Greg Ip
Appearances
Apple News Today
Inflation helped Trump win. Now it’s becoming a headache.
People endured quite a few years of rising prices for groceries, gasoline, other basics.
Apple News Today
Inflation helped Trump win. Now it’s becoming a headache.
So I think Trump knows that he has to deliver on lower costs for people in order to really fulfill the economic mandate that he's been handed.
Apple News Today
Inflation helped Trump win. Now it’s becoming a headache.
Whatever is happening in the economy, do not blame or thank the president because there is so little that a president can do. Most of these things are driven by really complex, multifaceted phenomena that have to do with the quality of the workforce, the level of technology, big global shocks like the financial crisis from 15 years ago or the COVID pandemic.
Apple News Today
Inflation helped Trump win. Now it’s becoming a headache.
The president has promised 25% tariffs on all imported steel and aluminum to take effect in a few weeks' time. And we have already seen U.S. steel companies raising their prices because now they can compete better with imports. And we've seen prices on markets go up, and that will find its way into a variety of products that Americans consume.
Apple News Today
Inflation helped Trump win. Now it’s becoming a headache.
He and his advisors are also very aware that if the inflation problem persists beyond a few months, the ability to blame this on Biden starts to ebb away and people are going to hold him responsible for it.
Apple News Today
Will the Supreme Court allow Trump to fire Fed Chair Jerome Powell?
They may decide to keep interest rates lower than they think is wise, and that might result in higher inflation and a lower dollar. Investors know this, and so they will be looking at everything the president says, and they will assume that when the president says, I want lower interest rates or I want a lower dollar, for example, that the Fed will somehow deliver the policy that does that.
Apple News Today
Will the Supreme Court allow Trump to fire Fed Chair Jerome Powell?
One is that it could introduce a lot of volatility. Now, you might initially get a rally in stocks because stock investors tend to like lower interest rates. But you would also see the markets beginning to build in higher expectations of inflation in the long run. And that could lead to higher long-term interest rates.
Apple News Today
Will the Supreme Court allow Trump to fire Fed Chair Jerome Powell?
And that would affect things like the money that the government pays to service the national debt. It would affect things like mortgage rates that homeowners pay.
Apple News Today
Will the Supreme Court allow Trump to fire Fed Chair Jerome Powell?
The Supreme Court is addressing a question about whether the president can fire members of independent agencies for anything other than cause.
Apple News Today
Will the Supreme Court allow Trump to fire Fed Chair Jerome Powell?
If they do, then in theory, the president would be able to fire the chairman of the Federal Reserve. And the Fed chairman would effectively, instead of being an independent central banker, become an at-will employee of the president, like any cabinet secretary.
Apple News Today
Joe Biden has prostate cancer. Here is what we know.
It seems kind of paradoxical that both political parties have been doing a lot to bring back manufacturing jobs. And if you look at the industry, there's actually a lot of open manufacturing jobs right now.
Apple News Today
Joe Biden has prostate cancer. Here is what we know.
Last year, the Manufacturing Institute, it's a nonprofit aimed at developing America's manufacturing workforce, and Deloitte, a consultancy firm, they surveyed more than 200 manufacturing companies, and more than 65% of the firms said recruiting and retaining workers was their number one business challenge.
Apple News Today
Joe Biden has prostate cancer. Here is what we know.
When people think of manufacturing, they picture like a Charles Dickens novel or something like that. They're dirty, they're dangerous, they're monotonous. But she says that's a misperception. You know, she says that modern manufacturing is clean, it's high tech, it involves problem solving.
Apple News Today
Joe Biden has prostate cancer. Here is what we know.
One of the big reasons why manufacturers left America in the first place is because wages are higher here than overseas. So this sort of wage issue begs the question whether manufacturers, particularly in labor-intensive types of manufacturing, can be profitable and globally competitive in the United States.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Our last survey asked economists that question, and they put the probability of recession in the next 12 months at 45%, which was up a lot from 25% in our prior survey. So the consensus is that we won't have a recession, but it's a very high risk. I think you're asking my view.
The Journal.
