Is he serious this time?
President Donald Trump swears up and down that the latest Aug. 1 deadline for tariffs to go into effect is final. Treasurys sold off a bit, but global markets basically shrugged. That suggests, worryingly, that the TACO trade — the idea that Trump will cave, again and again — has taken hold. Complacency is always a dangerous thing but especially so heading into the dog days of summer, when liquidity is thin and markets get twitchy. The knife-catchers are in Amagansett.
It was heartening, if a bit white-knuckled, to see the bond market work its magic earlier this spring. But that feedback loop looks to be getting fuzzier, and the gap between economic consensus and current policy is getting wider and more entrenched.
I caught up this week with Jed Kolko, a senior adviser at the JPMorganChase Institute, to talk about what the economic data is and isn’t telling us. The 147,000 jobs the US economy added in June was a strong headline, but relied heavily on state and local governments while industrial sectors pulled back. “We saw slower job growth, as we have for several months in industries that rely more on immigrants, particularly immigrants who are likely to be unauthorized,” Kolko said. Trump’s tariffs will take time to work their way through hiring data, but his immigration crackdown is working fast.
As we wrapped up, I asked him what the biggest fight in economics is right now. As a member of a New York City co-op board, I thrive on niche politics, and economists live to disagree with each other. “The disagreements are less within the world of economists and more between economists and policymakers,” he said. The White House’s tack away from economic consensus on tariffs (bad), immigration (good), and budget deficits (worrisome) “has brought us a bit closer together.”
When economists are running out of things to fight about, you know you’re in strange territory.