Many variables cloud the outlook.
Businesses are hesitant to invest when they are unsure of what’s ahead.
According to Ben Herzon, executive director of United States economics at Macroeconomic Advisers, a forecasting firm, research shows that the “level of investment spending recently has been about $100 billion lower than it would have had there been no uncertainty about trade policy.”
That suggests there is room for more investment if trade policy settles.
This week, Mr. Trump signed the new North American trade agreement with Canada and Mexico into law. But tariffs remain on two-thirds of Chinese imports. At the same time, trade frictions with Europe over tariffs, airplane subsidies, digital taxes and the World Trade Organization have ratcheted up.
Also unsettling is the outbreak and spread in China of a mysterious and deadly virus that has the potential to rattle investors, and slow growth in Asia.
On the domestic front, Mr. Trump’s impeachment trial in the Senate and the coming presidential election add another large dose of political volatility.
No matter who becomes the Democrats’ nominee, “we’re likely to have two candidates with very different views on tax, regulatory and trade policy,” said Mr. Luzzetti of Deutsche Bank. “Businesses don’t know which direction that’s going to go in, so they may hold back on spending projects.”
Ana Swanson contributed reporting.
Article source: https://www.nytimes.com/2020/01/30/business/economy/gdp-numbers.html?emc=rss&partner=rss
Speak Your Mind
You must be logged in to post a comment.