The Impact of the “Liberation” Day Tariffs on the US and Global Economy and Markets. Rising Short Run Risk of a Recession but Over the Medium Term “Tech Trumps Tariffs”
The announced April 2nd tariffs were much worse than most analysts and markets expected; thus, on Thursday April 3rd US equity markets were way down (with losses btw 4% and 6% on main indices and Friday markets showing further losses as China has started to retaliate)...
Toward a North American Economic Union
To resolve their current tensions, Canada, Mexico, and the United States should start drafting plans for a North American Economic Union. A single market in goods, services, capital, labor, technology, data, and information would benefit all three countries far more...
The DeepSeek Surprise/Shock
In my modest opinion the DeepSeek surprise/shock is - counterintuitively - over time bullish for US and global stocks as it is another positive global aggregate supply shock that increases US/global potential growth and makes exponential AI even more exponential! So...
The Good, the Bad, and the Uncertainty of the Trump Economy
Given the economic, financial, and political constraints that Donald Trump is likely to face if he pursues his most radical and ill-advised economic policy proposals, the near-term outlook for the US economy heading into 2025 is relatively benign. Overall, the good...
Israel and Iran are Likely to Escalate
Regardless of whether one agrees with Israeli political and military leaders' assessment of the threat posed by Iran, a further escalation of the conflict between the two countries is now highly likely. Policymakers and financial risk managers may be hoping for the...
Kamala Harris’s Economic Priorities
Although some of Kamala Harris’s policy proposals remain vague, there is little question that her fiscal, trade, climate, immigration, currency, and China policies would be quite different from her opponent’s. Donald Trump’s agenda is much more likely to cause...
The US Treasury’s Backdoor Stimulus Is Hampering the Fed
The US Treasury’s debt-issuance polices have become a powerful form of policy easing. By shortening its issuance profile to reduce long-term interest rates, the Treasury has delivered economic stimulus equivalent to a one-point cut to the Fed’s policy rate, impeding...
Would the French Far Right Moderate Once in Power?
If National Rally were to secure an absolute majority in the French National Assembly, it could of course try to carry out its far-right vision of reckless fiscal expansion and anti-EU unilateralism. But if it is smart, it would offer a more disciplined fiscal-policy...
China Confronts the Middle-Income Trap
While China obviously needs to boost private-sector confidence and revive growth with a more sustainable economic model, it is not clear that Chinese leaders fully appreciate the challenges they face. The shift back to state capitalism over the last decade is plainly...
Trump and the Global Economic Risk Picture
Although the world is beset by wars, rising great-power tensions, and other geopolitical risks, most of these factors have not radically affected the outlook for economies and markets in the near term. But that could change if the United States returns to an...