Trade And Fiscal Policy Prompt Concern Among Economists

Aug. 21, 2018
NABE economists worry that tariffs or the threat of tariffs could have unfavorable consequences for the U.S. economy.

Trade and fiscal policy are prompting concern among members of the National Association for Business Economics (NABE). More than 90% of the August NABE Policy Survey panel reportedly worry that the tariffs or the threat of potential tariffs could have negative consequences for the U.S. economy, as would a withdrawal from the North American Free Trade Agreement (NAFTA).

Most panelists do support the current Federal Reserve monetary stance, according to NABE Vice President Kevin Swift, CBE, chief economist, American Chemistry Council. “Current monetary policy continues to be supported by business economists, with nearly eight in 10 reporting that the Federal Reserve Board’s policy is ‘about right’,” says Swift. “Indeed, the percentage holding this view is the highest in more than 11 years. Most panelists believe the Federal Reserve’s current inflation target of 2% should be maintained. Of the remaining panelists, more favor raising the target than lowering it.”

Survey Chair Jim Diffley, CBE, executive director, IHS Markit, adds, “Seven out of 10 panelists maintain that fiscal policy is ‘too stimulative.’ In general, the panel expects the federal deficit, as a percentage of the economy, to grow in the longer term, with eight out of 10 panelists indicating that fiscal policy should help shrink the deficit as a share of the economy.”

NABE also notes that executive actions regarding immigration are expected to have an unfavorable economic impact, according to a majority of respondents, while the Trump administration’s deregulatory actions are expected to have a positive impact on the U.S. economy, at least in the short run. 

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