Throughout 2017 and most of 2018, U.S. corporate executives were generally very optimistic about the future of the economy, but now that optimism has been replaced by a deep sense of doom and gloom. And of course there are very good reasons for all of the doom and gloom. The trade war with China looks like it is going to last for an extended period of time, recent global manufacturing numbers have been absolutely dismal, and it is being projected that corporate earnings will be down significantly in the second quarter. The economic environment is tough and it is rapidly getting tougher, and a brand new survey that was just released has found that 69 percent of U.S. CFOs believe that a new recession will start “by the end of 2020″…
The longest economic expansion in modern American history could come to a screeching halt right before the 2020 presidential election.
At least that’s what US finance leaders fear. Nearly half (48.1%) of chief financial officers in the United States are predicting the American economy will be in recession by the middle of next year, according to the Duke University/CFO Global Business Outlook survey released on Wednesday. And 69% of those executives are bracing for a recession by the end of 2020.
Other surveys have come up with similar results. For example, a recent National Association for Business Economics survey concluded that there is “a 60% chance” that a recession will start by the time next year ends…
There is about a 60% chance of a recession starting in the United States by the end of next year, according to a National Association for Business Economics survey published earlier this month. Most economists in that report cited protectionist trade policy as the leading risk to the US economy.
Even before trade negotiations with China completely broke down U.S. economic numbers were looking quite bleak, but now it has become clear that the trade war is going to accelerate our economic problems.
In fact, it is being reported that large U.S. corporations that get over half of their sales internationally “are expected to see a 9.3% slump in second-quarter earnings”…
The trade war and global slowdown are combining to trigger a sharp drawdown in profits for U.S. multinational companies.
Companies that derive more than half their sales outside the U.S. are expected to see a 9.3% slump in second-quarter earnings as the reporting season looms about a month away, according to FactSet estimates that see the S&P 500 broadly reporting a 2.3% decline.
The one thing that could really help our economic situation right now would be a trade agreement with China that would end this trade war.
And it would seem that both sides should have a strong incentive to make a deal, because both sides have so much to lose.
But at this point it appears that any hopes of a deal in the short-term are completely dead. President Trump has made it abundantly clear that he will not accept anything dramatically different from the deal that he thought he almost had when talks broke down, and the Chinese have made it abundantly clear that such a deal is completely and totally unacceptable.
So many U.S. companies are now operating under the assumption that this trade war will be here for the long haul. For example, the following comes from an opinion piece that Canary CEO Dan K. Eberhart recently authored for CNN…
At Canary, we plan to operate as if the tariffs on Chinese goods are here to stay. China’s government recently released a white paper on the trade standoff that makes it clear Beijing is not giving in to US demands anytime soon.
We have moved much of our manufacturing to Vietnam, India, Malaysia and South Korea. We still depend on China for a significant portion of the wellheads and other steel products used in the oilfields, but it’s on the decline. Our goal is for non-Chinese sources to account for 25% of our international purchases within the year, up from our previous target of 10%.
And the Chinese appear to be preparing as if this struggle could potentially last for quite a few years. The following is a short excerpt from a recent Bloomberg article entitled “Tour of China Shows a Nation Girding for Protracted Trade War”…
Now, Trump says, it’s China’s turn to cower. Yet to visit China these days is to encounter the limits of his punch-them-in-the-nose strategy. Even as Trump threatens to raise import duties to painful levels, 10 days of meetings with Chinese officials, academics, entrepreneurs and venture capitalists revealed a nation rewriting its relationship with the U.S. and preparing to ride out a trade war.
Trump is seeking to increase pressure on Xi Jinping, his Chinese counterpart, before this month’s G-20 summit, but Trump may already have pushed too far. Last month, Xi exhorted his countrymen to a second Long March, an echo of Mao’s seminal strategy to preserve the communist revolution.
Without a doubt, we needed to get tough with China, because they have been lying, cheating, manipulating their currency and stealing our intellectual property for many years.
So doing nothing was not an option.
But let there be no doubt that this trade war is going to be exceedingly painful, and the longer it lasts the more painful it is going to become.
Are Americans ready to make the sacrifices necessary in order to win a protracted trade dispute?
That is a a very good question, and only the passage of time will reveal the true answer.
About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.