Fed Chair Jerome Powell has delivered an alarming warning about Trump’s tariffs causing stagflation.
Jerome Powell has once again said what everyone except Trump seems to already know: Lowering inflation while enacting staggering tariffs is virtually impossible.
“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” the Federal Reserve chair said on Wednesday. “The effects on inflation could be short-lived, reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent. Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and ultimately on keeping longer-term inflation expectations well-anchored.”
This is exactly what Trump doesn’t want the American public to hear.
Part of me thinks this is the point. Just like with covid, when corporations posted record profits, retail companies can raise their prices and then never lower them again.