00:00 Speaker A

Atlanta Fed President Raphael Bostic saying there's no clear signs of tariffs boosting inflation as of the April data, but it could begin showing up in the coming weeks and phone call with reporters. I'm still joined by my guest host for the hour, Stephanie Roth of Wolf Research as the chief economist, Stephanie. I I see you nodding your head. Do you agree with that assumption?

00:19 Stephanie Roth

Yeah, there is the tariffs certainly have not shown up yet in the inflation data. They certainly will. It's a question of how much and when, it's not if. So we expect that it will start to show up in the June print reported in July. That's kind of the next step where you're likely to see it. Companies had a decent amount of inventories heading into it, so I don't expect to see it in the next print, but after that, we should very much start to see inflation pick up. Base case is you start to see core inflation run up above, just at least a little bit above 3% year over year towards the end of this year before it starts coming back down.

00:58 Speaker A

And and if that trend were to continue, does that ever bring a hike from the Fed back on the table in your view?

01:05 Stephanie Roth

I don't think so. It the bar for a hike is really high. And at this point, they're still in the economy's still slowing. We just talked about how payroll gains could slow below 100,000. So there's enough out there for the Fed to be in wait and see mode as opposed to something that's more aggressive and and hawkish. Is there the chance that the market prices in a a chance of a hike? Of course. So the the the bond market might trade in that direction, but for them to actually do it, I think it would be a a very unlikely outcome.

01:46 Speaker A

And how likely do you think it is that we could enter into that concern that we had about stagflation from earlier this year, that we may be see unemployment ticking up while inflation is also ticking up?

02:02 Stephanie Roth

There's certainly the risk of that, especially as we start to to move in the next couple months when the tariff effects actually start to show up in the data. The thing is, we we the economy so far has been holding up fairly well largely because the tariffs haven't hit. Nothing hasn't really happened yet, even though it's been a a wild ride for the first half of the year. Yeah. But we do have some positive impulses in the economy, too. One, the labor market, like we talked about, is is fairly firm. We'll get a little bit of positive stimulus from the reconciliation bill, bonus appreciation and R&D expensing should filter into this year. Some of the individual provisions will also filter in. And then there's a little bit of stealth stimulus stuff like the employee retention credit, which was a COVID era uh stimulus that's now getting paid out after a long pause. So there's a couple of things that could actually continue to sort of boost the economy, even though, you know, the net effect of the tariffs is not very good.

03:22 Speaker A

Does the one big beautiful bill lead to stimulus for consumers in your view?

03:31 Stephanie Roth

It doesn't near term. The front loaded effect of the bill is not really for this year, but more for next year is you do get a a bit of a boost from a consumption perspective, tax and overtime, tax on tips, some of the child tax credits. So there is some positive impulses to the consumer. It probably could be felt towards the back part of this year. Depends on when they adjust the withholding tables. Right. The expectation is, you know, could be next year, but if you look back to to 2009, the withholding tables were adjusted earlier. So there's a there's a precedent for that to happen later this year, which would have effects call it Q4 growth.

04:19 Speaker A

Stephanie, great overview as always. Thank you so much. Really appreciate it.