Trump 2.0: Where Is The Economy Headed?
I don't think we'll have a recession because I think, first of all, you know, one thing I've learned watching the economy over the years is that there's a self-correcting mechanism at work here. And so I kind of think that we'll look back and see that all the chaos—
The Journal.
Trump 2.0: Where Is The Economy Headed?
of the last few weeks was a little bit of a sorting out process where the administration, responding to all the outside feedback it got to its plan, dialed it back and arrived at something that was perhaps a little less disruptive than people originally expected. And for that reason, I think the economy will probably make it through the year without a recession.
The Journal.
Trump 2.0: Where Is The Economy Headed?
And by the way, I just sort of like gave you the consensus forecast, right? I just basically said, well, the consensus is here and I'm just a little bit to the side of the consensus. So it is not exactly a profile in courage if I have to, if I'm being honest.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Well, Molly said a moment ago she came back to this kind of maelstrom of markets gyrating up and down. And what I find fascinating is that if you actually were able to ignore the markets, in fact, if you were able to ignore the news and only look at the economy, the economic data, the kind of stuff that we nerds sort of focus on, you know, like the Consumer Price Index and the unemployment report.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Nothing much is going on. The economy, since Trump became president, looks a lot like the economy when Biden was still president. Job growth is chugging along. Almost no sign of, like, Elon Musk's Department of Government Efficiency layoffs. Certainly no sign of big cuts to federal spending, which is actually up compared to a year ago. In spite of the
The Journal.
Trump 2.0: Where Is The Economy Headed?
much ballyhooed largest deportation in history. We don't see much sign that migrants have disappeared from the labor force. And on the tariffs, this is the most fascinating thing. There's just not much inflation out there. Now, there's a great big caveat to that, of course, and that is it's early days.
The Journal.
Trump 2.0: Where Is The Economy Headed?
But I still think it's intriguing that for all the talk of tariffs, we're not seeing it in the price data. We're not seeing it in the spending data. So this is definitely a time of frayed nerves, certainly among investors and consumers. But the economy overall kind of looks fine.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Well, if you actually take the administration at its word, if you take them both seriously and literally, then there is a very good reason to be worried. Because the scale of the tariffs, number one, the dollar value alone would amount to one of the largest tax increases relative to the size of the economy since the 1960s. So that would definitely weaken the economy.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Secondly, the impulse to prices would deliver a very strong boost to inflation. And finally, it would require a highly disruptive reorganization of supply chains, which would be costly and take years to work through. But, of course, the big question mark is, will the president actually follow through on this? And what we have seen is an interesting kind of, you know, self-correcting mechanism.
The Journal.
Trump 2.0: Where Is The Economy Headed?
The president threatens very aggressive action. The markets sell off. The president walks it back. And now we have a pause on tariffs. We have even talk of the tariffs on China being reduced and so forth. And so the markets improve.
The Journal.
Trump 2.0: Where Is The Economy Headed?
It would still be a very big hit to the economy if we had a lasting 50% tariff on China. I mean, our imports from China, a lot of them cannot be easily replaced by goods from other countries. Even if we were to move that production to other countries or to the United States, that's a multi-year process. So it's almost impossible to avoid some impact on prices and consumer spending.
The Journal.
Trump 2.0: Where Is The Economy Headed?
But again, we're not seeing the impact yet. And I think there might be a couple of reasons for it. First of all, a lot of the importers that were most exposed to these kinds of tariffs, they kind of saw the writing on the wall. And there was kind of a rush to import goods in the months leading up to the president's inauguration. And so that stuff is sitting in inventory waiting to be sold.
The Journal.
Trump 2.0: Where Is The Economy Headed?
The effect of tariffs may not show up until that inventory has been run down somewhat. And we've seen some companies actually rather than raised prices, step back and wait a little bit just to see what happens.
The Journal.
Trump 2.0: Where Is The Economy Headed?
You know, Molly, I feel like we could have had exactly the same conversation a year ago when the economic numbers were looking pretty good, the inflation rate was coming down a lot, and people's confidence was terrible. People were really upset, right?
The Journal.
Trump 2.0: Where Is The Economy Headed?
