The US economy is heading towards a recession
The US president claims that America has never been better in terms of economy. Mixed signals are coming out of the US government that raise speculations about a new recession.
The government says there is a possibility of recession, but US manufacturing has already sunk into recession in June after two consecutive quarters of decline. Why? All this is happening as a result of Donald Trumps trade wars, a slowdown in China and other trading partners.
The US Federal Reserve says manufacturing fell by a 2.2 percent annual rate in the April-June period. The total industrial production has lost 1.2 percent, in both cases the second consecutive quarterly decline.
Experts say tariff uncertainties and a general slowdown in the global economy are the reason behind the dive into recession. Economists warn that an uptick is unlikely in any time soon and the economy wont be on a track to be sustained in coming months. Many wonder how everything came to this, especially after the Tax Cuts and Jobs Act of 2017 which allowed a tax credit for employers.
At first, there has been a meaningful improvement in the pace of economic growth. It not only lowered taxes but featured reforms to business taxation that improved the incentives to invest domestically and keep headquarters in the US. Yet, Trumps trade policies are ruining everything. The aluminum and steel tariffs hurt consumers of metals far more than they helped US producers. The global growth was slowing down but Trumps escalating trade war with China amplified the crisis.
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