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Chicago Booth Review Podcast
Trumponomics: Expect higher inflation—with or without tariffs
Feb 5, 2025
Michael Weber, a Chicago Booth researcher focusing on consumer behavior and tariffs, discusses the intriguing impacts of Trumponomics. He reveals how consumer expectations of rising prices are reshaping shopping habits and driving inflation. The conversation touches on the parallels between tariffs and sales taxes, leading to misconceptions that prompt stockpiling. Weber also highlights the tension between the Trump administration and the Federal Reserve, as they navigate the delicate balance between domestic job growth and inflation control.
29:45
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Quick takeaways
- Consumer behavior is shifting as many Americans stockpile goods in anticipation of future tariff-induced price hikes, contributing to inflation.
- The anticipated rise in tariffs is likely to create tensions between the Trump administration and the Federal Reserve regarding inflation management.
Deep dives
Consumer Response to Tariff Expectations
Consumers are bracing for significant increases in tariffs, particularly on imports from China, with expectations averaging around 35%. This behavior has led to a noticeable shift in shopping patterns, as consumers are stockpiling goods in anticipation of higher prices. The survey findings indicate that many Americans seem to believe the tariffs will have dire financial consequences, prompting them to take proactive measures to mitigate potential price hikes. Consequently, inflationary pressures are expected to rise, which could create conflicts for the Trump administration with the Federal Reserve.
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