Fears are increasing that the American economy is heading towards stagnation with the decline in stock markets in light of the Trump administration’s application of customs fees.
President Donald Trump and his senior advisers seemed optimistic about the signs of economic prosperity, even with economists that the possibility of stagnation is increasing due to the comprehensive customs duties imposed by the White House.
Trump did not rule out the possibility of recession, and told the Fox News channel, Maria Barteromo, on (Sunday Morning Futures), he hates “predicting such matters.”
“There is a transitional period because what we do is very huge. We are returning wealth to America. This is very important. There are always periods, and it must take some time, but I think it will be great for us,” Trump said in an interview on Sunday.
By Monday evening, the three major US stock indicators decreased seriously, with experts expecting the potential for the economy to slow down in the first three months of the year, which is a noticeable shift after nearly 3 years of strong growth, according to a research conducted by the GB Morgan Bank on Friday.
Some economists warned that the mere referral to the recession may be sufficient to push companies and families to reconsider their spending, which may accelerate the occurrence of economic slowdown.
This is what should be paid attention to, according to the Washington Post:
What are the economic signs of stagnation?
The recession is defined as 6 months of negative growth in the state’s economy.
It will take some time before the National Office for Economic Research, which is the official authority concerned with stagnation in the United States, announced an official recession, and the office takes into account a number of economic factors, including what is happening in the labor market or individuals ’income, before making any decision.
But it is likely that the warning signs – which may include an increase in job loss, wages stopping, and low consumer spending – are pre -clear.
The American newspaper quoted the chief economist at New Century Advisers, Claudia Siham as saying that the labor market may be an early indication of an imminent economic stagnation, adding that the unemployment rate is not the first to be affected, but as soon as it begins to rise, it “tends to continue.”
So far, the labor market has slowed down a little, but it is still strong, as the unemployment rate was 4.1%, according to the February job report, however, the latest data included all the effects of the American Illon Musk for Reducing the Federal Manpower.
Is the United States heading towards an economic stagnation?
Economists are still not sure whether the United States is heading towards an economic stagnation, but they warn that the risk of this may be higher than what was previously believed, and this is due in a large part of it to the new White House policies.
“People look at customs duties, saying: If we go back to economic history books, customs duties were not good in terms of promoting growth,” the Washington Post quoted the head of the total economy strategy at Wales Vargo, Mike Schumacher, as saying.
Goldman Sachs raised the possibility of a 12 -month stagnation from 15% to 20% on Friday, noting that she believes that “policy changes are the main danger.”
According to Goldman Sachs’ economic expectations: “The White House has the option to retreat if the risk of economic recession begins to appear more serious … If the policy goes towards the risk scenario that we have developed, or if the White House remains committed to its policies even in the face of much worse data, the risk of stagnation will increase more.”
The “GB Morgan” analysis indicated that Trump’s repeated changes on commercial policy “make the expectation of growth and inflation this year a very arduous task.”
https://www.youtube.com/watch?v=cqand9qbloc
When was the last economic stagnation in the United States? How long?
The average economic recession in the modern era is 11 months, according to the data of the National Office for Economic Research.
The last economic recession in the United States – which was the shortest in its history – was the economic slowdown in March and April 2020 during the Korona virus pandemic, and the National Office for Economic Research was not announced that it was a recession until July 2021.
Before that, the great recession (2007-2009) lasted for 18 months. It is considered the worst American economic disaster since the Great Depression 1929.
Can customs duties cause stagnation?
Trump’s customs fees may have a significant impact on the economy, depending on its duration and any possible retaliatory reaction from commercial partners, according to economic experts from BNB Pariba.
“In the event of an uncontrolled commercial war, a sharp decrease in companies’ confidence is likely to occur, and if it is large enough, it may lead to economic stagnation, “BNB Pariba wrote in Thursday analysis.
BNB Pariba warned that the more customs duties increase, the greater the economic cost of it, adding that this effect will be felt by the average American consumer, and it is expected that the last customs duties will cost the American family more than 1200 dollars annually, according to the Peterson International Economy Institute.
Even if the fees are temporary, the mere use of them as a negotiating tool will cause uncertainty in the employment or investment decisions taken by companies.
How does the recession affect the audience?
The recession is usually associated with a large -scale loss of functionality, which provokes financial problems that may lead to analgesic loss.
The labor market is slowed down during the recession, the harm to those who keep their jobs, which makes it difficult to find a new job or obtain an increase in salary, and young people who enter the labor market during the economic recession periods often feel their inability to select their precise jobs, and many of them accept low initial wages that may negatively affect their income for the coming years.
“Ultimately, the economic recession periods are bad because people suffer financially. It is a painful blow, and it affects everyone,” Siham told the Washington Post in 2022.
What do I do to protect my money before stagnation?
Economists and financial advisors say that the wise step is often a reduction in spending and an attempt to save money, however, doing so may be accelerated from the recession because it gets money out of the economy.
“When they do not spend, they do not achieve income for others,” said Tara Senkler, professor of economics at George Washington University.
Michelle Cincignary, Personal Financial Pillar writer in the Washington Post, provided 7 tips to prepare for economic stagnation in 2022, including: payment of credit card debts, increase your savings, and search for low -fluctuating investment options such as bonds, and not panic.
“What you do not have to do is make decisions based on fears that may put you in a worse financial position.”
