‘This is the chicken crowing’
Economic outlook presented at Chamber luncheon
Chinese tariffs on imported goods, a stale housing market and a tight labor market were all issues discussed by Matthew Murray, Director of the Howard H. Baker Center for Public Policy at Thursday’s Anderson County Chamber’s quarterly business luncheon.
Despite these challenges, the economic forecast for the nation and the state is good.
Tariffs on Chinese goods are expected to increase to as much as 25-percent by January 2019, according to Murray. Right now, the tariff is 10-percent. These tariffs — which is just another word for a tax on goods coming into the country — are the Trump administration’s response to theft of intellectual property and “forced transfer of American technology” by China, according to the Office of the United States Trade Representative.
“It will have a huge effect on the consumers,” Murray told The Courier News. “We’ve got evidence that prices have already gone up.”
Consumers won’t eat the cost of the entire 25-percent, though. In retail stores like Walmart, which gets a big chunk of its inventory from China, Walmart will absorb some of the costs, and China will as well.
“The overall impact on inflation is expected to be relatively modest,” said Murray. “It’s going to be on certain segments of the population, though.”
Populations like North Anderson County, for example, will be affected more than areas where there are more shopping options.
“Those communities pay a price,” he added. “That’s part of the plan of the Chinese, maximum damage because of the damage imposed by our tariffs.”
The point of the tariffs is to make Chinese goods more expensive to buy, causing consumers to buy items made somewhere else. This hurts Chinese companies. The Chinese have in turn imposed tariffs on the U.S., on items like soybeans and automobiles.
The housing and labor markets have both seen stale growth, which doesn’t necessarily hurt the economy, but makes growth sluggish. Housing prices have stabilized and there is a shortage of new construction. The labor force is pretty much maxed out; most people who want to be working are working.
But not just that — part of the labor force is weakened by the opioid epidemic.
Nearly 1 million people nationwide are out of the workforce due to opioids. It’s a correlation that not many people are looking at, according to Murray, and he wants to change that.
Tennessee had 1.32 opioid prescriptions per person in 2015.
“Not everyone takes opioids,” said Murray. “So a whole lot of opioids are going to other people.”
His colleagues wanted to take a look at the correlation between the higher numbers of opioid prescriptions versus the participating labor force, and found not just a correlation but most likely a causality, meaning one results in the other.
The paper written by his colleagues is currently under review.
This is a serious problem not just for individuals and families, but also for entire communities in Tennessee, according to Murray.
“This is the chicken crowing,” he said, using a phrase that demonstrates cause and effect. A chicken crowing does not cause the sun to rise, but there is a connection between the two. “It’s strongly suggesting lower labor participation rate.”