems to have seen the light, I don't see anything remotely like another Great Recession on the horizon. Could we enter a slighter recession? The politics of things is so volatile, it's not possible to say. Trump's grasp of economics is very shaky, and he keeps trying to elevate economic illiterates to high places. He wants lower taxes, lower interest rates, but also caters to the deficit hawks (Austerians). That's a very confused mix.
Here's Dean Baker's take:
Since December of 2015, the Fed has raised the federal funds rate from essentially zero to 2.5 percent. With little evidence of inflation and some signs of a weakening economy, many investors are betting that the Fed has stopped hiking rates and will soon be lowering them. This hardly means there we will necessarily be seeing a recession.
Of course the weakness of foreign economies is bad news for the U.S. economy. Weakness in Europe, a weaker Chinese economy, and Canada possibly seeing the implosion of its housing bubble, means that trade will likely be a drag on growth in 2019 and probably 2020, as the trade deficit rises further. But, slower export growth is not going to be sufficient to push the U.S. economy into recession.
To be clear, the signals all point to a considerably weaker economy going forward. The Trump tax cut gave us a one-time boost. It was not the promised investment boom that lifted growth in 2018. Investment grew modestly, rather it was a story where the wealthy people -- who were the main beneficiaries of the tax cut – spent much of the money they got either directly or indirectly as share buybacks and dividends.
This led to a jump in consumption in 2018, but with no further tax cuts on the horizon, we can assume that consumption will return to its modest growth path of pre-recession years. Investment has been weakening, but presumably will be a modest positive through the year. On the other hand, housing is being hit by higher interest rates and is likely to be a drag on growth.
The drag from housing and trade could well push growth below the 2.0 percent trend path we had been on through most of the recovery. The weakness can be amplified if the Republicans’ new found (post-tax cut) concern with deficits, combined with austerity minded Democrats, leads to cuts in federal spending.
However, with wages growing at a respectable pace, and job growth remaining healthy, we should see still see enough consumption demand to keep the economy moving forward. That means slower growth, but no recession. [Source]