As everyone invested in mutual funds or stocks — about half of U.S. households — can tell you, the world is a different and somewhat forbidding place in 2019, and that has repercussions in Louisiana as everywhere else.
Growth forecasts are down across the globe, with mainland China’s growth at the slowest pace since 1990, and experts at the International Monetary Fund cutting growth forecasts for the world economy.
“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” IMF Managing Director Christine Lagarde as she presented the forecasts at the World Economic Forum in Davos, Switzerland.
Even tycoons are worried, with the PWC consultants polling them and finding their outlook for the future down.
Those of us who are not in the tycoon class have reason to be worried, too, because Louisiana is vitally invested in the economy beyond our borders in the United States and then across the globe. Our petrochemical complex serves the world, and our ports export vast quantities of almost everything, including the farm products of the Midwest.
Louisiana ports are also involved with imports of steel — and there too is a potential problem.
While the world outlook is concerning, Louisiana and its leadership also should worry about how much we in the United States are contributing to this wave of unsettling bad news in economics.
Steel tariffs are just one example.
Look at what has happened under the new administration in Washington: A big tax cut juiced the national economy but now leaves a legacy of exploding budget deficits and rising national debt. President Trump canceled a Pacific-region trade pact that could have opened more export markets, including new sales of Louisiana farm and ranch products.
Tariffs on imported steel are not only bad for ports in Louisiana, but also raise prices for manufactured goods and expanding facilities such as petrochemical plants, pipelines and natural-gas exporting facilities. All are vital for Louisiana’s future growth.
If you’re a soybean farmer, the drastic curbing of Chinese purchases — occasioned by Trump’s ill-conceived trade wars of the past two years — means that one of the world’s largest markets might continue to buy from Brazil and elsewhere in the future.
It is almost needless to say that today’s situation is hardly the president’s fault alone.
The world is a big place, and as interest rates have risen; many businesses and governments that borrowed when money was cheaper would have been stung anyway.
Long-term changes in demographics continue to age people out of the workforce in Europe and the West generally, putting a pinch on productivity. Seemingly miraculous inventions like the iPhone are now maturing as markets do their work, creating competitors and lowering prices.
For the long term, growth can and should continue, but self-inflicted policy wounds don’t help, and should get more pushback from the public and leaders on Capitol Hill.