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We are entering the phase where we can see the impact of tariffs on the economy and gauge how companies are responding to these prices.
We will forgive you to know what the current tariff rates are, seeing that they change quite often. For the 90-day stagnation agreement, China, the effective tariff rate collected is 12.6%:
Now we are actively collecting tariff revenue:
Now we are well within the stage where corporations should decide to either absorb cost growth or pass them on consumers. The result of this calculus will determine the platform for how the economy navigates the next 12 months and which takes the brunt of it.
Some economic figures released today indicate in the answer:
owner
We saw a huge negative miss in PPI today. When you dig into the data, it becomes clear that Miss was largely due to a large decrease in portfolio management fee.
This was due to market accident in April:
This downtic gave interesting insights how much the price is being increased to consumers to be absorbed by the corporations.
Economist Parker Ross mentioned How much growth is being absorbed by corporations, for now:
“So far, it seems that the impact of tariffs is generally not being passed meaningfully to consumers, but they are passing to businesses.”
“We see this in limited acceleration in PPI, 0.61%against sharp acceleration in PPI for private capital equipment for core finished consumer goods, the strongest monthly advantage outside the epidemic since 2008.”
Retail sale
We also got retail sales print today, which explains how the consumption habits are changing on the basis of tariff implementation.
Categories not affected by tariffs (such as food services) increased. On the other hand, categories are very much affected by tariffs, such as big box retailers and sports goods – where there is a lot of front before the tariff was live – now there are gums:
This dynamic is a small example of what is likely to happen because the economy digests the tariff: leading before the tariff, then an increase in a unique price level, then demand for destruction as demand for destruction is sought because high prices reduce demand.
As we navigate in the next few months, economic data will be extremely noise.
As we can see from these two prints, it is necessary to dig under the topline numbers to understand that the numbers are running.
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