No. of Recommendations: 5
What Powell and the Fed governors should have done was crank rates up 2-3 points more (and maybe higher than that) than they did a la Paul Volcker in the 1980s. Volcker/Reagan absolutely baked every last dram of the 1970's inflation out of the economy but Powell's Fed didn't do that: they didn't want to tank the job market right before Biden's election so they made almost the worst possible move: they raised rates up just enough to take the edge off of inflation but not eliminate it entirely.
What everyone on this board told you was TARIFFS WILL INCREASES INFLATION! TARIFFS WILL INCREASE INFLATION! TARIFFS WILL INCREASE INFLATION!
But no, for Dope the problem was Powell sucking up to... Biden - with no mention of Trump or tariffs.
AI Overview
Tariffs are expected to increase inflation, primarily by raising prices on imported goods, with the effect being a one-time price increase rather than continuous monthly pressure. While the overall impact on the inflation rate may be modest, it can be significant for specific tariffed products like furniture and auto parts. The full effect on consumers may be delayed as businesses pass on costs over time.
How tariffs affect inflation
Increased cost of goods: Tariffs raise the price of imported goods, and companies may pass these costs on to consumers, leading to higher prices for certain products.
Delayed price increases: The full impact on consumer prices is often delayed because it takes time for tariffs to move through the supply chain and for businesses to adjust their pricing strategies.
One-time vs. sustained pressure: Tariffs are expected to create a one-time upward adjustment in prices. Once all tariffs are implemented, they should stop generating new inflation pressure, and prices will stabilize at a higher level.
Impact on specific sectors: Industries that rely heavily on imported goods, such as the auto and furniture sectors, are likely to be more affected by tariff-related price hikes.
Partial pass-through: Not all of the tariff cost is always passed on to consumers. Companies may absorb some of the cost to remain competitive, especially if consumer spending is weak or if they have strong profit margins.
What to expect
Higher prices: Consumers should expect higher prices on certain imported goods. The magnitude of the increase depends on how much of the tariff cost businesses decide to pass on.
Continued price pressure: As more tariffs take effect, economists anticipate a continued increase in prices, particularly for imported goods.
Long-term effect: While inflation may rise in the short term, the effect is expected to be a one-time jump in prices rather than a sustained period of high inflation. ME:(Let's hope this happens rather than stagflation.)
