Global Data Pod Global Data Pod Weekender: Fake it till you make it
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Jul 25, 2025 The latest trade developments suggest tariffs might stabilize around 22%, yet global growth appears resilient. Discussions on recession risks highlight shifting perceptions, emphasizing the impact of central banks and labor market dynamics on economic predictions. The effects of tariffs on various sectors, especially automotive and manufacturing, are examined, revealing complexities in measuring their true economic impact. Amid ongoing trade tensions, expert insights tackle how financial conditions and market adaptability might shape future economic forecasts.
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Tariff Shock Differs From Expectations
- The expected disruptive shock from tariffs hasn't fully materialized due to slower implementation and partial absorption.
- Financial conditions remain easier, dampening the negative sentiment's transmission to the economy.
One-Sided Trade War Impact
- The U.S. faces unique risks since only it is imposing tariffs, possibly leading to weaker U.S. growth while the world fares better.
- The U.S. economy lacks typical late-cycle vulnerabilities, making a deep recession less likely despite shocks.
Slow Growth Without Sharp Recession
- Zero or modest job growth may coexist with slow GDP growth, differing from traditional recessions.
- Negative real labor income growth in such a scenario challenges household spending sustainability.