Without a trade deal in place by Dec. 15 between the U.S. and China, one of the biggest indicators of the economy’s health — jobs — could finally be hit.
Thats according to Jeffrey Kleintop, chief global investment strategist at Charles Schwab.
“One of the things we haven’t seen yet are job cuts,” he said.
“Businesses have pulled back on capital spending, trade has slowed down, manufacturing has hit a wall, inventories have piled up, but businesses have been slow to cut their staff. But I think that could be coming if we don’t get a deal by Dec. 15.”
Inventory levels are back to 2009, around the time of the last financial crisis, and this could be a bad sign for the economy and affect consumer confidence, Kleintop said.
To date, many experts have held that because consumer confidence remains strong, the economy hasn’t been negatively affected, despite the turbulence from the trade war.
But that could change as soon as January.
“Very important since it’s the consumer that’s been holding up the global economy, and any signs of weakness in the job market could undermine that confidence.”
Frances Newton Stacy, director of strategy at Optimal Capital, said that while the trade deal uncertainty has been written into projections, a breaking point could be reached if no deal is struck by the end of the year.
“I think there will be a violent repricing of the markets if we don’t get a trade deal,” Stacy said.
“I think both countries have to do a deal, they just have to do a deal.”
Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem