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mic conditions, solid job gains and moderately rising economic activity, though so
上海夜网ft business investment－did not necessarily warrant a rate cut (the decision was not unanimous). What mo
tivated Fed Chairman Jerome Powell’s decision may well have been the muted inflation pressures and par
上海夜网品茶微信ticularly global growth concerns, which the White House has undermined since the onset of its tariff wars in spring 2018.
Interestingly, the Fed cut did not cause a rally; it stumped the market. S&P 500 dropped almost上海夜网
2 percent and 10-year Treasury yields to about 2 percent. The Fed’s interest cut does not imply a start of a new r
上海夜网ate cut cycle. Instead, it does mean the post-2008 recovery is now over with darker clouds looming on the horizon.
Tariff wars cloud US and global forecasts
When US President Donald Trump assumed office in January 2017, he pledged GDP growth at 4 percent. More recen上海夜网品茶微信
tly, he projected US growth at 3 percent. Yet analysts estimate US growth this year at 2.5 percent or less. Qua
上海夜网litative assessments suggest deterioration, as the growth of domestic demand is slumping.
Worse, US GDP growth forecasts for 2020 indicate softening to 1.8 percent, possibl
y a (near-recession) slowdown－especially if trade and tech wars still escalate. In the absence of negative su上海夜网品茶微信
rprises, China’s GDP growth is likely to stay within the target of 6.2 percent in 2019 and possibly in 2020 as well, with su
上海夜网pportive fiscal and monetary conditions. US tariff wars are likely to penalize the Chinese economy by less th
an 0.5 percent of GDP, which could be offset by just a modest depreciation of the renminbi.
If recent policy mistakes in the White House prevail, slower growth in investment上海夜网品茶微信
spending, rising concern for continued trade wars and destabilizing geopolitics are likely to foster downside risks
上海夜网in global economic prospects, as risks for further downgrades morph into actual realities.
The author is the founder of Difference Group and has served at India, China and America In
stitute (US), Shanghai Institutes for International Studies (China) and the EU Cen上海夜网品茶微信
tre (Singapore). The views of the article do not necessarily represent those of China Daily.