Goldman Sachs Economist on Trump Criticism, Tariffs, and Inflation

Response to Presidential Criticism

• 🎯 Goldman Sachs economists stand by their study's results regarding tariff cost-sharing, despite criticism from President Trump.
• 💡 The team's analysis suggests that US consumers will eventually bear a significant portion of tariff costs, contrary to initial expectations.

Tariff Cost Allocation

• 📊 The study indicates that US businesses have borne most tariff costs so far due to implementation lags.
• 📈 If recent tariffs follow historical patterns, consumers are estimated to bear about two-thirds of the cost by the fall.
• 📉 Foreign exporters are projected to bear about one-quarter, with US businesses absorbing less than 10% net.

Consumer Impact and Inflation Outlook

• ⚠️ Consumer spending growth decelerated in the first half of the year, with slowing job growth and accumulating tariff effects eroding real income.
• 📈 While current inflation reports haven't shown a significant impact, most of the tariff effects are still anticipated.
• 🚀 The analysis predicts tariff effects could push inflation above 3%, but this is seen as a one-time price level effect.

Economic Data and Fed Concerns

• 🔍 The deviation of core goods prices from their pre-tariff trend, compared to core services, illustrates the impact of tariffs.
• 📊 Volatility in monthly data, such as airfares and dental services, can obscure broader economic narratives.
• 🧠 The dominant concern for the Federal Reserve is expected to be the labor market, rather than tariff-induced inflation.

Goldman Sachs' Research Approach

• 💬 Goldman Sachs aims to provide the best economic forecasts for clients and will continue publishing research reports.
• 🔒 The team remains committed to their methodology and will not alter their approach due to public commentary.