Politics suggest we may not get the best of all possible worlds. Sure, tariffs turned out less bad than feared. Even if the most extreme claims of Democrats that democracy is dying turned out to be right, investors have long been able to make good returns from stocks in autocracies, so long as the autocrat doesn’t fall foul of more-powerful countries.
But the president’s firing of the BLS head and attacks on the Federal Reserve mean the U.S. is less likely to get decent data on its most important statistics or nonpolitical interest-rate — WSJ
The highest tariffs in almost a century haven’t caused inflation to surge. The phenomenon has puzzled economists, some of whom suspect that companies have so far simply been reluctant to pass along the extra costs to their customers.
But another argument for the limited impact is gaining traction: that tariffs being paid by importers are lower than advertised.
In a new study, Barclays economists went through census data to see what tariffs importers actually paid in May. They found that the weighted-average tariff rate—the average of all tariffs, adjusted for import volume from each country—that month was around 9%. That number is well below the 12% rate that they had previously estimated based on White House announcements, and far less than what some others have estimated.
The reason is that more than half of U.S. imports were duty-free, the Barclays study says, and because many U.S. companies and consumers bought less from countries with higher levies, particularly China.
“The real surprise in the U.S. economy’s resilience lies not in its reaction to tariffs but that the rise in the effective tariff rate has been more modest than commonly thought,” the Barclays report says. — WSJ
JPMorgan economists argue that actual tariff rates in June were lower than headline averages suggest because importers switched to countries with lower tariffs or to domestic producers.
These lower effective tariff rates could help explain why consumer prices haven’t risen as rapidly as some analysts feared. The impact of tariffs has been a charged topic. Trump this week asserted that tariffs haven’t caused inflation and called on Goldman Sachs to replace an economist who had predicted price increases.
The new tariffs raised $58.5 billion in revenue between January and June, according to the Penn Wharton Budget Model. And inflation has crept up in recent months, with prices of imported goods such as furniture ticking higher. The latest inflation readings remain well above the Federal Reserve’s benchmark of 2% year over year. In July, wholesale prices rose at the sharpest monthly rate in three years and well above economists’ forecasts.
But the overall inflation picture in the first six months of the year hasn’t been as ugly as many feared it would be in the wake of President Trump’s tariff hikes. — WSJ
When's the last time you looked for an analysis of the Russia/Ukraine conflict? Three years ago? — frank
The tariffs are curious because they are somewhat novel and unpredictable. Estimates put the reduction of US GDP at about 6%, and it is this slow down of the US economy that will have the greater effect on Australia, rather than a 10% tariff on our exports to the US. If everyone else ends up paying 10% or more, then that makes little difference to our competitiveness in the US market. — Banno
remember that it is the US customer, not Australia, who pays the 10%. — Banno
Yesterday. I read the Kyiv Post maybe once or twice a week. — Banno
You guys should read more Wall Street Journal and less of whatever it is you're reading. — frank
The US economy usually grows at around 1.3% in the first half of the year. It makes up for that in the last half. But yes, we're waiting for the full effect of the tariffs. So far, it's not as expected. It's actually a lot closer to what Trump predicted.We will have to wait and see. — Banno
The ‘important stuff’ I see Trump doing is undermining democratic norms, attacking science, public education, public health and public broadcasting. — Wayfarer
The US economy isn't slowing down, though. Not yet anyway. — frank
Frank, one should remember just how GDP growth is calculated. Imports are subtracted from the equation, meaning that as imports to the US fall and as they now have fallen off a cliff, GDP grows.The US economy usually grows at around 1.3% in the first half of the year. It makes up for that in the last half. But yes, we're waiting for the full effect of the tariffs. So far, it's not as expected. It's actually a lot closer to what Trump predicted. — frank
see U.S. GDP Growth Bounces Back as Imports PlummetLike the first quarter contraction wasn't indicative of a coming recession, the second quarter expansion is not a sign of a booming economy. Both readings have to do with Trump's tariff policy and the reaction to it. In the first quarter, it was a steep increase in imports in anticipation of upcoming tariffs that drove the GDP decline. As imports are a subtraction in the calculation of GDP, a surge in imports actually hurts GDP growth, even if only in the short run. Conversely, imports declined at an annual rate of 30 percent in the second quarter, which in turn boosted GDP growth.
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