Effects of the U.S. - China Trade War on the National Job Market
While the unemployment rate for the U.S. may be at its lowest in almost 50 years, levels could have dropped even further if it were not for the U.S. – China trade war, according to a recent analysis by Moody’s Analytics.
Mark Zandi, chief economist for Moody’s Analytics stated that due to tariffs imposed upon hundreds of billions’ worth of Chinese imports by the U.S. government, 300,000 fewer jobs have been created, creating a 0.3% drop in the U.S. gross domestic product (GDP).
This value is centered on the variation between tangible nonfarm employment and forecasts of how the employment landscape would appear as of June 30, 2019, sans the effects of the U.S.-China trade war.
Should the U.S. tariffs remain intact at existing and projected levels, roughly 450,000 fewer jobs will be produced by year’s end. In fact, this amount would likely increase to 900,000 if the trade discord continues through the upcoming year, according to Zandi.
Zandi also indicated in the report that China Premier Xi and President Trump “have embarked on a dangerous game of economic chicken. Both claim that their economies are strong enough to withstand the trade turbulence, but they are pursuing policy stimulus to offset the costs of the war.”
Effective the week of September 7, 2019, Chinese goods became subject to over $100 billion in American tariffs. Another $200 billion in tariffs are slated to take effect in December. Furthermore, by the end of 2019, practically every item imported from China will be subject to the U.S. tax. This amounts to approximately $550 billion worth of complete goods which are compensated by American companies. Following increased Chinese duties on U.S. goods valuing in the region of $75 billion, the White House upped tariffs in September 2019, coinciding with an already intensifying trade war between the two largest economies in the world.
Amid indicators of decelerating job market, U.S. employers took on 130,000 workers during August 2019, setting the unemployment rate at 3.7%
U.S. companies have covered a large portion of tariffs on Chinese imported goods. According to a report released in September 2019, American business paid $6.9 billion in tariffs for the month of July, alone. This increasing fiscal uncertainty can hinder companies’ overall spending strategies which may result in slower economic growth.
“The data speaks for itself – the trade war is having a serious negative impact on the U.S. economy”.
Economist, Torsten Slok of Deutsche Bank, stated last September, “The data speaks for itself – the trade war is having a serious negative impact on the U.S. economy”. This impact involves a decrease in firms preparing their own upcoming capital expenditures, a falling confidence in businesses and CEOs, as well as a drop in available jobs.
It is projected that the years-long economic expansion experienced by the U.S. may be slowing down. According to the Congressional Budget Office, the forecast for economic growth is expected to level at approximately 1.8 per year following 2019, which is less than the historical average.
Source: CBSnews.com
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