And we talked endlessly about the disconnect, the disconnect between the good economic data and the poor vibes. And I kind of feel like the disconnect has now come for Donald Trump. And it just, I think, just demonstrates that there's a profound dissatisfaction in the economy which you can't pin on any particular president or any particular policy. So...
The Journal.
Trump 2.0: Where Is The Economy Headed?
The vibes in part are shaped, I think, by an underlying level of dissatisfaction that predates this administration. I think it also reflects the fact that the news is full of all the talk of what's going to be happening with tariffs and so forth. And, you know, we're rational people, right?
The Journal.
Trump 2.0: Where Is The Economy Headed?
So if like every time you open your social media feed or you listen to the news, it's talk about price increases are coming, price increases are coming. Of course, that's going to affect your mood and your vibes. But I think the key question we need to ask ourselves is, at what point do these concerns about the future actually reflect behavior in the present?
The Journal.
Trump 2.0: Where Is The Economy Headed?
And we just haven't seen that happen yet. So until that does, I'm going to continue to sort of treat this as kind of like Disconnect 2.0.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Well, the president obviously is upset that the markets don't like his tariff plan and that they've responded by driving down stock prices. And so the president says, hey, I've got this great plan. It's important for the economy, but I could use a little help here. And what does he turn to? Well, he turns to the Federal Reserve.
The Journal.
Trump 2.0: Where Is The Economy Headed?
And those of us who covered his first term are familiar with this script because in 2018 and 2019, when the Fed was raising interest rates from the very low zero level, the The president was attacking the Fed then, including Jerome Powell, the chairman who Trump himself, by the way, appointed.
The Journal.
Trump 2.0: Where Is The Economy Headed?
I think what gave it a different flavor this time, Kate, was that beneath that complaint was the threat that if Powell did not lower interest rates, Trump would fire him. And this is a whole new level of uncertainty and tumult that the market is just not used to.
The Journal.
Trump 2.0: Where Is The Economy Headed?
And it just kind of like, you know, adds to the overall feel of the institutional sinews of the economy becoming increasingly frayed and less dependable. And that's just not a big confidence-building measure.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Well, as my colleagues reported this week, we think that the market's role is quite important. The president does seem to be a little less sensitive to the stock market than he was in his first term, but he is still sensitive.
The Journal.
Trump 2.0: Where Is The Economy Headed?
And when the stock market, and in particular the bond market, when they started to show real signs of cracking, that is coincided with when they announced the pause on many of the tariffs.
The Journal.
Trump 2.0: Where Is The Economy Headed?
For those in Trump's inner circle who are a little nervous about the speed and aggressiveness of this tariff action, that provided them with talking points and ammunition to sort of like suggest to the president, hey, Mr. President, maybe it's time to walk this back. There might be a better way.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Well, you know, it's kind of like almost a cliche now, but uncertainty is like bad for growth, right? I mean, businesses are just inclined not to do anything. But the longer this uncertainty persists, the more likely that negative effect is likely to manifest itself.
The Journal.
Trump 2.0: Where Is The Economy Headed?
I would say that, as you say, I think that especially leaders from other countries have been struggling to figure out exactly what is it that Trump responds to. Even more so, they're trying to figure out what he wants from them to get rid of the tariffs. We hear this over and over again from countless countries is that they go in, they talk to the president's advisors.
The Journal.
Trump 2.0: Where Is The Economy Headed?
They say, we want to like work with you to negotiate with you. What do you want? And they don't get a clear answer. And so I think it's way too premature to think that the uncertainty is about to go away soon. Because I think that there is still this chasm of mystery about exactly what the United States wants and what the president can ultimately accept from a negotiation.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Look, I think one thing that I think we can say with some confidence is that however all these tariff negotiations end up, we will end up with higher tariffs than we did before. And we will especially end up with higher tariffs on products that are very important to the president like automobiles, steel and aluminum, semiconductors, a few other things.
The Journal.
Trump 2.0: Where Is The Economy Headed?
