The Beige Book, the most important book you have never heard about.
The following is by Paul Krugman, a Nobel Prize-winning economist.
The Fed’s Beige Book, which looks what businesses are saying, says that “uncertainty around international trade policy was pervasive across reports.” And this uncertainty will have dire effects on the real economy.
Many forecasters now expect a recession. But the impact of erratic tariffs and tariff threats may occur even before the economy has time to slump.
Preliminary data suggest that imports from Asia, after surging as importers tried to front-run tariffs, are now collapsing. See the chart at the top of this post.
The CEOs of Target and Walmart reportedly warned Trump that we may be seeing empty shelves within weeks. And foreign trade won’t be revived by hints dropped at closed-door financial conferences. Companies need some certainty about policy, which they won’t get.
In other words, we may soon see a disruption of supply chains reminiscent of what happened during and after the Covid pandemic.
I shop at Costco primarily, and over the last two weeks, I haven’t been able to buy soy milk because they don’t have it in the stores where I shop. The other thing is water; there seems to be much less water available. I am not sure why. The Mexican products are few and more expensive. My wife likes Top Chico mineral water, but while it’s still available, they don’t have as much of it as they used to.
We can hope that Donald Trump will come to his senses before he destroys the strongest economy in the world. But wishing and happening are two different things. I don’t think that Donald Trump is capable of doing the right thing for this country. I hope I am wrong, but only time will tell.
If things keep going in the same direction, we may all soon be buying less, not because we want to, but because there will be no products.
