Wayne Best, Visa Chief Economist
November 30, 2018 – Strong economic growth is likely to continue in the near term, with consumer confidence climbing and income growth slowly but surely accelerating. Robust consumer spending and employment are also fueling this trend. If this keeps up, the U.S. economy could even break a record next summer for the longest uninterrupted growth streak since records have been kept. However, the expansion will not go on forever. In the short term, the continued threat of a trade war is the wild card in the equation that could disrupt the economy's current positive trajectory. Long term, other economic events could also be the linchpins that push the country into a recession.
The direct impact of a trade war is generally felt by consumers when goods subject to newly enacted tariffs cost more as a result. Currently, the percentage of personal consumption expenditure represented by imports from all trading partners is still a relatively low 18 percent¹. When broken down by specific trading partners it becomes even less consequential. The portion represented by imports from China, for example, is still fairly low at 4 percent² of the total. However, the impact will be unevenly felt across different income groups, as imports from China are more prevalently consumed by less affluent Americans.