Federal Reserve Chairman Powell told a group in Denver the economy is in good shape, but cash reserves took a hit when corporations pull cash out of the repo market to pay taxes and other federal obligations. Powell let people know the Feds may not cut interest rates again this year unless Trump’s tariff war causes more economic damage than expected.
Trump’s trade war slowed the economy down in the third quarter. Economists say the third-quarter growth figure is 1.8 percent. Economic growth will continue to slide as Trump adds tariffs to European products for supporting Airbus. Trump’s European tariffs will impact wine. cheese, and other products made in Europe. And Trump may add more tariffs on European-made cars and trucks.
The cost of the tariff war keeps growing. Economists think the tariffs will cost Americans more than $800 in 2019. But according to MarketWatch, Americans will pay more than $2,000 in additional taxes in 2020.
Consumer spending is still strong, but consumer confidence is shaky. The impeachment inquiry as well as China’s resolve not to give in to Trump’s request to change the way China subsidizes its international companies have consumers worried. And Wall Street economists don’t think the new trade talks will produce a trade agreement.
China just wants to talk about trade at the October meeting. But Trump wants China to address intellectual property thief and the spying the president claims happens when companies like Huawei interact with American tech companies.
In order to force China to agree to his terms, Mr. Trump blackballed Chinese companies with artificial intelligence and facial recognition software. Commerce Secretary Wilbur Ross said Trump made that move because China uses that software to repress Muslims in the Northwest region of the country.
The Chinese bought 100 tons of gold over the last 10 months. China knows the trade war won’t end after the October meeting so they want to own gold and stockpile enough dollars to within stand Trump’s trade torture.
But the Trumpster wants to insure the Chinese feel his trade war pain in other ways. The president wants to stop the flow of money into Chinese corporations. At first, he wanted to throw Chinese companies off the New York Stock exchange. But his new plan is to restrict American pension plans from investing in Chinese companies. If that plan becomes reality, Chinese companies that do business in the United States would take a major financial blow.
Dil Bole Oberoi
