The usual suspects are at it again predicting crisis:
Tariff increases could bring us back to 2008 crisis levels, World Bank warns
World Bank: Trade disputes threaten global economic growth
World Bank warns trade tensions could cause 2008-level crisis
These are the same people who in 2016 predicted recession and crisis if Trump won. Now, 17 months into his presidency, there has been neither crisis nor recession (the unemployment rate is at 18-year lows, and all economic indicators are firing on all cylinders), so they have latched onto these overblown tariffs as being the catalyst for the next recession. These people are so desperate to see Trump fail they have to invent a crisis where none exists–imagine that–to hate Trump so much that it distorts one’s own perception of reality.
It reminds me of Vox Day concern-trolling over Jordan Peterson, trying to front-run dissension regarding Jordan Peterson’s interpretation of Christianity and supposed globalist ties, but it’s only a crisis in his mind and the readers of his blog. That is a large number, but small compared to Jordan’s Peterson’s massive fan base. To everyone else, Jordan Peterson remains popular.
I agree with Pictet Research, which put out a report that the economic impact of the tariffs will prove to be minimal for both China and the US. From the report:
Assuming US trade rhetoric does not escalate, we think the impact of the tariffs on both US GDP and inflation this year should be below 0.1 percentage point. We therefore maintain our 2018 forecasts of 3.0% annual GDP and 1.9% core PCE inflation for the US. In fact, the impact could be even less as it is plausible that the tariffs will be diluted.
For China, the impact of the tariffs on growth is similarly limited, and also likely to be below 0.1% of GDP. The Chinese government has a strong incentive to avoid a trade war with the US. A trade agreement that involves China promising to lower trade barriers and grant wider market access to US industries is possible.
I agree. As stated here, here, and here, the impact will be immaterial and any resulting inflation or slowdown in GDP growth from the tariffs will be impossible to disengage from background factors. The stock market is not worried, and the S&P 500 is close to making all time highs again, and I predict it has much higher to ago and may reach as high as 3,800-4,500 by the end of Trump’s first term. The strong stock market and the post-2009 economic expansion, which is officially the longest ever and will continue for many more years to come, will help him win reelection.
Given how low interest rates still are and the absence of any economic headwinds, It may be another decade or longer until there is another bear market and recession. Two years from now, we’ll be looking back thinking “wow all that hype over the tariffs was for nothing. I guess they weren’t so bad.” Pretty much every president in history has enacted tariffs, usually as a symbolic gesture or as way of opening up trade talks, and not once did it lead to recession.
I am fond of saying media narratives are often wrong. They are wrong because the media is not in the business of being right or of giving good advice, but rather saying whatever will generate the most ad-dollars and or agree with whatever political agenda they are aligned with. Negative economic forecasts generate more ad impressions than positive ones. Absurdly high Bitcoin forecasts ensnare more viewers than realistic targets.
That’s why I support Elon Musk’s efforts to create a media credibility rating site. These pundits, forecasters, and journalists who are always wrong need to be held accountable, instead of just publishing the same crud over and over and hoping no one notices all they earlier times they were wrong. In fairness, it’s not just the left-wing media that should be held accountable, but the right-wing media too. Just as the left-wing media was wrong (at least so far) about the predicted dire economic consequences of Trump, the’right’ was wrong in 2008-2011 regarding TARP, inflation and so on. A bipartisan rating system that holds both sides accountable by tracking forecasts and predictions would be useful, and would mean more efficient news consumption because pundits and journalists who are consistently wrong would rank low under such a system and be easily disregarded.