Moody's Talks - Inside Economics 4-peat
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May 16, 2025 Aaron Klein, Senior Fellow in Economic Studies at the Brookings Institution, returns to provide his expert insights. He discusses the latest economic indicators like CPI and PPI, shedding light on their implications for inflation and growth. The conversation delves into the effects of recent tariff changes on consumer confidence and recession risks. Klein also assesses emerging vulnerabilities in the financial system and highlights the importance of vigilance against potential crises, intertwining past warnings with current dynamics.
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Origin of TARP's $700 Billion
- The Troubled Asset Relief Program (TARP) was initially set at $700 billion due to political and practical reasons amid the financial crisis.
- It was sized to ensure enough reserve and was changed from an auction to capital injection approach to stabilize banks effectively.
Tariffs' Delayed Inflation Impact
- Consumer price inflation did not yet reflect tariff impacts in April due to inventory stockpiling.
- Price increases from tariffs are expected to emerge in May and June as cheaper inventories are used up.
Tariffs Still Economic Headwind
- The tariff arrangement reducing extremely high rates to about 30% still represents the highest tariffs since the Great Depression.
- This imposed tariff shock acts as a short-term economic headwind, even if partially alleviated.