While Trump Blames The Fed, The Real Cause Of The Growth Slowdown Is His Trade Policy

On Sunday, Trump once again blamed the Fed and Chairman Jerome Powell for the economic slowdown that has intensified since late 2018, and that will likely see 2019 growth close to 2% rather than the 3%+ promised by the President. If Trump actually wanted to find the culprit for this deceleration, however, he would be wise to take a look in the mirror. Indeed, Trump's protectionist trade policy has created enormous business uncertainty around the world and has led to a steep fall in global trade, causing a decline in both US and global growth. Last week, the IMF downgraded 2019 global growth from 3.5% to 3.3%, and similarly reduced their US growth projection for this year from 2.3% to 2.1%. In their analysis, they cited increasing trade tensions as the top risk to global growth and wrote that a failure to resolve Trump's trade war with China and a potential one with the EU would cause a further economic decline.

Furthermore, CNBC's March Fed Survey saw a downgrade in expected 2019 US growth from 2.45% to 2.3% according to 43 market investors, who blamed global trade conflicts and slowing global growth for the slowdown. Finally, the WTO early this month projected that global trade growth would fall from 3% in 2018 to 2.6% in 2019, significantly below its 2000-2018 average of 3.8%. America has witnessed an unprecedented experiment with protectionist trade policy during the Trump administration, and the results of this experiment are now clear - significantly slower US and global growth, and a large hit to the stability of the rules-based global trading system. You can read more about NDN's work challenging Trump's trade policy here, and find our recent piece about the WTO's legal blow against Trump's tariffs here

Weekly Notes On The Economy is a weekly column that NDN writes on the most recent economic news, policy, and data.