Torsten Slok, the chief economist at Apollo, issued a warning for U.S. consumers of what to expect at the end of the year.<\/p>\n
In an interview<\/a> with Bloomberg, Slok on Thursday said that the President Donald Trump\u2019s<\/a> tariffs will push prices higher until inflation is expected to peak in November or December. <\/p>\n Slok said that he \u201cabsolutely\u201d believes that inflation has already caused a \u201clift off\u201d on consumer goods. Data released from the Bureau of Labor Statistics on Tuesday showed<\/a> that inflation accelerated in June, signaling that Trump\u2019s trade wars are leaving an initial impact on the economy. <\/p>\n \u201cWe are seeing goods inflation, which makes up 40% of the CPI basket, seen on a number of different categories: tools, toys, apparel, furniture,\u201d Slok said. \u201cWe\u2019ve seen a fairly decent rise, and if we begin to see the lift off now over the next several months, then the risk is of course that this becomes more persistent.\u201d<\/p>\n The consumer price index rose 2.7% compared to last year \u2014 the biggest recorded rise since February. It is an increase from the 2.4% pace reported in May, as prices rose by 0.3% over the course of the month. <\/p>\n The prices of products that have been most impacted by tariffs have reported slight increases compared to last month. The cost of appliances jumped to 1.9%, which is up from 0.8%, while household furnishings grew by 1%. While apparel and clothing has seen declining prices, the index recorded a 0.4% rise. Grocery prices also saw an increase of 0.3%, and gasoline prices<\/a> bounced up by 1% after falling by 2.6% in May. <\/p>\n Slok said that high inflation can ultimately cause to two results: the Federal Reverse will be unlikely to cut interest rates, and the start of the shock of stagflation, which is the combination of still-high inflation and a weak or stagnant economy.<\/p>\n \u201cThey need to wait to see the peak, and we\u2019re really only at the take-off stage,\u201d Slok said. \u201cThe consensus expects that later this year… but the bottom line is before we can see that peak incite, it is not clear that the Fed will say that \u2018Now we\u2019re going to cut rates more meaningfully.\u2019\u201d<\/p>\n He said that the potential firing of Fed Chair Jerome Powell<\/a> \u2014 an idea that Trump has mused, but has since called it \u201chighly unlikely\u201d \u2014 could lead to the likely decrease of the value of the U.S. dollar<\/a>, coupled with increase of long rates.<\/p>\n Slok also mentioned that wage inflation will likely begin to rise in industries with undocumented immigrants, such as agriculture, construction, and leisure and hospitality. <\/p>\n \u201cSo the fear you can have is that it\u2019s not only goods inflation coming from tariffs, it\u2019s also the upside risks to service inflation coming from wages, especially because of deportations potentially beginning to play a more significant role,\u201d Slok added.<\/p>\n In recent weeks, Trump has sent dozens of letters<\/a> to foreign leaders that set new thresholds for tariff rates \u2014 all of which are intended to go into effect by Aug. 1, if the countries do not come to a trade deal with the United States. The president also recently told NBC News<\/a> that he plans to impose blanket tariffs of 15% or 20% on most trade partners.<\/p>\n Our journalism needs your support. Please subscribe today to NJ.com<\/a>.<\/p>\n If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement<\/a> and agree that your clicks, interactions, and personal information may be collected, recorded, and\/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Torsten Slok, the chief economist at Apollo, issued a warning for U.S. consumers of what to expect at…\n","protected":false},"author":2,"featured_media":20675,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101],"class_list":["post-20674","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/20674","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=20674"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/20674\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/20675"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=20674"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=20674"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=20674"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}