As Wall Street fixates on tariffs, some analysts warn the real recession risk lies in Fed policy.
Transcript:
JAY HATFIELD: Well, with regard to the trade war impacting the economy, we have a non-consensus view in that it’s important to keep in mind that only 13% of the US economy are imports, so even heavy taxes. Right now, the proposal’s effective tax rate on that number of less than 10% So it’s only $175 billion on a $30 trillion economy. So we think that the recession fears from tariffs are way overblown, but not nearly enough focus on the potential for recession from ultra tight monetary policy. Again, investors just massively underestimate how powerful monetary policy is. So we don’t think there’s 0% chance of recession. But we think it’s very modest because again, housing is holding up, which it normally doesn’t. And tariffs are irrelevant at least compared to the drop in energy prices.
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