And so it seems almost certain that we should see some new investment, new jobs in the United States as a result of the fact that it is now very costly to import those things and it makes more sense to make them in the United States. We'd already seen, for example, that the steel tariffs that President Trump had imposed in 2018 in his first term had a little bit of that effect.
The Journal.
Trump 2.0: Where Is The Economy Headed?
But, of course, that's only the narrow first order effect of the tariffs. And I think you have to step back and ask, what are the bigger effects on the economy? First of all, it will make it very expensive to operate any business in the United States that uses those products that are protected.
The Journal.
Trump 2.0: Where Is The Economy Headed?
Because we know with confidence that one thing protection via tariffs does is it makes the protected industry more expensive and less efficient. So I think that putting walls up around the U.S. economy will, over time, lead to possibly a more stable manufacturing sector but a less competitive one. But look, the U.S.
The Journal.
Trump 2.0: Where Is The Economy Headed?
economy is an incredibly big and dynamic economy, and it is very likely to be a very prosperous economy. and dynamic economy for a very long time to come in spite of these tariffs. So I'm not convinced that five to 10 years from now, it will look a whole lot different than it does now.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
The main takeaway from what Chair Powell had to say is that not a lot in the economic outlook with respect to either economic growth or inflation has changed, notwithstanding the fact that the headlines and the conversation have been jam-packed. Thank you very much.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
Well, they lowered their economic growth projection for this year to 1.7% from 2.1%. Now, that's obviously in the wrong direction, but I'm not sure how much to read into that because a lot of that might just reflect some of the strange weakness we've seen in the quarter so far. They also raised their expectations for inflation this year a little bit by about a quarter of a percentage point.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
And Chair Powell in his press conference did indicate that that reflected some expected pass-through to consumer prices from higher tariffs. But if you look at the projections for the following year, those haven't really changed.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
So effectively, what they're saying is we think tariffs will generate this one-off bump up in the inflation rate, but not a persistent increase in inflation, which is the kind of thing that they would worry about and might have to respond to by raising interest rates.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
The press corps obviously wanted to get him to talk expansively about all the stuff Trump's been doing on tariffs and on spending cuts and so on. And Powell, who tries very hard to maintain the apolitical, nonpartisan reputation and mission of the Fed, he wasn't helping out on that front at all. He was batting down those questions left, right, and center.
WSJ What’s News
Fed Warns of Increased Uncertainty, Holds Rates
Well, it's not a very satisfying answer, but the main impact is just raising a lot of uncertainty. I mean, we've said it before on this show and other places is that we have a lot of anxiety out there. We know that from confidence surveys. We can see it in the volatility of the stock market, all the so-called soft indicators.
WSJ What’s News
Fed Warns of Increased Uncertainty, Holds Rates
But when we look at the hard indicators like employment and spending and production, they're not yet showing up much impact of the tariffs. But there's just so much they don't know about what the impact of tariffs will be.
WSJ What’s News
Fed Warns of Increased Uncertainty, Holds Rates
Well, they, like the rest of us, are waiting effectively to see the extent to which the tariffs show up in prices or result in cutback in deliveries or production, you know, whether there are actually empty shelves from certain products don't show up. And that could happen in as little as several weeks or it could take longer.
WSJ What’s News
Fed Warns of Increased Uncertainty, Holds Rates
But this is kind of a moving target because, as you know, the president and his advisors are right now entering into negotiations with a lot of countries. The tariffs on China could end up being lower than we currently expect. That adds further uncertainty because it means that in addition to the lags from the tariffs that are already in place, the tariffs in place may not stay at that level.
WSJ What’s News
Fed Warns of Increased Uncertainty, Holds Rates
The feds basically say, why rush a decision that they don't have to make now?
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
Electricity is almost a purely domestically sourced energy supply. And it's also very diverse. Because of these many different modes of electricity, there's no maximal exposure to disruptions in any single mode.
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
Almost all of it comes from domestic sources, sources like renewables, wind, and especially solar, which has become very, very important. There's a lot of excitement about new nuclear technologies that are on the drawing board. Geothermal, also another potential area of expansion. What's interesting about electricity is that unlike oil, which is very much a global market,
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
And therefore, we are in some sense vulnerable to global developments. Electricity is almost a purely domestically sourced energy supply. And it's also very diverse. Because of these many different modes of electricity, there's no maximal exposure to disruptions in any single mode.
