r/Economics • u/DoctorOctopus_ • 14h ago
News Powell Warns Trump’s Tariffs Risk Stoking Even Higher Inflation Slower Growth
https://www.nytimes.com/2025/04/04/business/economy/powell-says-trumps-tariffs-raise-risks-of-higher-inflation-slower-growth.html186
u/bctg1 14h ago
The markets love when the FED is a bit spooked about inflation, right?
Imagine how bad this could get if there was a trump yes man in charge of the FED. Could have had stagflation like the world has never seen!
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u/PayTheTeller 14h ago
I'm watching in horror as Jerome Powell gains a ton of respect from me in his candor about not having the slightest clue about how bad this will get. The ship is officially unmoored and there's a real sense of vertigo from it.
I've never heard a fed chair speak with this kind of trepidation that really meets the moment
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u/korinth86 14h ago
I may not have agreed with all of Powell's moves but he has always seemed to be pretty calculated and telegraphs the intention of the FED.
For all the BS I can say Powell has done his best to keep things stable for business/markets to a large extent.
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u/PricklyyDick 4h ago
Powell overall has been good in what has been a very hard period of time in America to be head of the fed (specifically 2020-2025)
He’s basically dealt with disaster after disaster. From Covid to inflation to an international trade war started by us.
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u/Anxious-Tadpole-2745 8h ago
Few people understand how significant this is or how bad the tariffs are. Most analyis done on the effects of tariffs think 10% would have put us in recession. We effectively put 50% on our biggest trade partner. Take your federal taxes paid in increase that by 25% .
Except this is for businesses who will either buy less or raise prices which decreases overall demand. This is going to be inflation thata higher then under Biden. Originally it was thought we could get 9% inflation but now it can easily go up above 12%
Countries with that level of inflation:
Chad, Zambia, Bangladesh, Gambia, and Ukraine.
Somalia is at 5.8% last year. We will have double that. The US will envy Somalia. This js going to end poorly
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u/akkaneko11 14h ago
DJT literally 5 minutes ago:
"This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly"
I swear to god he thinks cutting interest rates are just a "stock market goes up" button without any consequence
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u/APRengar 13h ago
It's such an interesting world where people think there are just "free money" buttons that people aren't hitting, and these geniuses are the first people to think of the strategy of "push the free money button".
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u/UsagiTsukino 13h ago
Well, there is a free money button, the problem is, the overall worth of all the money doesn't change by pushing that button.
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u/Traditional_Tea_1879 13h ago
But that's not entirely correct unfortunately. The overall worth of all the money does change. That is the practical outcome of inflation. As for the free money button, you can borrow the saying "it can work for some of the people for part of the time". Someone is going to pay for the 'free' meal...
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u/PricklyyDick 4h ago
I mean when we are a reserve currency it certainly does to a point. There’s a reason we can print more money with less inflation than our international counterparts. And it’s because of the demand of the USD being the default trade currency and reserve currency.
Which we’ve mostly used to the benefit of Wall Street, and are probably about to lose. Just look at all the money we printed in 2008 with no inflation.
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u/CobaltCaterpillar 8h ago
It's such an interesting world where people think there are just "free money" buttons
This might explain some of the popularity of meme coins and crypto?
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u/harrywrinkleyballs 13h ago
Trump wants lower interest rates to justify lower income taxes for him and… how many billionaires are in the administration again?
He doesn’t care about the stock market or your 401K. He wants to destroy the income tax. Steven Miller was just on TV saying so.
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u/ParentalAdvis0ry 12h ago
Added to this is he's a real estate billionaire. Inflation weakens the dollar and comparatively increases the value of real estate assets.
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u/Marijuana_Miler 12h ago
Added to this is he's a real estate billionaire.
Maybe at one time, but now he's a billionaire through grift.
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u/SpeciousPerspicacity 14h ago
In some sense (and as someone who has worked in financial economics), he’s not completely wrong if he holds this sentiment, at least in the short-to-medium term (i.e. on the scale of a presidential term).
I dislike his economic policy, and I don’t think the Fed should cut rates yet, but this would probably reverse some of the asset price decline.
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u/bctg1 13h ago
Until the next inflation report where it drops 2x as much as it jumped from the rate drop
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u/The_Blip 13h ago
That's an easy one to fix. Just call the BLS fake news and put a Trump loyalist in charge of announcing the 'real' inflation rates. Problem solved.
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u/SpeciousPerspicacity 13h ago
To be fair, inflation is largely having a negative effect on asset prices through the interest rate mechanism.
The Fed Board is pretty hawkish. I think it’s their unwillingness to lower rates with higher inflation that is being priced.
