Bloomberg Surveillance Inflation Data and Unilateral Tariffs
Jun 12, 2025
Frances Donald, Chief Economist at RBC, discusses inflation data and its implications for Fed policy, questioning if the central bank is too slow to adjust rates. Rich Clarida, former Fed Vice Chair at PIMCO, shares insights on the current US economic climate, including the influence of looming trade tariffs on market confidence and long-term growth. They both analyze the widening economic disparities and the potential impact of government spending on defense and infrastructure, suggesting a complex future for American fiscal strategy.
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Two Americas in U.S. Economy
- U.S. GDP growth is sub-trend at around 1.5 to 2%, not recession-level.
- Two different economies exist: wealthy Americans prosper while low- and middle-income Americans struggle.
Tariffs Delay Inflation Impact
- Tariff effects on inflation appear delayed by inventories built earlier.
- Inflation pressures from tariffs might emerge in consumer prices only in a few months.
Structural Inflation Pressures Persist
- Structural pressures like shelter costs and tight labor market will push inflation higher regardless of tariffs.
- Inflation could reach the high twos even without considering tariff effects.
