Bloomberg Surveillance
Can Consumers Drive Markets Higher?
May 15, 2025
Michael Darda, Chief Economist at Roth Capital Partners, shares insights on decreased recession risks spurred by new trade deals. He discusses how recent tax increases might not derail economic stability. Elizabeth Economy, a senior fellow at the Hoover Institution, dives into the complex dynamics of U.S.-China trade relations, emphasizing the importance of navigating tariffs and technology independence. Together, they explore consumer resilience in the face of economic uncertainty, highlighting how high-end spending affects market trends.
41:57
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Quick takeaways
- The reduction of tariffs might alleviate recession fears, providing the Federal Reserve greater flexibility in monetary policy adjustments.
- Despite economic pressures, consumer spending, particularly from higher-income households, remains robust and could support market stability and growth.
Deep dives
Historical Context of Tariffs and Economic Impact
The discussion highlights the significance of past tariff hikes, specifically referencing the Smoot-Hawley Act of 1930, which led to a long-lasting negative impact on the Republican Party and the economy. The current tariff rates are noted to be at their highest in a century, raising concerns about potential recessionary effects similar to those experienced in the 1930s. With the recent announcements concerning tariff reductions, there's cautious optimism about avoiding drastic economic downturns. This context is essential for understanding the potential implications of today's tariff policies on trade and market stability.
