By coinnews 
00:00 Speaker A
Well, we had that breaking consumer confidence data crossing the wire coming in at 98. Economists were expecting 87.1, an increase from last month’s reading of 86. Want to bring in my co-host for the hour, Simeon Hyman, Proshares Global Investment strategist, no relation, as we always say. Simeon and I have been doing stuff together for many years. And we have Eric Winograd, Alliance Bernstein chief economist, both of you guys. Thanks so much for being here. Simeon’s going to be here for the hour. Eric here to talk to us a little bit about some of the data we’ve been getting. Um, so let’s start with that consumer confidence reading, because it is interesting to see, and unusual lately, to see a, a survey that comes in stronger than estimated.
00:51 Simeon Hyman
Yeah, it’s nice to see a little bit of a rebound. We’ve seen significant weakness in a lot of the survey data, in the soft data, as you point to. And you know, it suggests that consumers are at least somewhat sensitive to the news flow, the back and forth on tariffs. You know, we got the back, if you will, and now with the fourth, consumers seem to be feeling a little bit better about things.
01:15 Speaker A
And do you think that that is going to translate, you know, there was concern on the downside of the survey data that it would translate into lower spending. Is now the, I mean, but do you think there was actually going to be any significant change in spending, or do we just go back to status quo at this point?
01:39 Simeon Hyman
So, look, the correlation between the hard and the soft data is imperfect, right? It’s not perfect, it’s never been perfect. It’s probably less perfect now than it would normally be. Uh, I think we also want to take a step back and look at this in perspective. Consumer confidence indicators are still lower than they were a few months ago. They’re again back and forth, but generally trending lower. This is also only one measure of consumer confidence, and some of the others look a little bit weaker. So we do think still that the soft data are sending a leading signal about what, where the hard data are going to go over the next few months. We do expect to slow down in consumer spending.
02:23 Eric Winograd
What if we get back down to this 10% thing that’s supposedly the floor? Is that enough to have a material impact long-term? Let’s assume all the other crazy stuff doesn’t happen but the 10% sticks.
02:48 Simeon Hyman
Oh, I think that’s enough to have an impact. You know, it’s an interesting perspective to put on it. If I had told you coming into the year that we were going to have a 10 percentage point increase in the universal tariff plus some additional stuff on China, I think most people would have thought of that as a very bad outcome. It’s only because we have seen worse that that all of a sudden doesn’t look so bad. Is that enough to, to crater the economy, to push us into a recession? Probably not, but it is enough to have a meaningful impact on both growth and on inflation.
03:25 Speaker A
And so what is that impact? If 10% is the baseline, if that is where we end up, how should we be thinking about it?
03:36 Simeon Hyman
So that probably pushes prices up by about 1% for the economy as a whole. If you otherwise would have had inflation at two and a half percent, you probably now get it more like three and a half percent, or something like that. In our estimation, that’s enough to slow growth down by, give or take, three quarters of a percentage point. We have been assuming over the course of this year that the effective tariff rate increase will be about 15 percentage points, which is, call it a 10% universal plus 25% or 30% on China. That raises prices by a percent and a half, and it slows growth down in our forecasts to about half a percent for the year.
04:25 Speaker A
So if that’s the case, when can we look to the Fed to sort of, when can the Fed be sure enough that that, that that’s going to be the outcome, that it can actually move?
04:44 Simeon Hyman
So the Fed has been clear here that they’re going to rely on the hard data, not the soft data, and particularly the labor market data. Remember that their mandate is the labor market, not growth in general. It won’t be until we see true weakness in the labor market that I think the Fed will be comfortable moving. Uh, you know, Minnesota Minneapolis Fed President Kashkari, uh, this morning was only the latest Fed president to signal that they’re going to wait and see how things play out. I think that that’s the message they will all deliver until we get one or two weak payrolls reports, and then they’ll be ready to cut in my estimation.