Quantifying the effects of the recent trade war escalation
The Wall Street Journal is out with an article saying that Federal Reserve economists are projecting that uncertainty over trade policy is likely to reduce US economic output by more than 1% through early 2020.
You can read the articlle HERE (although it may be gated).
The research says:
- the rise in trade policy uncertainty in 2018 2019 has gone hand-in-hand with the slow down in world industrial production and global trade.
- Researchers found that the initial increase in trade policy uncertainty in the 1st half of 2018 shaved around 0.8% from US and global output in the 1st half of 2019
- more recent increases in uncertainty will now reduce US output by more than 1% in the 1st half of 2020
- the drag on GDP would have begun to ease at trade tensions not escalated again in May and June 2019
- renewed uncertainty since May 2019 points to additional knock on effects that may push down GDP further in the 2nd half of 2019 and in 2020
