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It is Getting Worse – Fed Considers Rate Cut, US-China Trade Fears

It is Getting Worse - Fed Considers Rate Cut, US-China Trade Fears

The US economy has been somewhat resilient in the past six months, with the labor market showing strength. However, with the US-China Trade War intensifying the economic outlook for the US, Europe and China are all in question. Of course this would mean that Japan and other exporting countries would need to reassess their economic outlooks as well. Richard Clarita, vice chairman of the Fed, said the central bank would be “nimble” in ensuring that the expansion continues – this would imply cutting rates if there is a downturn in the economy.

Growth remains robust, with the economy expanding at a revised annualized pace of 3.1 percent in the first quarter, the most recent data show. Still there are some who are not 100 percent confident in the sustainability of the US recovery which is now lasted over a decade. The fear stems from the US-China Trade War which was triggered by the Trump Administration placing tariffs on goods imported from China.

More recently, after 8 months of trade talks, the White House slapped new tariffs of 25%, up from the original 10% as it expanded to $200 billion  of goods. Now market and business confidence remains vulnerable to these talks and any setbacks that could result in economic slowdown or emerging market challenges. The US Iran oil and sanctions that are focused on weapons development by Iran will also have impact on Iran and other economies in the Middle East.  

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