I would expect, as you suggest, that the impact from tariffs will be spread over many months, as firms figure out how much to absorb and how much to pass along, and that as time goes on more will be passed along in higher prices.
Perhaps unemployment and inflation will be whatever the administration wants it to be. I don't think anyone in the administration has the integrity to disappoint their boss.
The line staff who produce the numbers who scream loud and long if there was any manipulation. In addition, states produce employment estimates independently of the Feds, and any substantial difference between the nation and the sum of states would quickly become apparent.
I appreciate the calm, measured analysis. You might give some thought to whether the coming work requirements for Medicaid may encourage marginal workers to look for steadier jobs that can be more easily documented.
I think that will interesting to see. The lesson from states who tried to implement a work requirement is that it’s a bureaucratic nightmare and eligible workers will be kicked off of Medicaid; and that there is only a small at best increase in the number of workers. If deportation pushes some wages up, that might attract more people into the labor market at the margins.
California’s Central Valley growers are experiencing shortages of field labor. If ICE continues to sweep up anybody who looks Latino, the workers will quit showing up for work. The same holds true in the restaurant and hospitality sectors. It seems to me this may turn out to be a driver of inflation. The knock-on effect of agricultural produce or lack thereof is significant. Trump already wiped out the soybean market for U.S. farmers. It’s ironic he’s threatening Brazil with 50% tariff in the wake of hanging its soybean farmers the Chinese market for soybeans.
I would think that uncertainty, which I've read is dampening investment in new plants, equipment, hiring, etc., will also tend to burden the economy. I also wonder if businesses will elevate prices (owing to passing along tariffs to consumers) and, also to increase margins in the absence of pursuing additional demand for products and services.
Thanks for the article. I’m surprised to see the term “reciprocal” tariff in your article since that is clearly a misnomer. Economists might want to refrain from using the term for accuracy and clarity.
Today we saw some concerns with the labor market with the challenger job cuts and the surprise decline in the June ADP payroll number at -33k jobs being its first decline in the payroll number since March 2023. With that said, if there's a less than stellar June non-farm report tomorrow along with jobless claims I believe the chances of a fed rate cut for July should go up but we'll see what happens.
Maybe. But the ADP numbers have never been any good (I don’t know why they get any press). I tend to feel the same about Challenger numbers but haven’t really analyzed them.
I would expect, as you suggest, that the impact from tariffs will be spread over many months, as firms figure out how much to absorb and how much to pass along, and that as time goes on more will be passed along in higher prices.
Perhaps unemployment and inflation will be whatever the administration wants it to be. I don't think anyone in the administration has the integrity to disappoint their boss.
The line staff who produce the numbers who scream loud and long if there was any manipulation. In addition, states produce employment estimates independently of the Feds, and any substantial difference between the nation and the sum of states would quickly become apparent.
I appreciate the calm, measured analysis. You might give some thought to whether the coming work requirements for Medicaid may encourage marginal workers to look for steadier jobs that can be more easily documented.
I think that will interesting to see. The lesson from states who tried to implement a work requirement is that it’s a bureaucratic nightmare and eligible workers will be kicked off of Medicaid; and that there is only a small at best increase in the number of workers. If deportation pushes some wages up, that might attract more people into the labor market at the margins.
We saw this happen before when wages rose in 2021 and 2022.
California’s Central Valley growers are experiencing shortages of field labor. If ICE continues to sweep up anybody who looks Latino, the workers will quit showing up for work. The same holds true in the restaurant and hospitality sectors. It seems to me this may turn out to be a driver of inflation. The knock-on effect of agricultural produce or lack thereof is significant. Trump already wiped out the soybean market for U.S. farmers. It’s ironic he’s threatening Brazil with 50% tariff in the wake of hanging its soybean farmers the Chinese market for soybeans.
I would think that uncertainty, which I've read is dampening investment in new plants, equipment, hiring, etc., will also tend to burden the economy. I also wonder if businesses will elevate prices (owing to passing along tariffs to consumers) and, also to increase margins in the absence of pursuing additional demand for products and services.
What do you think, CS?
Thanks for the article. I’m surprised to see the term “reciprocal” tariff in your article since that is clearly a misnomer. Economists might want to refrain from using the term for accuracy and clarity.
Nice explainer
2 % inflation fine
But
4% plus UE with participation rate falling
We can do way better
Or could if corporate amerika wasn't mark up happy
Theres a serious injection by the state
when y is a combo
of p and q
More and more potential y becomes mostly more p as the injection continues
Today we saw some concerns with the labor market with the challenger job cuts and the surprise decline in the June ADP payroll number at -33k jobs being its first decline in the payroll number since March 2023. With that said, if there's a less than stellar June non-farm report tomorrow along with jobless claims I believe the chances of a fed rate cut for July should go up but we'll see what happens.
Maybe. But the ADP numbers have never been any good (I don’t know why they get any press). I tend to feel the same about Challenger numbers but haven’t really analyzed them.
Very cogent analysis- I agree. Although once the OBBBA is through business uncertainty will be much reduced so growth might be maintained.