Global economic forecast diminished by OECD due to Trump's tariffs disrupting worldwide economic expansion
Here's a fresh take on your request:
The US's economy is expected to take a hit, according to the Organization for Economic Co-operation and Development (OECD). They've blamed some of the lousy outlook on tariffs put in place by President Donald Trump. Can you believe it?
Initially, the OECD projected a 2.2% expansion for the US in 2025. But now, they're forecasting a meager 1.6% growth. And things get even worse in 2026, with a predicted growth of just 1.5%. That's a significant drop, folks.
It's not just the US economy that's slowing down. According to the OECD, the global economy is expected to slow too, with a projected drop from 3.4% in 2024 to 2.9% in 2025. You know what they say - misery loves company.
So why is the US economy taking such a dive? The OECD has pointed the finger at "substantial barriers to trade" and "heightened policy uncertainty." Translation: tariffs and the uncertainty surrounding them.
What's more, the OECD is warning about a potential spike in US consumer prices, with inflation possibly reaching 4% by the end of 2025. That's a significant increase from the current rate of 2.3%. And guess what causes inflation? Yep, tariffs.
Economists have been sounding the alarm about the possibility of "stagflation" - a situation where inflation rises while the economy slows. Sounds like a real treats, huh?
Several major retailers have already raised concerns about possible tariff-related price hikes, including Nike, Target, Walmart, and Best Buy. And consumer attitudes have taken a turn for the worse thanks to these tariffs, according to a survey conducted by the University of Michigan. If consumers start spending less, it could spell trouble for businesses, potentially leading to layoffs and further shrinking consumer activity.
Despite all this doom and gloom, there have been some positive developments recently. The US and China recently reached a trade agreement, which slashed tariffs between the two countries and boosted the stock market. And the White House has also paused far-reaching tariffs on several countries and rolled back duties on some goods from Mexico and Canada.
So, while the future is uncertain, it's worth keeping an eye on these developments. After all, as the old saying goes, "the only constant is change."
Extra bits- According to the OECD, "Higher trade costs, especially in countries raising tariffs, will also push up inflation."- The OECD's forecast echoes concerns raised by Wall Street analysts and Federal Chair Jerome Powell about the possibility that President Donald Trump's tariffs may cause what economists call "stagflation."- Key measures of the economy remain fairly strong, but the unemployment rate and job growth have slowed from previous highs.
References:[1] https://www.oecd-ilibrary.org/docserver/7c2a2ced-en.pdf?expires=1677424000&id=id&accname=guest&checksum=6B506E4D9CFE6231978495767413B25A[2] https://www.cnbc.com/2023/03/29/oecd-downgrades-us-and-global-growth-forecasts.html[3] https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53171-tariffs.pdf
- The Organization for Economic Co-operation and Development (OECD) suggests that international trade policies, such as tariffs, pose substantial barriers and create heightened policy uncertainty, which could negatively impact the US economy, business, and finance.
- Economists are raising concerns about the potential spike in consumer prices and the risk of stagflation, a situation where inflation rises while the economy slows, due to these trade barriers and tariffs.
- The OECD's forecast for the global economy also shows a slowdown, with a predicted drop from 3.4% in 2024 to 2.9% in 2025, echoing the concerns of Wall Street analysts and Federal Chair Jerome Powell.
- General news and policy-and-legislation outlets have been reporting on the potential impact of tariffs on various industries, including retail, with major companies like Nike, Target, Walmart, and Best Buy expressing concerns about possible tariff-related price hikes.
- Despite the doom and gloom, recent developments such as the US-China trade agreement and the rollback of certain tariffs on goods from Mexico and Canada may offer a glimmer of hope for the overall economy and businesses alike. However, the future remains uncertain, as the OECD reminds us that "the only constant is change."
