Bloomberg Surveillance
Tariffs Ripple Through Markets
Feb 4, 2025
In this discussion, Stephanie Roth, Chief Economist at Wolfe Research, dives into how tariffs are reshaping the U.S. economy and the Federal Reserve's policy responses. James Steel, Chief Commodities Analyst at HSBC, highlights the surge in volatility within commodities markets linked to tariffs. Krishna Memani, CIO at Lafayette College, reflects on the impact of high market valuations amidst tariff uncertainties. The trio paints a vivid picture of the interconnectedness of tariffs, inflation, and market dynamics.
39:15
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Quick takeaways
- Tariffs could raise inflation expectations significantly in the U.S. economy, while consumer confidence remains crucial for economic growth.
- The labor market appears resilient despite potential future challenges from immigration trends, impacting workforce availability and wage pressures.
Deep dives
Impact of Tariffs on Inflation and Growth
Recent discussions have highlighted the significant potential impact of tariffs on the U.S. economy, particularly regarding inflation. Tariffs on goods from Canada and Mexico were projected to raise inflation expectations by over 50 basis points but have been delayed. While the smaller tariffs on China are more likely to proceed, their expected impact on inflation and GDP is modest, estimated at around 10 basis points each. Market observers remain cautiously optimistic about economic growth, waiting to see how these tariffs materialize before adjusting their forecasts.
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