alt Hacker NewsIf the consumer price index, which is a metric the Fed uses, goes up, then inflation has gone up. Every dollar buys you less (less purchasing power), and the nominal price has increased. To me this indicates inflation. Of course, you need to calculate how this balances out in terms of jobs/wages and the flow of investment, but that's really hard to figure out at this point in time.
I'd expect the CPI to go up in the event of global tariffs at a baseline of 10% assuming all things go ahead as described.
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One way around this might be a twist on Goodhart’s Law: if you come after the people at BLS who produce the CPI [0], and replace them with political appointees, then maybe you can arrive at an “improved” CPI that hews more closely to your political desires. Assuming you’re the kind of leader who privileges optics over high-fidelity data.
[0] https://www.politico.com/news/2025/02/12/elon-musk-doge-labo...
> I'd expect the CPI to go up in the event of global tariffs at a baseline of 10% assuming all things go ahead as described.
A lot of dollars are spent on US goods/services, so the baseline is more like 10% * proportion of dollars spent on non-US goods.
Yes, that's fine. But if the acute cause is not consumer demand, raising interest rates won't do anything.
(Note: a sibling comment suggests that it "doesn't matter", because if you slow the economy enough, you'll offset the artificial "inflation" due to tariffs. Maybe so. But that would be cutting off your arm to treat a paper cut.)