The economic consequences of changing tax rates over time, San Francisco Fed Feds
Isazi sezomnotho uSteve Moore Jore Jore Jore Jore Jore Jore Jore ‘Varney & Co’ Ukukhipha uMongameli uDonald Trump’s Cariff Checks ahlongozwayo futhi axwayise nge-White House ngokumelene nokwenyuka kwamanani entengo.
A new analysis from the Federal Reserve Bank of San Francisco examined the impact of taxes In economics based on historical examples, finding that the effect of import taxes on income and unemployment varies over time.
This page San Francisco Fed On Monday he published an economic book by senior policy advisor Oscar Jorda and the Department of Economic Economics of San Francisco, which used data from the economic sheets to measure the tax caused by the economic shifts caused by the Schiffs.
“Tax rates can affect supply chains, investments, and companies’ costs, leading to negative consequences such as higher inflation and more energy shortages,” wrote economists. “However, tax rates can also affect spending, the demand side of the economy. Weak demand translates into higher unemployment but lower inflation.”
Tariffs on imported goods are paid by the importer, which often outweighs some or all of those higher costs to consumers at higher prices. (Qian Weizhong / VCG via Getty Images)
“It is estimated using 40 years of international data that, following a change in tax rates, initially the unemployment rate increases and the rate of inflation decreases. However, the unemployment rate returns to normal levels when the rate of inflation increases,” it said.
Consumer confidence is rising as Americans worry about the economy
The San Francisco Fed Economist observed that the increase in unemployment and the drop in prices that often immediately follow the tarfiffs are like negative shocks, as businesses and businesses withdraw money spent. The economy and inflation. They said that suggests that “prices act as a brake on the economy.”
“Firms may hold back on investment spending until there is more clarity on future trade policy, because tax policies will prompt them to reinvest their profits in acquiring products and services,” the researchers said.
“Over time, the economy adapts: Unemployment rate It returns to its original level or decreases slightly, and the inflation lasts for three years after the first change in the areas with tax rates, which is related to the situation where the prices remain unchanged, “he wrote.
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Economists noted that the size of the taxes used by the Trump Administration this year are much larger than historical examples, which means that their analysis should be “interpreted carefully.”
This page average US tax rates It was 3% a few years ago, but has risen to around 18% this year – more than double the 8% figure in the mid-1960s and the highest chance of data used in the study before this year’s changes.
“The newly implemented tax rates have not been kept in a reasonable and large scale, and they are surrounded by great uncertainty,” said the economist. “The sample used in our analysis is based on historical evidence without such major changes. Therefore, the generalization of our results to the current environment is exhaustive.”
The Supreme Court is weighing the Trump Administration’s tax bill under the emergency powers law
President Donald Trump announced the “Receiver” tariffs in April that have since been reversed on some trading partners. (Brendan smilowski/AFP via Getty Images)
Economic data released this year showed a tendency for prices to reach higher levels in the following months The Trump Administration’s Tax announcements earlier this year.
This page Consumer price index (CPI) – a widely used gauge of inflation published by the Bureau of Labor Statistics (BLS) – started the year at 3% and sank to 2.3% in April, which was the lowest rate since February 2021.
However, CPI inflation has picked up since this spring and reached 3% in September, the most recent month in which CPI data has been released so far, thanks to a record long Federal government shutdown.
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Monthly jobs reports were also disrupted by the shutdown.
The recently released BLS Jobs data shows that the unemployment rate was there 4.4% in September – The highest rate since October 2021 and an increase from 4% in January.
