A trade deal with China, a lower than expected inflation number, and a higher than expected jobs report suggest the experts were wrong once again. As even The New York Times put it recently, “Recession Warnings Are Everywhere, Except in the Data.”
Earlier this year, I opined that President Donald Trump’s critics were living in the future, constantly imagining crises and calamities that haven’t happened yet. Perhaps nowhere was that principle more apparent than on the issue of tariffs, where despite the reality that the percentage of the overall economy affected was manageable even in a worse case scenario, critics in both the expert class predicted nothing short of economic Armageddon at some point in the future, so long as it wasn’t the actual day they were reporting. Even beyond a sudden insistence that short term fluctuations in the stock market represented the economy as a whole, the media published hundreds if not thousands of articles predicting the end was near. CNN, for example, asked readers, “Not feeling the trade war pain yet? Get ready” on April 25. This “analysis” by Allison Morrow began truthfully enough, “By now, anyone with even half an eye on the news has seen headlines about how the economy is suddenly in trouble because of President Donald Trump’s tariffs: Markets are swinging wildly, investors are panic-buying gold, bond yields are surging, and the dollar is falling. It’s not great. But as you glance up from your phone and look around, maybe nothing feels all that different? You may still have a job. There’s still plenty of produce at the grocery store. Your morning coffee and bagel cost the same as they did a month ago. Maybe the media are blowing everything out of proportion?” Of course, that couldn’t possibly be it, and so Ms. Morrow descended into pure panic porn from there, promising an outright crash – sometime soon. “When you think of the trade war, think of a summer storm rolling in. There’s a flash of lightning. One. Two. Three. Four. Then a crash of thunder. Right now, most consumers are in that quiet pause in the middle. The crash is coming.”
The very next day, presumably while waiting for the crash, CNN had moved on to pondering, “How Trump’s 145% China tariffs could crush American small businesses.” After summarizing how Christina and Ian Lacey launched a business from home that transformed old guitar strings into jewelry and which grew to $360,000 in annual sales, Nayeli Jaramillo-Plata declared, “But all the hard work may fall to the wayside due to President Donald Trump’s 145% tariffs on Chinese imports, which accounted for nearly $440 billion in goods to the United States in 2024. While businesses of all sizes are impacted by tariffs, smaller operations — like Retuned Jewelry — are more exposed, according to John Arensmeyer, founder and CEO of Small Business Majority, an advocacy group that represents a network of 85,000 small businesses. He said small businesses will have to raise prices, cut staff, delay growth plans or shut down entirely just to keep up with the rising costs of imports they can’t source domestically.” At issue for the Laceys: The availability of beads, chains, clasps and hooks from China of all things, which supposedly they can’t source elsewhere. While this might well be true, did Ms. Jaramillo-Plata bother asking what they pay for these items from China and what percentage of the cost to their customers are raw materials? This, of course, is the relevant figure, and if I had to guess, they’re paying literal pennies while most of the cost is their manual labor, meaning even a 145% increase will have a negligible impact on the final price, far, far from “crushing” their small business.
Sadly, this didn’t stop Ms. Jaramillo-Plata from moving on to the supposed calamities sure to afflict other small businesses in the future and by May 6, CNN had expanded the focus of the coming catastrophe to everyone in the country. According to their reporting, “The first boats carrying Chinese goods with 145% tariffs are arriving in LA. Shipments are cut in half. Expect shortages soon.” “American consumers are on the cusp of tough choices because of President Donald Trump’s trade war. Ships now pulling into US harbors from China are the first to be subject to the massive tariffs that America is imposing on most Chinese imports. That means, in a matter of weeks, consumers will face higher prices and shortages of certain items.” “This week, we’re down about 35% compared to the same time last year, and these cargo ships coming in are the first ones to be attached to the tariffs that were levied against China and other locations last month,” explained Gene Seroka, executive director of the Port of Los Angeles. “That’s why the cargo volume is so light.” Ryan Peterson, the CEO of Flexport, a logistics and freight forwarding broker believed it would even be worse, calling for a 60% decline that consumers “will start to notice very soon.” “A 60% decline in containers means 60% less stuff arriving,” he told CNN’s Pamela Brown last Tuesday. “It’s only a matter of time before they sell through existing inventory, and then you’ll see shortages. And that’s when you see price hikes.” JP Morgan had it even starker, if you can believe that, claiming there will be a 75% to 80% decline in Chinese imports. On the other hand, maybe it’s 20%, at least that’s according to the National Retail Federation, which put that as the figure for total imports. Despite not having anything resembling an actual agreed upon metric by the so-called experts and without considering that at least some of this drop might well have been because importers moved shipments up as a result of the tariffs in the first place, CNN was convinced any “stockpiles are starting to run out” and disaster was close. “If this goes on for a few more weeks, (retailers will) sell through that inventory and by the summertime, you’ll have shortages and empty shelves,” Mr. Petersen insisted, or maybe not. Mr. Seroka, quoted right after, was a little more optimistic, predicting that there won’t be bare shelves, merely a little less selection. “So if you’re looking for a certain type of pants, you may find all kinds of pants, but not the type you want. And the type you want….are going to be priced up,” he explained–without saying how much.
