Bloomberg Surveillance Bloomberg Surveillance TV: June 12, 2025
Jun 12, 2025
Adam Posen, President at the Peterson Institute for International Economics, dives into the economic consequences of unilateral tariff rates. Frances Donald, Chief Economist at RBC, shares her insights on the Federal Reserve's direction and the U.S. economy's future. Norman Roule, Senior Adviser at the Center for Strategic & International Studies, addresses the heightened tensions in the Middle East following Iran's nuclear developments. Together, they unpack intricate economic and geopolitical dynamics shaping today's world.
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Inflation Drivers Beyond Tariffs
- Inflation is driven more by tight labor markets and structural forces than tariffs alone.
- Tariffs contribute, but underlying wage dynamics and consumer strength matter more.
Structural Labor Market Tightness
- The US labor market tightness is structural, driven by accelerated retirements and low replacement labor supply.
- Unemployment rates around 4.5% now reflect labor shortages, not economic strength.
Fed Faces Divergent Inflation Challenges
- The Fed faces complexity in inflation management due to divergent price trends across sectors.
- Inflation isn't uniform, complicating the Fed's policy response.