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US shutdown ends. US taxes rise

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US government shutdown has ended, and amidst the scenes of jubilation in Washington, US President Trump announced a direct tax on US consumers. Tariffs on imported washing machines and solar panels will now be imposed. Washing machines are a negligible part of consumer price inflation, but the tax is bad luck for any American wanting to buy a new washing machine now.
  • Members of the US Congress have borrowed the grand European tradition with difficult decisions, and have opted to kick the can down the road (specifically, to early February). Another standoff is likely then. In theory this increases uncertainty, in practice markets probably do not care that much.
  • The German ZEW business sentiment survey is due (a survey, so of limited use, but a survey of economists, which redeems it somewhat). Evans of the Fed is to speak, and Fed nominee Goodfriend is to appear before the Senate for confirmation hearings.
  • The IMF has raised its global forecasts by 0.2%, which has given journalists at Davos something to talk about (other than the snow). The move is pretty meaningless. Economic data, indeed economic forecasting is not precise enough to make a 0.2% change relevant to the real world.