President Trump's trade war with China is increasing the odds that America will be thrown into a recession, according to Goldman Sachs.
Since the upcoming September tariffs are targeting finished goods rather than inputs or components, the pass-through effect on prices will be more noticeable. “Consumers are going to feel the effects of those tariffs,” Lardy said.
Looming over the prospect of higher prices is the prospect of the labor market stalling out. Some sectors of the economy that are more exposed to the trade war are struggling to add and maintain jobs, and business investment in capital expenditures already has stagnated across the board. “If they decide, given the recent actions, they’re going to pull back on payrolls and jobs and employment slows much further, that’s recession,” Zandi said.
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