ORLANDO, FLORIDA, U.S. — Both the United States and China have suffered more damage from the trade war than expected, Blu Putnam, CME Group chief economist and managing director, said at the opening session of INTL FCStone’s annual Global Markets Outlook conference.

China felt pressure initially and the United States has felt more pressure as the trade war continued, especially in the automobile and agricultural sectors, Putman said. As a result, the pressure to get a deal done “has gone way up.”

“The U.S. farmer has really paid for the trade war in many ways,” he said.

Putnam suggested an immediate response to a trade deal with China would be “buy the rumor, sell the fact.” The key point to a deal will be whether the tariffs come off or not, he said. At the same time, he suggested the Democrat-run U.S. House will “reject any agreement” with China.

The removal of tariffs also will affect whether Canada approves the United States-Mexico-Canada Agreement (USMCA), which he suggested was the North American Free Trade Agreement under a new name. He said Congress’ “lack of approval may not matter” if the United States decides to honor the USMCA anyway.

Aging populations in both the United States and China will affect economic growth going forward, Putnam said. In the United States, 16% of the population was over 65 years of age in 2018 and about 21% will be by 2030. In China, about 11% was over 65 last year and 17% will be by 2030. However, the impact of an aging population in China is delayed a few years as people continue to move from rural to urban areas, he said. In countries with aging populations, the political focus is on health and wealth, while those with younger populations (such as much of Africa and some countries in Latin America and Asia) must focus on job growth, which often comes from increased exports, he said. He noted that China’s economy still was growing, but not as fast as in the past. China has about five years to get its trade policy “figured out,” he said.

In the United States, the economy has shown signs of strengthening, and a growing economy can take on more debt, Putnam said.

“Debt doesn’t cause recessions,” Putnam said. “Economies need debt to grow.”

At the same time, the Federal Reserve’s attempt to ease monetary policy has been affected by the deficit. As the Federal Reserve reverses its quantitative easing to quantitative tightening, assets must equal liabilities, he said, and the Fed has a liability problem. Currency growth at 7% per year has been the fastest growing part of the federal balance sheet, he said, but 60% of the currency has left the United States due to the export/import imbalance. Meanwhile, bank reserves have been drawn down by the federal debt, he said.

“The Fed is on hold for a very long time,” Putnam said. “The Fed is very concerned about raising rates too fast.”