Looming Trade War Portends Economic Downtrend

The US plan to start a trade war with China is bad news, predict economists and management experts at UCLA. This year saw a GDP growth of 3%, which President Trump optimistically expects to rise by 4-6% going forward. According to the experts, though, over the next two years, the rate is expected to drop to 2% and then 1%.

Job growth is predicted to dip from 190,000 per month to 160,000 per month by 2019 then fall off dramatically in 2020 to 40,000 per month. While the expected rate of unemployment is 3.5% in 2019, a fifth of a percent lower than the current rate of 3.7%, by the end of 2020 it could rise again to 4%.

The worry of the UCLA team of economists is that recent attempts by businesses to invest while interest rates are low to profit later will cause them to carry more debt than expected as trade tensions rise. Furthermore, it’s not just these businesses but the whole economy that will suffer because of rising prices coupled with slower growth.


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