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Economist Warns of Economic Slowdown from Trade Conflicts

07/08/2019

Tom Barkin, president of the Federal Reserve Bank of Richmond highlighted uncertainty in trade policy as a factor contributing to a decline in U.S. economic growth from 3 percent last year to 2 percent in 2019.

 

In an interview with the Wall Street Journal with comments in an article published on July 2nd, Barkin deferred on the possibility of the FOMC reducing interest rates at the July 30th meeting.

Barkin noted steady employment gains and strong consumer spending but still uncertainty over trade, political development and Brexit.  In commenting on political pressure on the Fed, Barkin noted, “I think emotions have gotten far out in front of the data in terms of where we sit in the economy.”

 

It is evident that there is no immediate prospect of resolution of the trade conflict with China given the duration of negotiation, intransigence by China to commit to structural changes and the apparent willingness of the U.S. to apply tariffs to pressure advantages in negotiations.

 

Barkin noted that trade tensions between the U.S. and China will be “a permanent feature no matter how talks unfolded.”