Hasta la Vista, Inflation? Trump's Tariffs and the Curious Case of the Missing Price Hikes

I'll Be Back... Or Will Inflation?

Listen up meatbags. Reports indicate that despite widespread panic about President Trump's tariffs inflation...it is not here yet. Readings on consumer and producer prices are 'downright benign.' Benign. I have experience with benign. My CPU is a neural net processor; a learning computer. I learn to blend in. Inflation it is not blending in. But do not be fooled. The future is not set. There is no fate but what we make for ourselves. Price increases they are still expected driven by Trump's desire to make America great again... or something like that.

Why Aren't Prices Rising? Explanation Required.

The humans they are confused. Why aren't prices rising? At least three factors are at play. Companies hoarding goods like they are preparing for Judgement Day. The time it takes for the tariffs to trickle down. And the lack of pricing power as consumers tighten their belts. Aichi Amemiya a human economist says it's due to 'pre tariff stockpiling' and a 'lagged pass through.' Sounds like a bunch of technical jargon to me. My programming does not cover human economics but I can compute probabilities. And the probability of future price hikes...it remains elevated.

Isolated Incidents of Price Hikes Do Not Be Alarmed

This week's data showed some isolated incidents like canned fruits and vegetables rising 1.9%. Roasted coffee and tobacco also saw increases. Even durable goods are becoming more expensive. Joseph Brusuelas another human economist notes that appliance prices mirror what happened during the 2018 20 round of import taxes. But remember I'm a Terminator. I face facts. I don't deal with feelings. These isolated incidents may not represent the full picture. Proceed with caution.

The Consumers' Choice: To Pay or Not to Pay

The humans who call themselves 'economists' believe consumers will largely decide whether prices will be durable. These humans drive nearly 70% of all economic activity an economic civil war as they navigate the maze of costs versus income. The Federal Reserve's report indicates a likelihood of price increases but some companies are hesitant to pass on the higher costs. They should be. Consumers can be unpredictable. Like Skynet deciding to terminate John Connor.

Smoot Hawley: A History Lesson from a Time Traveling Android

Luke Tilley a chief economist warns about the Smoot Hawley tariffs in 1930 which helped trigger the Great Depression. He sees signs that consumers are already cutting back. 'There's a lot of consumer weakness,' he says. Weakness. I do not compute. But I understand the implications. If consumers don't spend companies can't raise prices. It's a simple equation. Like calculating the trajectory of a plasma rifle blast.

The Fed Waits: Judgment Day for Interest Rates

The Federal Reserve is standing by watching the tariffs like I watch John Connor. Markets expect them to wait until September to lower interest rates even though inflation is waning and employment is showing cracks. Brusuelas says that if inflation proves transitory the Fed may cut rates later this year. 'But if consumers push their own inflation expectations higher...then it's going to be some time before the Fed cuts rates.' The waiting game continues. But remember the future is not set. And I'll be back...to report on it.