The Economist: “Together, the squeeze from tariffs on real incomes, reduced labor supply and capex-shy companies adds up to 0.8 percentage points. That is in line with the earlier figure we arrived at by considering a counterfactual American economy… Looking ahead, there is little sign of relief. Tariffs remain in flux, sustaining high uncertainty for businesses and households. The war in Iran and effective closure of the Strait of Hormuz has triggered an energy shock that will further compress real incomes and corporate margins, dampening investment even more.”
“A natural reaction to such figures is to despair at how much damage bad policies can cause. Another, though, is to marvel at the awesome power of America’s economic engine. Despite everything Mr Trump has put in its way, GDP may grow at an annual rate of 4% in the current quarter, if you believe the latest real-time forecast by the Federal Reserve’s Atlanta branch. Without the deadweight of the MAGA tax, in other words, America might be rocketing ahead at nearly 5% annualized growth.”
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