12. February 2019, 12:49 Uhr
Helpful though they might have been, Donald Trump’s tax cuts not only have begun to wear off – his simultaneous trade spat with China and his readiness to plunge the federal government into as many shutdowns as it takes to get the funding for his pet border wall project have started to leave their marks on the US economy, too.
And it’s leading, ‘soft’ indicators such as business confidence, of course, signalling trouble first: The so-called Small Business Optimism Index by the National Federation of Independent Business has been diving steeply in the past few months (see chart). Even the Fed’s recent turnaround in its policy stance has obviously not sufficed to soothe businesses’ sentiment.
It’s only one indicator, of course; and other leading indicators such as the PMIs by Markit as well as further survey-based indices compiled by local Federal Reserve branches are still indicating healthy if somewhat slowed economic activity. But by mirroring the economic sentiment among the base of America’s economy, the NFIB’s indicator provides a radar of particular reach – and these numbers certainly don’t allow for complacency. The eventual resolution of the trade stand-off with China as much as the budget stand-off with Congress will determine whether this deterioration is set to take hold or to evaporate in the months ahead.