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
Well, the economics of electricity are very different from the economics of oil. With oil and to some extent natural gas, when it's burned for heating, for example, most of the cost involves the fuel itself. But with electricity, most of the cost is the infrastructure involved in generating and transmitting it. And so electricity is a very capital intensive form of energy relative to oil.
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
And that means you have long lead times and enormous capital demands. And that's especially important right now because the central point of my column is that we are seeing much faster rates of growth in electricity demand in coming years than we've seen in many decades. And that means that we need to have in place these capital intensive infrastructure
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
arrangements to make sure that we have the capacity to generate that electricity.
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
All of them are aware of these needs that are coming along. So they're filing with regulators plans to build more generating capacity, but you're seeing other arrangements coming along as well. So big users of electricity like Google and Amazon and Microsoft are building co-location agreements.
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
Instead of simply building a data center and then buying their electricity off the grid, they're actually making arrangements with like nuclear power plants to have direct access to that power.
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
Well, if you think about it in the old days, why did we worry about oil security? It's because if there was a shock to the supply of oil, it could really do a lot of harm to the American economy. Well, as oil becomes less important, those shocks are less of a risk.
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
But you do have to worry about economic growth coming to a halt because we don't have enough electricity capacity or that capacity has been interrupted by some kind of accident or demand spike or something like that.
WSJ What’s News
How RFK Jr. Is Reshaping the U.S. Health Agencies
There is a big mission ahead for investors, utility companies, the public, and our political leaders to basically have in place all those building blocks to make sure that that infrastructure that can serve the electric economy is there and able to accommodate those demands. Otherwise, it will be a big negative for economic growth.
WSJ What’s News
Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?
Well, under the law right now, the Fed chair is one of seven governors, and the law says governors can only be fired for cause. So that tells you that the plain reading of the statute is no, the president cannot fire the Fed chair. There is a more ambiguous question about whether he can demote the Fed chair to being just another governor, and I don't think there's a clear answer on that.
WSJ What’s News
Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?
But the straight-off answer is no, that Trump cannot fire the Fed chair.
WSJ What’s News
Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?
The decision in question dates back to 1935. It's called Humphrey's Executor. And in it, the Supreme Court said Congress is fully able to bar the president from firing members of independent commissions for reasons other than cause. So a few months ago, the president fired a member of the National Labor Relations Board. She is suing to get her job back.
WSJ What’s News
Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?
And when the Supreme Court rules on that case, they may decide if that 1935 precedent still stands or they may knock it down. If they knock it down and it is interpreted in such a way that this is also true of the Fed, then in some sense, the road is open for Trump to also fire any member of the Fed that he wants, including the Fed chairman. Now, we don't know whether he will actually do that.
WSJ What’s News
Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?
And it's also likely the case that Jay Powell will not go if the president fires him and that he will pursue his own legal options in that instance. But I think it's fair to say that we'd be heading for a fairly disruptive and significant clash between the Fed and the White House.
WSJ What’s News
Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?
All right. Thanks for having me.
WSJ What’s News
Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?
