President Trump wants the Feds to cut interest rates to zero or below zero. Mr. Trump believes consumers will go deeper into debt if interest rates are stupidly low. Japan and Europe tried that economic stimulation plan and pensions funds in Europe feel the backlash from those low rates.
Mr. Trump’s economic plan is to sell the economic sizzle while GDP growth goes up in flames. Trump’s trade war did a number on global supply chains. Moving production out of China, and placing orders in Thailand, Vietnam, Cambodia, and a few Eastern European countries became the world’s latest supply and demand nightmare. Those countries don’t have the manufacturing capacity or a large enough trained labor force to handle all the orders that carried a 25 percent tariff if they stayed in China.
Mr. Trump continues to tell the people still listening to his con job, China pays the tariffs. But Federal Reserve researchers published a report that shows American consumers paid $40 billion in tariffs in one way or another. China’s factory prices didn’t drop 25 percent when Trump added that additional tariff percentage. But factory prices did drop two percent due to a lot of open-to-make in China’s enormous factory sector.
Consumers still feel good about the economy. Most consumers don’t care about a recession. Trump’s con job works on people who don’t understand there’s a lag time before reality sets in the economic world. The impact of Trump’s 2017 tariff tax will wipe away any savings consumers got when he made the rich richer and threw a few crumbs to the middle class. According to several economists, consumers will pay an additional $1,000 in tariff taxes this year.
Fed Chairman Powell told a group of bankers the board wants to keep the inflation rate below two percent. The unemployment rate is still 3.6 percent and inflation is below two-percent. In a normal economy those numbers would give investors reasons to keep stirring their financial pots. But Trump’s economy is not a normal economy. His tariff addiction creates economic issues the pros can’t figure out. But most economists know the global economy has health issues, and the U.S. economy has a fever.
The Trumpster was able to brag when the trade goods deficit dropped by 5.7 percent in October. The decline is due to the shift in production Trump’s tariffs created. But the yearly trade deficit is still way in the hole thanks to Trump’s trade war.
Dil Bole Oberoi
