It's not me, it's you!
Yes Virginia, you, I and Irene are very well aware of US president Donald J. Trump's Twitter attacks on the Fed. The last, most significant one was right after US Federal chair Jerome Powell's speech at Jackson Hole:
Trump let loose on Twitter, virtually naming Powell an enemy of the state, saying: "As usual, the Fed did NOTHING! It is incredible that they can "speak" without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work "brilliantly" with both, and the U.S. will do great..."
"....My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?"
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Former president George W. Bush had his "axis of evil", Trump's got his "evil twins"!
From Trump's previous tweets, we know that he's demanding the Fed cut interest rates by another 100 basis points and re-start QE.
The Fed strikes back.
A recent research paper published by the Fed, titled The Economic Effects of Trade Policy Uncertainty, quantified the direct and indirect effects of the tariff wars.
According to Reuters: "The Fed researchers analysed newspaper articles and corporate earnings calls to estimate trade policy uncertainty, finding it has recently "shot up to levels not seen since the 1970s."
The Fed researchers then estimated the blow such uncertainty delivers to economic activity, as businesses pull back on investment and production. They concluded that globally and in the United States, its impact is around 1% to GDP ... through early next year.
With U.S. GDP estimated at about $20 trillion, and world GDP at about $85 trillion, a 1% impact would put the drag from trade uncertainty at about $200 billion to U.S. GDP, and $850 billion to global GDP, according to Reuters calculations."
USD 200 billion? That's about US$10 billion short of New Zealand's entire economy. US$850 billion buys you Norway and Hong Kong plus loose change.
The latest Fed research puts numbers in Financial Standard's claim that it's Trump's tariff war, stupid and the Wall Street Journal's piece, Cut the Trump Uncertainty Tax ... His best stimulus policy would be to end his tariff campaign.