As Trump berates Goldman, economists agree higher tariff inflation coming

Goldman Sachs is facing criticism for its prediction of heavier tariff-induced consumer inflation, but it is not alone in this view on Wall Street. Despite the recent consumer price index report showing benign inflation, economists believe that the worst effects of tariffs are yet to come.

As pre-tariff inventories deplete, effective tariff rates rise, and companies pass on higher costs to consumers, the consensus is that inflation will continue to climb throughout the year. JPMorgan Chase’s chief U.S. economist, Michael Feroli, warned that tariffs could subtract 1% from GDP and add 1-1.5% to inflation.

President Donald Trump publicly criticized Goldman Sachs for their research, suggesting the CEO should fire the economist responsible for the report. However, many economists on Wall Street share the same concerns about the impact of tariffs on inflation.

Most economists anticipate a gradual increase in prices as businesses pass on higher costs to consumers. UBS senior economist Brian Rose expects inflation to continue rising as effective tariff rates reach around 18%. This could push the Federal Reserve’s preferred core measure to the low to mid-3% range.

While no one is predicting runaway inflation, monthly gains of 0.3%-0.5% could be enough to prompt the Fed to lower interest rates. Despite concerns about slowing consumer spending and GDP growth, economists believe the Fed will act to counter the impact of tariffs.

There are worries about the expiration of de minimis tariff exceptions on August 29, which could lead to a 1 percentage point gain in core inflation. Pantheon Macroeconomics forecasts core inflation to reach 3.5% by the end of the year, with price increases extending beyond goods to services.

The Cleveland Fed’s measure of sticky-price CPI inflation has been steadily rising, indicating potential challenges ahead. Higher inflation could give policymakers pause about implementing rate cuts, even with a weakening labor market.

Overall, while the path to rate cuts may be opening up, higher inflation caused by tariffs remains a significant concern for economists and policymakers alike. The impact on consumers and the broader economy is yet to be fully realized, and Wall Street economists are closely monitoring the situation. The world of technology is constantly evolving, and with that comes a wave of new and innovative gadgets that promise to make our lives easier and more efficient. From smartphones to smart home devices, there is no shortage of tech gadgets to choose from. One of the latest trends in the tech world is the rise of wearable technology.

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