Nothing close to 100% of the tariff amounts are being passed onto consumers as a "tax." 10% to 15% tariffs just may be the sweet spot. Yes, higher tariffs could not be absorbed by the companies and would have to be passed to the consumer but that hasn't happened for the most part. Trump's process of using tariffs as economic leverage has worked splendidly. Look at the EU deal.
I've been reading your posts since the first of the year with your economic forecasts:
Where's the recession?
Where's the sharp spike in inflation caused by tariffs?
Where' s the higher gas prices or price of eggs?
Where's the evidence of the world turning away from the US as a trading partner? We're locking down trade deals every day which are beneficial to the US. The rest of the world is coming to us for deals.
Where's the stock market crash?
Where's the economic chaos y'all predicted?
The recency bias, or availability bias, identified by behavioral economics, is when people overweight new information or recent events.
www.investopedia.com
In
behavioral economics, recency bias (also known as availability bias) is the tendency for people to overweight new information or events without considering the objective probabilities of those events over the long run.
Availability bias matters for the financial markets, as memory of recent market news or events can lead investors to irrationally believe that a similar event is more likely to occur again than its objective probability. As a result, investors may make decisions to sell into
bear markets, or buy into
bubbles, since crashes and bubbles can be salient in the minds of individuals as they occur.
* * *
A well-known example of recency bias is that people tend to overreact to news of a shark attack that has recently occurred. Shark attacks, especially deadly ones, are extremely rare—killing just a handful of people each year. In 2023, for example, there were only 69 reported unprovoked shark attacks worldwide. Nevertheless, many fewer people swim in the ocean following reports of a shark attack, with many people believing the odds are far greater than they actually are. Indeed, after the 1975 blockbuster movie
Jaws came out, the notion of an unprovoked shark attack became incredibly salient, leading to far fewer swimmers than in previous years.
For investors, availability bias
affects the trading decisions that people make based on recent events or headlines, expecting such events to be more frequent than they actually are. During a
market crash, people may adopt a negative outlook that assumes a bear trend will continue, even though the drawdown may merely be a
correction. On the other hand, during asset bubbles, when prices reach levels that are no longer supported by fundamentals, people may continue buying under the false belief that the rally can only continue.
Whether it’s sharks or stocks, overweighting recent (i.e., available) information is irrational since it does not accurately reflect the true probabilities of future events.
Recency bias can be difficult to counteract because it plays on human emotions of
fear and greed, which are powerful forces. Moreover, our brains are wired to put the most emphasis on recent events that are fresh in our memories as older events fade out of mind.
