“If it isn’t hurting, it isn’t working,” was the cry of then-UK-chancellor John Major in 1989, as the British government tightened policy to fight inflation and drove the country into a recession.
But it could also be the catchphrase of the new American president, who appears relaxed about concerns he could trigger a US downturn.
Donald Trump has refused to say whether his trade policies means the US economy is facing a recession or higher inflation, arguing that a “period of transition” is taking place.
Instead, he told Fox News show Sunday Morning Futures:“I hate to predict things like that. There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.”
The comments echo Trump’s line about how tariffs will cause ‘a little disturbance’, in his State of the Union speech last week.
Trump was speaking to Fox shortly after the latest US jobs report showed a pick-up in the unemployment rate in February, but also a rise in hiring – with payrolls up 151,000 in February.
That jobs data calmed some nerves about a looming “Trumpcession”, but economists remain concerned that slapping tariffs on major trading partners and slashing the Federal government will hurt growth.
Kyle Rodda, senior financial market analyst at Capital.com, says: "US President Trump implied he’s willing to tolerate weaker growth as the economy “transitions”, something that may sour investor sentiment further – with private sector job creation far outstripping modest public sector job creation.
"The data added to the notion the US economy is moderating and its performance is converging with the rest of the world. The rates market, responding to increasingly disappointing data and downside surprises in activity, indicate that the Fed ought to re-starting cutting interest rates in July, if not potentially June."
Another front in Donald Trump’s trade wars opened up this morning, as China’s retaliatory tariffs on US imports kicked in.
The tariffs, announced last week, target about $21bn of agricultural imports from the US, in response to the extra 10% tariff imposed on China’s exports to the US by Donald Trump.
Beijing’s move covers a wide range of commodities. Imports of US-grown chicken, wheat, corn and cotton will face an extra 15% tariff, the Chinese ministry said last week. Tariffs on sorghum, soybeans, pork, beef, seafood, fruit, vegetables and dairy products will be increased by 10%.
The move will make US products more expensive, and thus less competitive, in the Chinese market, which is likely to lead to more imports from other countries instead.
That is bad news for US farmers, and increases the risks that the US economy slows … or even drops into the dreaded recession.
The agenda
• 7am GMT: German trade balance data for January
• 2.15pm GMT: House of Lords Home-based Working Committee hearing on development of working from home
We'll be tracking all the main events throughout the day … |
