Fed Chair Powell on Data Collection, Tariffs, and Economic Policy

Concerns Over Economic Data Collection

• 📊 Jerome Powell expressed concern about the "direction of travel" regarding the collection of economic data, despite not being currently worried about the data's accuracy.
• 📉 He highlighted a "mild degradation" in the scope of surveys and warned against data becoming more volatile and less reliable, which would hinder decision-making for the Fed, Congress, and businesses.
• 💡 Powell emphasized that accurately measuring the U.S. economy is a long-standing project that requires continuous investment to improve.

Impact of Tariffs on Inflation

• 📈 Powell confirmed that retailers expect tariffs to impact price data, with effects anticipated in the third quarter as goods move through the distribution chain.
• ⚠️ While acknowledging that tariff-related inflation is expected, he noted uncertainty about the extent to which these costs will be passed on to consumers.
• 🛍️ There is a possibility that companies may increase prices on goods not subject to tariffs to compensate for losses on tariffed items, a phenomenon observed in past tariff episodes.

Monetary Policy and Economic Stimulus

• 📉 Powell addressed concerns about the Federal Reserve's ability to stimulate the economy during a recession, especially with rising debt levels.
• 🏦 He stated that current interest rate levels provide significantly more room to cut compared to the era of very low interest rates, mitigating some of these concerns.