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By Leila Lajevardi • April 19, 2018

Economy Moving Despite Tariffs

The US job growth for March fell well below projections leaving the unemployment rate at 4.1%-a seventeen year low. This was a downswing from the positive growth that was seen in January and February. The reasoning behind the blimp has been cited as a result of the warm weather in the late winter and the drop in temperatures in March. Additionally, it is understood as a response to the rapid growth that was witnessed in such a short duration of time.

While job growth took a slump if March, wage growth has picked up with the BBC reporting that, “The average hourly wage for private sector workers was $26.82 in March, up 2.7% from a year ago.”

However, despite the job report, the federal reserve still plans to raise interest rates gradually. The Federal Reserve Chair, Jerome Powell reports that he expects to see inflation rates continue to rise in the coming months. The BBC quotes Powell to have said that If "the economy continues broadly on its current path, further gradual increases in the federal funds rate will best promote" employment and stable inflation.

While there is no indication of relation, a topic of contention still remains the implications of President Trump's tariffs on steel, aluminum and Chinese made goods.

The LA times reports that, Carl Tannenbaum, chief economist at Northern Trust in Chicago, agreed with Powell that it is too early to know what the impact of announced tariffs will be on economic activity and inflation. But he added: "In my view, if we get into a tariff tussle, it would be the worst scenario for the Fed: It could diminish growth and increase inflation. Those environments make it tough to set policy." Only time will tell what China’s response will be and the effect it will have.

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