The economy is being shaped by a series of short-term disruptions due to changes in trade policies. One immediate consequence is that businesses are pulling forward their spending to avoid future tariffs, causing a sharp surge in imports which will distort economic data for several months.
Justin Wolfers, University of Michigan professor of economics and public policy, joins Catalysts hosts Seana Smith and Madison Mills to offer his insight.
"My advice to your viewers is: Be very careful about interpreting economic data over the next few months because you'll see a huge surge in imports followed by a huge decline in imports, both of which are basically due to trying to front-run the imports," Wolfers says. "And that's going to have effects all through our economic data."
Wolfers also points out two key risks facing the economy: increasing economic uncertainty and a decline in consumer and business sentiment, which could lead to reduced spending.
"If enough factories [reduce or delay spending], or if enough families do that, that creates its own economic problems," Wolfers adds.
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This post was written by Josh Lynch