From CPB, data through May:
Figure 1: World Trade Volume (blue), World Industrial Production (tan), both 2006=100., on log scale. Light orange shading denotes Trump 2.0 administration. Orange dashed line at “Liberation Day”. Source: Central Plaanbureau.
There’s a drop in May as tariff-front running ended. We need June’s data for some clarity.i
When (Trump) Tariffs last bloomed:
Figure 2: World Trade Volume (blue), World Industrial Production (tan), both 2006=100., on log scale. Light orange shading denotes Trump 1.0 administration. Orange dashed line at notice of intent to impose Section 232, 301 tariffs. Source: Central Plaanbureau.
By the way, as everybody is hailing the “deal” with Europe (All those investments! All those purchases of energy products!), just remember the sorry implementation record of the Trump US-China Economic and Trade agreement, Phase 1.
US exports are shown in this post, for Q1, and nowcast for Q2.
Here’s a picture of U.S. manufacturing production during the first felon administration, along with the fed funds rate:
https://fred.stlouisfed.org/graph/?g=1KVPF
U.S. manufacturing climbed (tariff avoidance) and then fell (tariff implementation) then, just as seems to be underway now. Once the slide in output was established, the Fed cut rates. That all happened before Covid hit.
Same picture, but with employment rather than factory output:
https://fred.stlouisfed.org/graph/?g=1KVQu
Again, a slowing in real economic activity, and the Fed cut rates. In the first felon term, the funds rate was already below conventional Taylor rule prescriptions – Fed policy was already slightly easy – before rates were cuts.
So the Fed had a recessionary scare in felon 1,before Covid hit. Sure, plenty of other things were going on, but there is a clear case to be made that the tariffs of the first felon administration put us at risk of recession. The slowdown in the economy came despite accommodative Fed policy. We may have had a “Covid recession” instead of a “felon recession” only because of the timing of Covid’s onset.
This time, tariffs are higher and more widespread, and Fed policy is neutral, not easy. This time, we have a supply shock in the labor market that’s larger than during the first felon administration. This time, there’s no Gary Cohn to make the case (sometimes) for good policy.
Shrub managed to have two recessions in two terms. There’s still time for the felon to beat Shrub’s record.