Fed only saw cumulative inflation ticking up .3 percent this year on PCE from 2.5 to 2.8 percent. Markets think they’ll try and save jobs as long as it doesn’t get out of control.
Companies are trying to bring manufacturing to the US, so there will be plenty of jobs (just not well paying).
So we will have low unemployment but way worse utilization of manpower. We will see people with specialized degrees have to start working labor in a drone factory.
Quality of life goes down hard and people can’t afford their loans… but they will not be unemployed.
High employment does not necessarily mean good usage of resources.
It will make the Fed position very hard, economy in the shitter, inflation rising, low unemployment… all their tools will be useless.
It's pretty unlikely companies will actually start bringing manufacturing to the US, unless there is a guarantee these tarriffs will last even after Trump's term. Buildig a new factory and getting it completely set up isn't a month process, and it's incredibly fucking expensive.
Factories aren't in the US right now because it's cheaper elsewhere. If the tarriffs go away, it'll again be cheaper to manufacture elsewhere. The companies that invested in new US factories are then left holding the bag, since their competitor's product will be cheaper (since manufacturing in other countries is cheaper).
If the genuine desire is to increase manufacturing in the US, you can indeed use tarriffs, but companies have to be aware of this beforehand, and have to be able to trust that these tarriffs will last a long enough time that the building of a new factory is cost-effective. Regardless of political affiliation, Trump has caused a lot of economical unrest, which makes companies a lot more hesitant and unwilling to take the risk.
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u/spookyswagg 1d ago
Inflation is predicted to rise to 4% this year and >4% next year
Without accounting for retaliatory tariffs or potential rate cuts.
Why would Jpow go and make that worse by lowering rates? Just to save the stock market?
What is more important for the Fed, inflation or stock prices?