One-Letter Words

20 April 2025

Checking the Google News before dawn this morning, hoping to be entertained by Trump's latest idiotics. Nothing new. Then I found "Trump's tariffs roiled markets but data shows a solid economy. Here's why." by Max Zahn, at ABC News, dated 17 April 2025.

The article quotes Fed Chair Powell saying "the U.S. economy is still in a solid position". Reminds me, when we first moved into our house we had a plumber in to do some work. The wife showed him around the place, and told him she likes this house, "It's solid".

The plumber told her "all houses are solid".

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The contradiction in the article title between a "solid" (presumably good) economy and "roiled" markets is worked out in the opening paragraphs:

"Measures" of (monthly) economic data are not reported until the following month...

"Barometers" of market sentiment offer "an up-to-date snapshot" of the economy...

"Due to the lag in economic data, the gap between solid readings and dire warnings" can be "overstating or underplaying" the actual situation. That is a good observation. But the article is three days old now -- why it is still in the Google News I don't know -- and I have been suckered in by that title three times. The article is definitely not worth reading three times.

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The article says "uneasiness" is "manifested in shopper surveys, one of which last week showed worse attitudes about the economy than at any point during the Great Recession." 

That would be a powerful statement, if it wasn't just one survey. Their statement leaves me with the impression that they lend support to my view that Trump is doing serious damage to the economy. In fact, they add no support. Maybe it's good I read it three times, so I noticed the one survey thing.

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The article is disappointing. It gains more strength from the gaps than from the facts it presents. They present two paragraphs separated by a photo of Powell. This photo:

Vincent Alban/Getty Images

I really like that photo. It shows the weight of the world on Powell's shoulders.

You know, it still makes sense to me that it was Trump's idea to delay increasing interest rates for a year (from March of 2021 to March of 2022) to create "the Biden inflation". But I no longer think Powell had any part in it. There are (no doubt) Trump supporters on the Federal Open Market Committee who would have been willing to vote for that delay for that reason. Off-topic, but it has to be said.

(What a scandal it would make, if people thought that to assure his own election victory, Trump created the Biden inflation.)

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Anyway, two paragraphs in sequence. These two:

Many economists expect Trump’s tariffs to hike costs and slow growth, since importers burdened by the tax are expected to raise prices for consumers, who may opt to curtail spending and ratchet down the main engine of U.S. economic activity.

“Consumer sentiment is a leading economic indicator – it’s saying people are worried now and they’re going to stop buying,” Frederick Floss, an economics professor at Buffalo State University, told ABC News.

I am troubled by their logic. Seems to me the first sentence leaves a big gap between a tariff-related, cost-induced slowdown and a general retrenchment in consumer spending. The second has a gap between a worries-related slowdown and the resulting recession -- though they refuse to use the R-word. 

ABC News tried to fill the gaps with a photograph.

The logic of those two parags begins with higher import prices, takes us to consumers choosing to slow their spending growth, then jumps to worries that cause people to cut their spending enough to create the "tariff-induced recession" that the article finally puts into words 8 paragraphs later. 

Worse, the first parag misrepresents the economic problem: The tariffs increase costs but they don't increase consumers' incomes. If we can't spend any more money, then we have to buy less of the more expensive stuff. Or we could split the difference, reducing purchases of domestic goods so we can spend more on imports. This is the insidious method by which the tariffs cause the slowing of domestic economic growth.

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The uncertainty created by Trump repeatedly imposing and pausing tariffs is a whole separate problem which could slow the economy all by itself, and is sure to deepen any slowdown arising from the costs of the tariffs and the resulting changes to our buying habits.

Don't forget massive layoffs of government workers; these are sure to increase unemployment. And, since unemployment checks are substantially smaller than paychecks, the layoffs will further reduce what the article calls "the main engine of U.S. economic activity," consumer spending.

And don't forget the one-or-two trillion-dollar reduction of government spending that has been promised; a lot of it comes with the layoffs, but there is more besides. And on that topic, you might want to read this short PDF by Frederick C. Thayer.

Last but not least, don't forget what Robert Kuttner said:

There are several distinct elements of the coming Trump depression, all cutting in the same direction, all interacting with each other, all needless.

 It's not the R-word we need to worry about. It's the D-word.