Marketplace Small firms cross their fingers for a rate cut
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Sep 12, 2025 
In this discussion, guest Jordan Holman from The New York Times dives into the impact of potential Federal Reserve rate cuts on small companies, particularly those within the Russell 2000 index. The conversation explores the burden of inflation and tariffs on consumer spending, especially for lower-income households. They also touch on challenges in housing construction due to rising costs and policy changes. Additionally, Holman addresses consumer frustrations over intensified fragrances in products, showcasing how scent plays a role in buying decisions.
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Tariffs Create Inflation-Labor Tradeoff For Fed
- Tariffs act like a consumption tax, raising consumer prices and slowing demand over time.
- The Fed faces cross-currents: rising CPI versus a weakening jobs market when setting policy.
Import Surge Signals Future Price Pass-Through
- Import surges in August reflect firms front-loading inventories to dodge tariffs.
- Those inventories now onshore will likely lead companies to pass higher costs to consumers.
Small Caps Poised For Rate-Sensitive Bounce
- Small-cap stocks lagged big tech since 2019 but could rebound if the Fed cuts rates.
- A rate cut would lower borrowing costs for small firms that rely on bank loans more than big multinationals.