

Rules of Thumb
May 30, 2025
Tariff troubles take center stage as the hosts dissect a federal court ruling on previous tariffs and its ripple effects on prices and inflation. They lay out the implications of recent tax policies on the national debt and treasury yields. Expect lively debate on the necessity of TARP during the 2008 crisis and its long-term benefits. Consumer spending patterns are examined in light of anticipated tariffs, revealing stark contrasts across income levels. Finally, the team introduces a new recession indicator, estimating a 45% chance of an economic downturn.
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Tariffs' Inflation Impact Rule
- Each 1% increase in effective tariffs raises inflation by 0.1 percentage points.
- Inflation could jump from 2.5% to nearly 4% next year if tariffs rise from 2.25% to 15%.
Personal Tariff Price Increase
- A salesperson quoted me a 25% price increase due to tariffs starting June 1.
- This illustrates how tariffs are directly prompting businesses to raise consumer prices.
Stock Market Ignores Tariff Fundamentals
- The stock market reacts heavily to tariff-related headlines but shows little fundamental change.
- This has created volatile but overall stable market prices despite tariff uncertainty.