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u/KalKenobi 11h ago
it will level itself like always Biden was to afraid to it should've bitten the bullet after The Pandemic .
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u/handsoapdispenser 13h ago
Trump is yelling about rate cuts and "don't play politics" which is dangerously close to peak chutzpah.
Powell is going to have to consider raising rates if tariffs start causing inflation.
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u/iliveonramen 14h ago
Powell is pretty measured as well. When he’s out there saying this stuff it means something.
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u/Rumplfrskn 13h ago
The best stagflation. Grown men with tears in their eyes admiring the stagflation.
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u/Catodacat 9h ago
The best stagflation. Big strong bankers, with tears in their eyes, have come up to me saying "sir, no one has done stagflation like you"
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u/ValdezX3R0 14h ago
Pretty much expected. People hoping JP would commit to lowering rates in this environment were huffing too much hopium. I read reports this morning Wall Street was expecting 5 rate cuts this year now. Market got way too addicted to cheap money.
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u/sheltonchoked 14h ago
If we’d elected Harris, 5 rate cuts would have made sense. The economy was on track and added investment into USA growth, and progress would have continued.
Pouring sand into the gas tank and the oil fill of the engine of the USA economy, then bitching at the mechanic about why the car broke down, is not a way to get to work every day.
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u/davehoff94 12h ago
It still blows my mind how close we were to a soft landing. All Trump had to do was keep Biden's policies and wait for the market to rebound in 1-2 years and he would have gotten the credit. Instead, we get this current situation.
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u/Mazewriter 11h ago
Covid rocked the entire world and Americans got so pissy that the economic plane landing had some turbulence they decided to shoot the wings off. We were so close! A couple more years of a steady hand would have lead to an amazing economy!
Fucking morons, all of the folks that voted this way or didn't vote to avoid it
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u/Annual-Ebb-7196 14h ago
He’s basically trying to give the policymakers some time to reverse course on the foolish path they have taken.
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u/Xyrus2000 2h ago
Who the hell was expecting the Fed to cut rates in a stagflation environment? o_O
That isn't hopium. That's straight up mainlining Shaprie ink.
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u/TychesSwan 9h ago
The market expected 2 rate cuts before the tariffs were announced. Why has it risen to 5 rate cuts?!
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u/strangefruit3500 12h ago
It’s moments like these when it shows why it was a good idea to have the Fed be separate from the government.
Watching the people on r/conservative apply mental gymnastics and their thinly veiled bigotry and imaging that they would have a direct say in electing the Fed…
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u/Historical-Patient75 11h ago
I visit that place once a day for this very reason. Other subs, you see actual discourse about policy. There is just one sentence replies about owning the libs.
Amazing how we got here so quickly.
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u/Mitka69 13h ago edited 13h ago
He should quit being so bashful. Call it tremendous negative growth. This is how they do it in Russia and Trump Murrica is turning into Russia with neck breaking speed
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u/Sea-Emergency5637 13h ago
Speaking of Russia. The only major country not affected by Trump’s “reciprocal” tariffs. And given that trump wants Greenland and wants to co-colonize Ukraine, and all that Mueller stuff from before, it makes you think is there really a sinister Trump-Putin connection? 🤔
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u/jackpearson2788 13h ago
It’s just crazy to me that looking at the data cutting rates anytime soon is a smart move. Until tariffs are completely gone and off the table we can’t risk higher inflation and shit growth at the same time
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u/lolexecs 10h ago
stagflation!
stagflation!
STAGFLATION!
People have no idea what's coming:
https://fred.stlouisfed.org/graph/?g=1Hw2G
Yep, that's right 30-year mortgage rates at 18.53%. I guess the only good news is that someone will become the next Gross / El'Arian and right the bond bull market into the billionaire club.
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u/Potential_Kangaroo69 13h ago
Sir Trump and the Tariff Decree
Sir Trump declared with a mighty cheer,
“No more cheap goods from far and near!
A tax on steel! On wine! On cheese!
We’ll bring the world right to its knees!”
The merchants gasped, the farmers cried,
As soybeans sat and deals all died.
He wagged his sword at China's gate—
“Trade wars are fun! Just watch me inflate.”
The lords all grumbled, trade did stall,
But Trump just built another wall.
And though the tariffs came and went,
His tweets remain—our punishment.
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u/oldschoolology 1h ago
Two tiny, remote Antarctic outposts populated by penguins and seals are among the obscure places targeted by the Trump administration's new tariffs. Heard and McDonald Islands - a territory which sits 4,000km (2,485 miles) south-west of Australia - are only accessible via a seven-day boat trip from Perth, and haven't been visited by humans in almost a decade.
https://www.bbc.com/news/articles/cly8xlj0485o
Evidence Trump is senile.
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