In view of President Donald Trump's blazing criticism, the Goldman Sachs economist David Mericle stood a controversial forecast on Wednesday that tariffs will start to make consumer letters.
Trump hit the bench in a truth social in a Tuesday and suggested that CEO David Solomon “get a new economist” or consider resignation.
In a CNBC interview, however, Mericle said that the company is confident in its research, regardless of the president's objections.
“We stand by the results of this study,” he said to “Squawk on the Street”. “If the recent tariffs like the April tariff follow the same pattern that we saw with these earliest tariffs in February, we finally estimate that consumers would bear about two thirds of the costs.”
The source of the president's anger was a Gold man Note on the weekend, which was written by the Economist Elsie Peng, and claims that exporters and companies have so far recorded most of Trump's tariffs, but will switch to consumers in the coming months.
In fact, Peng wrote that Goldman's models state that consumers will cover about two thirds of all costs. In this case, the price index for personal consumption, the main inflation forecast measuring device of the Federal Reserve, is increased to 3.2% by the end of the year, without food and energy. The Kern -Pce Inflation for June was 2.8%, while the FED is aiming for inflation of 2%.
“If you are a company that is produced in the USA and is now protected against foreign competition, you can increase your prices and benefits,” said Mericle. “So these are our estimates, and I think they are actually pretty much in line with what many other economists have found.”
Remarkably, Mericle said that Trump would probably still receive at least some of the interest reductions he demands from the Fed.
“I think most of the effects are still ahead of us. I'm not worried about it. I think how the white house, like the Fed officials, we would see this as a unique price-level effect,” he said. “I don't think this will play a whole role for the Fed, because now they have a job market that you have to worry about, and I think that will be the dominant concern.”
After modest profits that were reported for the consumer price index this week, and in a weak, not colored salary billing report, in which the previous two months were tough down, the markets are too recently over each of its three remaining meetings this year.
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