USA economy 'very far' from recession: Donald Trump

White House chief economic adviser Larry Kudlow speaks with reporters outside the White House on Aug. 6

President Donald Trump on Tuesday said the current USA standoff with China over trade was necessary, adding that China still wants to make a deal.

Speaking to the media before a meeting with Romanian President Klaus Iohannis in the Oval Office, Trump called warnings that the country may be heading into a recession "inappropriate" and noted that a possible cut in payroll taxes was something he had been considering for a long time.

US President Donald Trump appeared on Tuesday to misunderstand the definition of a recession, suggesting that the US economy could fall into one for "two months".

Yet, when asked about the economy, the president said he and his advisers have discussed "all types of options", including the payroll tax cut, which supports Social Security and Medicare.

Some conservatives, such as anti-tax crusader Grover Norquist, believe Trump has the regulatory authority to add an inflation adjustment to the calculation of capital gains taxes.

He told reporters he's considering a cut to capital gains taxes by indexing them to inflation.

The Trump administration will have to gain Congressional support to adopt both of the two measures, and analysts believe it would be hard for the two tax reductions to pass in the Democrat-controlled House.

Economists and other observers were quick to point to Trump's reckless trade war with China, the world's second-largest economy behind the USA, as a key reason for recession fears. "But I'm looking at that all the time, anyway", the president told reporters on Tuesday afternoon.

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"Whether it's good or bad, the short term is irrelevant".

While answering the question, Trump raised the prospect of the U.S. economy shrinking briefly, which he said would be worthwhile in exchange for taking on China economically.

Journalist Matt O'Brien derided the White House's reported ideas to ward off a recession as handouts to the rich that would do little to stimulate the economy.

In 2011 and 2012, Congress and President Obama reduced the part of the tax paid directly by employees from 6.2 percent to 4.2 percent. "Payroll tax is something that we think about, and a lot of people would like to see that".

Trump continued to insist that the economy is in great shape but also continued to harshly criticize the Federal Reserve, saying the Fed needs to "do its job" and cut rates. Bloomberg's Laura Davison reports that those cuts "reduced the tax burden for a median-income family by about $996, according to Politifact".

But economists say attempts by the President to get ahead of a slowdown today would leave policymakers with far less ammunition to fend off further calamities down the road.

"I've been thinking about payroll taxes for a long time".

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