Neil Shearing, group chief economist at Capital Economics, said his team reworked its outlook the day after Mr. Trump’s election, assuming there would be a 10 percent across-the-board tariff as well as higher taxes on Chinese and automobile imports.
“It was extreme, but it wasn’t implausible,” Mr. Shearing said. Inflation would rise and output would drop, but the revision did not predict that the United States would plunge into a recession.
Still, the assumptions about tariff levels were considered radical at the time. “I spent two and a half months just talking to clients who said, ‘You can’t seriously think this is going to happen,’” Mr. Shearing said.
If there is a recession in the United States this year, Mr. Shearing of Capital Economics said, that bungled delivery could be what pushed it over the line.
