June 2018 Economic Recap
The Trump administration placed 25% import tariffs on $34 billion worth of Chinese products, with $16 billion more set to go into effect in the coming weeks. China responded in kind, focusing on agricultural products such as soybeans along with automobiles. The fallout from these actions is highly uncertain at this point, with further tariffs from the U.S. having the potential to drive the two countries into further trade conflict. On their own, the combined measures will likely have a limited impact on growth; most estimates suggest they will shave off around 0.1% of U.S. GDP over the next year. However, concerns over the disentangling of global supply chains and reaction of financial markets remain.
The FOMC hiked interest rates a further 25 basis points to a range of 1.75%-2.00%. The committee’s statement, along with Chair Powell’s remarks, painted current economic conditions as in line with the Fed’s dual mandate. So far trade concerns have been brushed aside as largely transient factors, however it remains to be seen if further escalation in trade conflict could adjust that calculus.
For a deeper consideration of the economic data released during June, please follow the links below: