By Timothy S. Snyder, Matador Economics
With threats of tariffs increasing, the markets took a nose dive yesterday. Equities were lower on concerns over a slowing economy. To that point, the Atlanta FED released in a statement that they expect to see a contracting economy in the first quarter of 2025.
If prices continue to inflate, markets could see stagflation develop if Fed Chairman Jerome Powell overplays his hand too late! This is the proverbial “slippery slope.” Can’t allow the economy to dissolve into a flat mess!
Now comes the trade wars as there was a report that a Dodge Ram Truck, with a sticker price of $80,000 just became $100,000 because of the tariffs.
We must remember a tariff for the sake of having flexing a muscle, has little long term effect. This is not what the Administration wants to see. They want to bring recipients of the tariffs to the negotiating table and repair our trade deficit. We don’t want to endure the tariffs very long, so expect a quick-ish resolution.
As tariffs began at midnight on Canada, Mexico and increased tariffs on China, tonight President Trump will address a joint session of Congress. We’re told to expect a “Jerry Springer-like” show from across the aisle, as one wonders what ever happened to decorum in Congress and respect for the Office of the President. This is apparently the place where reality television meets the State of the Union.
U.S. winter weather
Early morning storms blew through the DFW Metroplex, heading east quickly, but strong winds will be the concern for the rest of the day as fire watches and warnings replace the severe thunderstorm warnings and of course there’s blizzard warnings in the Midwest. What a day!
More energy commentary is available at www.matadoreconomics.com