If the president gets his way, it essentially turns the Fed chairman into an at-will employee like the Treasury Secretary. And it means that monetary policy is effectively under the control of the president.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
It's very important to look at the individual behavior inside the bond market to kind of understand the message that's going on. When bond yields go up, that's essentially a very long-term interest rate, and it's telling you what the market thinks the cost of long-term borrowing should be.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
Usually, movements in bond yields are driven by what they think the Federal Reserve is going to do with short-term interest rates. But if that was what was going on right now, we should see the biggest movement in two-year bond yields. Those are the most sensitive to what people think the Fed will do. But they've barely moved.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
Instead, we've seen 10-year yields go up and we've seen 30-year yields go up a lot. So what's going on right now seems to be that investors are becoming specifically quite nervous or uneasy about owning U.S. Treasury bonds and are asking for higher returns associated with the risk. The most obvious reason they're nervous is because the U.S.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
is already running very large budget deficits on the order of 6% of GDP. Republicans in Congress and President Trump are about to pass a budget package, which will not only maintain those deficits, but probably see them rise to over 7% of GDP as far as the eye can see. That basically means that we are going to be selling a lot of bonds to people and we need them to buy those bonds.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
And they're asking for a higher return in order to do that.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
So the overall environment you have out there is one where inflation used to be very benign. That kept interest rates low and it was an easy time for governments to borrow. Now, because the inflation environment is no longer benign and central banks are on the case, that alone makes it a more difficult time for people to borrow money for very long term, including our government.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
So you mix the inflation picture with the deficit picture and you have a bunch of reasons why people might be more nervous than they used to be about lending money for very long term to the U.S. Treasury.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
So first of all, the most important reason why the dollar is probably going to stay the world's reserve currency for a while is that there's really not an alternative. But that doesn't mean people aren't going to look for alternatives to the dollar. They will look for alternatives. They seem to be buying a lot of gold. They're buying a lot of Bitcoin.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
And I don't think a reserve currency status is the sort of thing a country loses overnight. But it happens bit by bit. And you do see some evidence that that's happening now. The fact that the dollar fell instead of going up as bond yields went up is very unusual. And it does suggest that investors as a whole are trying to reduce their holdings of U.S. dollar assets.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
So what I'm trying to say is that, no, the reserve currency status ain't going away tomorrow or next year. But you can see that bit by bit is probably going to be something that the U.S. can't take for granted the way it used to.
WSJ What’s News
President Trump Threatens New Tariffs on the EU and Smartphones
All right. Thanks very much for having me.
WSJ What’s News
What’s Behind President Trump’s Trade Agenda
It tells us that there's really been no loss of momentum in the economy, even after the very high tariffs that President Trump announced on April 2nd. April job gains against the revised figures for prior months, it looks very steady, very solid. The unemployment rate unchanged. This tells us a few things. One is that the underlying economy was very healthy when President Trump came into office.
WSJ What’s News
What’s Behind President Trump’s Trade Agenda
And secondly, that the effect of the tariffs is not really being felt yet. That's mostly because most products have not yet actually seen their prices go up because of tariffs. Partly that's because businesses may have pre-ordered. Partly it's because there were delays in the implementation of those tariffs. And the president has gone on to pause many of his own tariff announcements.
WSJ What’s News
What’s Behind President Trump’s Trade Agenda
Certainly all the economists that we talked to are expecting a slowing in job gains this year. There are certainly some economists who even think that we will go into a recession. And with the border basically closed to unauthorized migrants. The labor force will be growing more slowly in coming months. So I would expect that alone to pull down job growth.
WSJ What’s News
What’s Behind President Trump’s Trade Agenda
The bigger question is, will some of the sentiment and spending effects of tariffs further hurt hiring? And that it's a lot less certain because the president keeps changing his plans. businesses are reluctant to make dramatic changes one way or the other.
WSJ What’s News
What’s Behind President Trump’s Trade Agenda
A lot of them are holding out hope that just as he paused or rolled back many of the tariffs so far, he will continue to do so, and that you may not see as dramatic a change as people were anticipating just a month or two ago.
WSJ What’s News
What’s Behind President Trump’s Trade Agenda
Did those show up in the numbers? Yeah, we actually did see some effect of that. Federal employment was down around 10,000. If you exclude the post office, it was down around 8,500. And it's now down about 20,000 since the president took office. Now, federal employment does fluctuate.
WSJ What’s News
What’s Behind President Trump’s Trade Agenda
It's fair to say that that definitely represents the effect of the Department of Government Efficiency and some of the very severe cutbacks it implemented on federal payrolls. That effect, I expect, will continue to trickle out over coming months.
WSJ What’s News
What’s Behind President Trump’s Trade Agenda
Recall that the initial wave of job reductions were essentially asking people to take voluntary resignations, and they could stay on the payroll as late as September. And if you're still on the payroll, you're counted as employed. That was Greg Ip, The Wall Street Journal's Chief Economics Commentator.