By Randy Brown for Forbes.
In July, the U.S. economic expansion will hit its ten-year mark, making it the longest on record. Yet surveys from the Conference Board and the Business Roundtable show business confidence is dipping, and U.S. CEO’s intend to dial back hiring and spending as they expect sales to trend lower. And just last week, the Federal Reserve shifted its stance from being “patient” to being willing to “act as appropriate to sustain the expansion”. In essence, that says Jerome Powell is alert to downside risks and will move to short circuit anything that may derail growth.
What’s driving this pessimism? And could it be a harbinger of the next recession?
Trade Disruption Is The Chief Culprit
While economic indicators may be signaling a slowdown, the most immediate threat to economic stability is the U.S.’ ongoing cold trade war with China.
President Trump’s threat to hit all Chinese imports with tariffs is amplifying uncertainty. CEO’s are nervous: in mid-June, over 600 companies and industry groups, ranging from Walmart to Rawlings, sent a letter urging the President to reengage with China. The companies estimate that continued tariffs and retaliation could result in 2 million job losses and cost the average family $2,300.
Those fears are showing up in the data: second quarter U.S. GDP is starting to slow and economists are revising growth forecasts downward for the year. Left unguarded, the U.S. economy could start to sputter as trade tensions undermine global growth.Read More
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