Isaac Saul (10:57)
First up, let's start with what the left is saying. The left worries that Trump's policies are leading the US Toward a recession. Some say the president's tariffs plan will reignite inflation across the economy. Others say the tariffs could be effective if applied differently. In Bloomberg, Mohamed A. El Erian said US Recession odds are becoming unsettlingly high. Several key financial indicators are already flashing yellow. The Yield on the 10 year treasury bonds has fallen about 70 basis points in recent weeks, while oil prices have slipped below $70 a barrel. These moves coincide with a string of disappointing economic data releases, reflecting growing apprehension about the immediate consequences of President Donald Trump's trade policies and public sector reforms, el Erian wrote. Adding to the unease inflation, which had shown signs of abating, is proving more stubborn than anticipated. This whiff of stagflation, that troublesome combination of stagnant growth and rapidly rise in prices, raises the specter of another policy misstep by the Federal Reserve. Yet it is important to remember that recession is at this stage far from a foregone conclusion. Several factors offer a counterweight to these negative forces, El Erian said. Lower energy prices boost the purchasing power of consumers and reduce input costs for businesses. The administration's deregulation agenda could unleash a wave of corporate investment. And while the short term disruptions caused by Trump's trade policies are undeniable, the potential for long term productivity gains through innovation in areas such as artificial intelligence, robotics and life sciences should not be discounted. In msnbc, Zehon Alim wrote, trump won the White House due to inflation. Now he's turbocharging it the biggest reason President Donald Trump won the White House again was dissatisfaction with the economy under Joe Biden. Specifically the public's frustration over a spike in inflation, which even after it cooled, appeared to leave widespread lingering resentment over the cost of everyday items at the grocery store and elsewhere. Trump has now enacted an extraordinary tariffs regime that will, by design, cause a spike in many of these items, Aleem said. Beyond grocery store items, tariffs could exacerbate the affordable housing crisis by making the lumber imported from Canada more expensive. Trump's use of tariffs is not only far more sweeping than anything he did during his first term, it's the most sweeping use of tariffs by the US Government in about a century. The coming economic plan raises political questions. What will happen to Trump's reputation as an effective steward of the economy as tariffs cause prices to soar and and possibly induce a recession, aleem wrote. Trump occasionally warned us of the hardship to come, alongside his tirades against migrants and nonsense about bringing down prices. But the pain is due to arrive now. In the Guardian, Dustin Gostella suggested tariffs can help US Workers, but Trump's doing them all wrong. Trump's proposed tariffs seem unlikely to improve what ails the US Economy. Worse, applying tariffs as broadly as he's proposed and without any supplementary industrial strategy does risk needlessly raising prices while acting like a big corporate giveaway, gustella said. Yet despite what elite economists say, tariffs can be sound and progressive economic policy. In fact, liberals might be surprised to learn that during his administration, Joe Biden actually raised the highest tariffs in recent American history, a 100% tariff on Chinese electric vehicles. Why? Because tariffs work. Trump has for the most part not focused on raising tariffs on particular imported goods, but instead on all goods coming from certain countries. A 20% tariff on all Chinese goods might make it more expensive for Americans to continue to buy certain things from China, but nothing in that policy encourages Americans to buy American made products, costello wrote. Trump's steel and aluminum tariffs are closer to the mark. By making all steel imports, regardless of national origin, subject to the same tariff, the policy could succeed in making US Steel comparatively cheaper for domestic buyers. Alright, that is it for what the left is saying, which brings us to what the right is saying. The right is mixed. On the economic outlook, though many say the risk of recession is far off, some argue the short term pain of tariffs will be worth the long term benefits. Others say Trump is unwisely alienating economic allies. In the Washington Examiner, James Rogan argued recession fears are overblown. The Federal Reserve bank of Atlanta lowered its GDP now model of economic growth for the first quarter to a -1.5% annually. The Atlanta Fed's forecast model stirred up talk of recession, one prominent economist said. The economy is slowing at an alarming rate, but is it really falling into recession? Rogan wrote. Very importantly on Monday, the Institute for Supply Management survey of February's manufacturing activity said the United States economy continues to expand. The survey also found only a modest increase in imports. Economists expect that the US economy created about 160,000 new jobs over the last month. Economists also believe that hourly wage growth will show a healthy increase of around 0.3%, which on an annualized basis would show wage gains of around 4%, well above the inflation rate. If these estimates are met, talk of a recession will evaporate, Rogan said. Yes, over the longer term, tariffs, lower immigration and uncertainty caused by Trump's policies will prove to be a drag on economic growth. But over the next year, as long as the labor market remains resilient and healthy and households enjoy real economic gains, the US Economy will almost certainly expand. In American greatness, Spencer P. Morrison said Trump's tariffs will create millions of jobs. At its core, this issue is all about time horizons. That is, are we looking at the impact of tariffs here and now or next year or 10 years down the road? The impact of just about any policy will be different at different times and across different industries, morrison wrote. The media hates tariffs, therefore they only consider the impact of tariffs on a short term horizon and in particular industries. As a result, pundits can claim and accurately claim that tariffs will destroy jobs, but this is not true in the long run Economic logic and historical evidence prove that tariffs will increase GDP and create jobs. However, we need to be patient and remember that America does not belong to us. It belongs to our children, our grandchildren and every generation that has come before or after us, morrison said. The trade deficit displaces America's potential gdp. Rather than build it up, we buy it. Therefore, running a trade deficit must reduce gdp. President Trump's tariffs will reduce the trade deficit. In doing so, they will increase GDP by a corresponding amount and reshore the jobs that have been lost to China and friends, the Wall Street Journal editorial board wrote. Trump Takes the dumbest tariff plunge Mr. Trump said at the White House that there was no room left to negotiate with the two American trade treaty partners. Some of his smarter advisors had been hoping he'd start renegotiating the US Mexico Canada agreement. But Mr. Trump wants tariffs for their own sake, which he says will usher in a new golden age, the board said. Mr. Trump is whacking friends, not adversaries. His taxes will hit every cross border transaction and the North American vehicle market is so interconnected that some cars cross a border as many as eight times as they're assembled. Mr. Trump is volatile and who knows how long he'll keep the tariffs in place. Retaliation that hits certain states and businesses may also cause him to reconsider sooner than he imagines. Investors are trying to read this uncertainty as they also watch growing evidence of a slowing US Economy. Unbridled tariff man was always going to be a big economic risk in the second term and here we are. Alright, let's head over to Isaac for his take.
