Daily update
Daily update
- Every pundit claims they know the reason for the US election outcome. This pundit is no different. In exit polls, Republican voters’ biggest concern was the economy and 75% of US voters said inflation was a hardship this year. Three years of durable goods price deflation are not noticed by voters, who focus on price levels of high-frequency purchases (like food). The election may have been won and lost in the aisles of Walmart, over the price of a Snickers bar.
- Trade taxes raise US consumer prices, but that inflation will skew towards less visible durable goods prices. Inflation may not deter tariffs. The Federal Reserve is supposed to deal in inflation realities, which justify a rate cut today. Headline consumer price inflation has fallen one percentage point this year, raising real rates.
- China’s October export data was a lot stronger than expected. There are rather implausible claims this is in anticipation of trade tariffs. China’s officials are likely under pressure to meet their 5% growth target. Note that part of China’s exports never leave China, so China exports 16% more to the US than the US imports from China.
- Germany and Ireland are heading to general elections. Economists’ main thought is “could this not have waited a week?”.
