Do fluctuations in uncertainty have a symmetric or asymmetric effect on the economy? The question is important considering that since last year, uncertainty has been acting as a headwind to global growth. Moreover, recent news about the US-China trade negotiations and Brexit have raised hope that uncertainty may have peaked and that growth in activity could accelerate. Empirical research shows that an increase in uncertainty has a bigger effect on the economy than a decline, in particular in a subdued growth environment. This would suggest that, should the decline in uncertainty be confirmed, the pick-up in growth would be very gradual.
Halloween is big business. According to the US National Retail Federation, American shoppers are expected to spend USD 8.8 billion this year on Halloween items like costumes, candy, decorations and greeting cards. The numbers are huge but are not immune to what happens in the economy in general. Slowing growth seems to impact Halloween spending because this year’s plans are down from last year’s USD 9 billion and the record established in 2017 of USD 9.1 billion. People interviewed about their shopping intentions expressed concern about the trade war with China although Halloween merchandise had been imported before the latest tariff increase.
Halloween is, to some degree, about scaring off people: millions of adults plan to dress like witches, vampires, pirates or zombies. Apparently, a lot of people enjoy having a scary time: 22% of survey respondents intend to visit a haunted house. Of course, like with children playing trick or treat, it’s only a game, so the feeling of fear doesn’t last long. Although it is tempting to look for an analogy between trick or treat and trade negotiations (threatening in order to get something in return), the big difference is that one does not know how long the trade negotiation ‘game’ will last.
