Almost daily during the tariff hysterias of March, we were told by university economists and most of the PhDs employed in investment and finance that the U.S. was headed toward a downward, if not recessionary, spiral.
Most economists lectured that trade deficits did not really matter. Or they insisted that the cures to reduce them were worse than the $1.1 trillion deficit itself.
They reminded us that free, rather than fair, trade alone ensured prosperity.
So, the result of Trump’s foolhardy tariff talk would be an impending recession. America would soon suffer rising joblessness, inflation—or rather a return to stagflation—and likely little, if any, increase in tariff revenue as trade volume declined.
Instead, recent data show increases in tariff revenue. Personal real income and savings were up. Job creation exceeded prognoses. There was no surge in inflation. The supposedly "crashed" stock market reached historic highs.
Common-sense Americans might not have been surprised. The prior stock market frenzy was predicated on what was, in theory, supposed to have happened rather than what was likely to occur. After all, if tariffs were so toxic and surpluses irrelevant, why did our affluent European and Asian trading rivals insist on both surpluses and protective tariffs?