Noah Smith at Noahpinion:
Despite steady GDP growth, low inflation, low unemployment, and record high stock prices, Americans told pollsters in 2024 that they were deeply unhappy with how Joe Biden had handled the U.S. economy. So they elected Donald Trump, who promised to lower costs for average Americans, create a new era of U.S. manufacturing and domestic investment, and so on.
How is that working out? Well, the Atlanta Fed now projects that the U.S. economy will shrink at an annualized rate of 2.8% in the first quarter of Trump’s presidency:
The forecast was fine until it became clear a few days ago that Trump’s tariffs on Canada and Mexico would actually go into effect.
Now, this is just one forecast; the real number might be less dramatically bad. The Federal Reserve’s Beige Book, a survey of current economic indicators, suggests that growth will stall out but not go negative. But it’s very clear that tariffs are the driving force behind the slowdown.
More here.
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