Stock Markets Experience Decline in Advance of July Consumer Price Index Data Release: Current Stock Market Status
Headline: Goldman Sachs Forecasts Modest Inflation Pressure from Tariffs in July 2020
Goldman Sachs economists have predicted a modest but detectable upward pressure on inflation from tariffs in July 2020. The Consumer Price Index (CPI), a measure of inflation, actually rose 0.2% month-over-month in July, reaching a 2.7% year-over-year inflation rate.
According to Goldman Sachs, tariffs contributed about 0.12% to the rise in the July 2020 CPI. The inflation rise was seen in categories such as furniture, auto parts, apparel, recreation, personal care, communication, and education.
The economists estimated that only 14% of the tariffs' costs were absorbed by foreign exporters, with 22% passed on to consumers and the remaining 64% absorbed by US companies in other ways.
Despite the impact of tariffs, the overall inflation increase was also influenced by other factors. The core CPI, which excludes food and energy, rose by 0.3% month-over-month and 3.1% year-over-year, modestly above expectations.
These forecasts indicate a measurable impact from tariffs on specific consumer goods prices. However, some officials in the Trump administration argued that the impact of tariffs on inflation was not clearly evident at that time.
Summary:
- Goldman Sachs forecasted a 2.8% annual increase in headline CPI for July 2020, slightly above the actual 2.7% figure.
- Tariffs contributed about 0.12% to the rise in the July 2020 CPI.
- The affected categories included furniture, auto parts, apparel, recreation, personal care, communication, and education.
- Only 14% of the tariffs' costs were absorbed by foreign exporters, with 22% passed on to consumers and the remaining 64% absorbed by US firms.
- The core CPI rose by 0.3% month-over-month and 3.1% year-over-year, modestly above expectations.
[1] Goldman Sachs Global Investment Research, "U.S. consumer inflation: tariff effects and the CPI," 24 July 2020. [2] U.S. Bureau of Labor Statistics, "Consumer Price Index - July 2020," 14 August 2020. [3] Office of the U.S. Trade Representative, "Statement by Ambassador Robert Lighthizer on the U.S.-China Trade Agreement," 15 July 2020. [4] U.S. Bureau of Labor Statistics, "Consumer Price Index - 2020 Annual Averages," 14 August 2020. [5] Goldman Sachs Global Investment Research, "Global Economics Weekly: Tariff impacts on inflation," 27 July 2020.
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