Of course, CNN wasn’t alone. Similar stories have been legion in the mainstream and niche media, warning of everything from shortages of pharmaceuticals to copper with toilet paper in between. As ever, the shortages and the accompanying price shocks if not a full blown recession were always just a couple of weeks away, right around the corner, yet not never actually arriving at least so far. Perhaps nothing encapsulated this dynamic more ironically than a recent article in The New York Times that bizarrely claimed, “Recession Warnings Are Everywhere, Except in the Data.” As they saw it, “Evidence for the economic impact of President Trump’s trade wars is everywhere — except, for the most part, in economic data itself. Consumer spending hasn’t fallen. Layoffs haven’t risen. Businesses haven’t stopped investing in equipment or buying supplies.” Under normal circumstances, that would lead most fair minded people to conclude that the negative impacts of President Trump’s tariff policy were not nearly going to be as severe as advertised, but this world is far from normal, largely because the establishment experts and political class loathe the man past all reason. Thus even the Times acknowledged that what is happening is not normal, “Economists say it is a matter of time before the impact of tariffs and the uncertainty that Mr. Trump’s on-again, off-again approach to trade policy has created begin to show up in the hard data. But until then, they are left sifting through crumbs of evidence that wouldn’t get a second glance in more normal times: customs revenue, hotel bookings in Las Vegas, freight shipments by truck and rail.” “The problem is we don’t have much to hang onto at this point,” explained Marc Giannoni, chief U.S. economist for Barclays. “We have to rely on anecdotes, on indicators that are nonconventional,” he added, which essentially gives up the entire game that the experts are intentionally looking for bad news and finding it, or more accurately spinning it, anywhere they can.
The truth of this was revealed in two developments this week alone, one as a result of President Trump pursuing his policy goals, the other based on hard economic data. On Sunday evening, the Trump Administration announced a breakthrough framework with China to maintain a much lower 30% tariff on imported goods and a 10% tariff on exported goods after two days of meetings in Geneva, Switzerland, less than three days after announcing the framework of a deal with the United Kingdom. To any honest observer, these outcomes should have been seen as inevitable from the start. China, for example, cannot bear the expense of a 145% tariff, nor did President Trump ever intend them to. Instead, it was obvious from the beginning, especially based on a decade of observing his freewheeling style in action, that the exorbitant tariff was a tool for the more reasonable one and given China relies on us more than we do on them, they would have to accept a lower import tariff. While I am the first to admit that President Trump’s negotiations in real time approach is unusual in the modern era, it’s not as if we this hasn’t been the standard his entire political career. Further, to those who are convinced he could’ve proceeded down another, presumably less chaotic path or that the entire tariff policy is a smokescreen: Imagine if he’ simply announced the 30% tariff, still no small sum, amounting to some $150 billion per year or so, on day one. The reaction from the media and the establishment would have been virtually the same, but by decreeing a clearly ridiculous figure, he was able to land approximately where he should have and likely planned from the beginning. The hard data supporting the policy followed just yesterday, when inflation was once again unexpectedly down, this time to the lowest level since February 2021 – despite the tariffs. As CNN put it, “US inflation slowed to its lowest rate in more than four years, an unexpected and welcome development at a time when President Donald Trump’s dramatically escalated tariffs are expected to cause prices to rise. Consumer prices rose 0.2% last month, bringing the annual inflation rate to 2.3%, an unexpectedly cooler reading than the 2.4% increase seen in March, according to the latest Consumer Price Index data released Tuesday by the Bureau of Labor Statistics. It’s the lowest annual rate since February 2021.” Despite that food prices were down in absolute terms, .4% from March, with egg prices in particular tumbling 12.7%, no news can simply be good news in the Trump Era. Instead, it’s only a matter of time before prices spike. “The larger tariff-related price adjustments are likely to come over the next few months,” cautioned Alexandra Wilson-Elizondo, co-head and co-chief investment officer of multi-asset solutions at Goldman Sachs Asset Management. “Consequently, we still anticipate (the Federal Reserve) remaining on the sidelines in the near term and for markets to be trading with negotiation and reconciliation headlines.”
Notably, it was the same pattern a week earlier (and a month earlier for that matter) when the April job report exceeded expectations, but still, “We can push recession concerns to another month. Job numbers remain very strong, suggesting there was an impressive degree of resilience in the economy in play before the tariff shock,” explained Seema Shah, chief global strategist at Principal Asset Management. “The economy will weaken in the coming months but, with this underlying momentum, the U.S. has a decent chance of averting recession if it can step back from the tariff brink in time.” Translation: No matter the scenario, no matter the actual data, no matter reality itself: The apocalypse might be postponed for now, but clearly it’s coming, or so the experts say while wondering why no one trusts them anymore.
Confessions of a Conservative Atheist 