KC Fed & MAGA 'Liberation Day' After: Trade Policy Will Raise Costs

Today Kansas City and the U.S. stand at the outset of a global trade war. 

To wit . . .

LIKE IT OR NOT, ALL OF THE DATA INDICATES THAT COSTS WILL RISE BECAUSE OF MAGA TRADE WAR!!!

Smarter GOP leaders are preparing the public rising costs rather than denying the obvious. 

To be fair . . .

As much as it has been explained . . . The hope seems to be that this "pain" will inspire American manufacturers to come back home and spark domestic buying and growth. That IS NOT the way the global economy has worked for nearly a half a century . . . And we only wonder if anyone is REALLY prepared for for the fallout.

Again . . .

The only thing worth sharing here is the data and we found a recent summary published this week by the KC Fed is applicable given its consideration of economic uncertainty and local biz.

We respect local news talking to small biz owners or academics but the fact is that few of these folks understand macroeconomics and global trade. And that's why we're sharing a quick primer from the local branch of the BANK FOR BANKS because they have more insight into the far reaching impact of monetary policy.

This passage is the easiest for laymen to understand and offers a mixed view in a survey of economic indicators . . . 

"Firms in the KC Fed region are currently anticipating trade policy adjustments will raise their costs over the coming year, with the majority of respondents indicating it will push costs and prices higher or significantly higher. In contrast, regional firms are mixed in their expectations of demand in the wake of changing trade costs. Some firms expect higher demand due to domestic market protections while others anticipate lower demand as cost pressures squeeze competitiveness. However, the most common response was that demand conditions are not expected to change as a result of anticipated trade costs.  The distinction between firms’ expectations about demand and expectations about their costs highlights how trade policy uncertainty has implications that are different from general economic uncertainty and financial market volatility; trade policy uncertainty appears as a cost shock that affects firms’ willingness and ability to produce and sell into prevailing market conditions."

Read more via www.TonysKansasCity.com links . . .

A Reader's Digest: Uncertainty and the Outlook

Economic and policy developments are emerging rapidly, substantial differences in responses to these developments are evident across businesses and sectors, and uncertainty about their implications for the outlook is elevated. Recognizing these circumstances, this article provides a digest of work by Kansas City Fed researchers on how uncertainty can influence the outlook and highlights recent activities of regional businesses in the wake of heightened uncertainty.

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