WSJ's Take On the Week Inflation, the Fed, Tariffs and Immigration. An Economist Weighs In.
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Mar 9, 2025 Seth Carpenter, Morgan Stanley's chief global economist and former Federal Reserve staffer, shares his insights on the current economic landscape. He dives into the recent plummet of the Consumer Confidence Index and discusses the impact of rising inflation, particularly driven by soaring egg prices. Carpenter elaborates on the disconnect between consumer sentiment and spending, while addressing how immigration policies affect labor supply and inflation rates. He cautions about the future of inflation and the critical economic conversations ahead.
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Inflation Trend
- Inflation is still high, but trending down from its peak.
- Recent data disruptions and technical adjustments by the Bureau of Labor Statistics contribute to perceived volatility.
Eggflation
- Egg prices have risen due to avian flu and resulting supply disruptions.
- This illustrates how specific events, not underlying trends, can impact prices.
Fed's Decision on Interest Rates
- The Federal Reserve is inclined to lower interest rates if inflation continues decreasing.
- The upcoming CPI reading might not alter this course if the underlying trend is downwards.