Yellen expects Trump's tariffs will hike inflation to 3% year over year

[BumRushDaShow]

Source: NBC News/CNBC

June 12, 2025, 6:22 PM EDT / Source: CNBC


Former Treasury Secretary Janet Yellen predicts President Donald Trump’s tariffs will cause prices to rise and average household income to fall, despite a slowing trend in the U.S. inflation rate. “I would expect inflation, on a year-over-year basis of this year, to shoot up to at least 3%, or slightly over, because of the tariffs,” Yellen said Thursday on CNBC’s “Money Movers.”

The Biden-era Cabinet secretary made that prediction even as she noted that when it comes to Trump’s tariffs, “There remains a huge degree of uncertainty about exactly what is going to go into effect.” But “I definitely expect that we’re going to see them impact pricing,” she said.

That will lower average household income, Yellen added. “The most recent and optimistic estimate I’ve seen suggested that the average household will see on the order of $1,000 reduction in income,” due to tariffs and their knock-on effects, she said.

“It could be greater than that, depending on how things play out with the tariff program,” she said.

Read more: https://www.nbcnews.com/business/economy/yellen-expects-trumps-tariffs-will-hike-inflation-3-year-over-year-rcna212754

[bucolic_frolic]

1. Understated for strategy and credibility

unless, of course, the recession bites hard in December, which my gurus say it will. Even so, 3% after these tariffs would be a whimper. I'd bet on 4-5% and not be surprised by 6%. But again, recession and the drop in federal spending and employment.

[Hugin]

2. With a conflict in the ME...

Your 6% prediction just became the baseline for inflation.

[BumRushDaShow]

4. What may bite harder

is the incessant and racist removal of a labor force that has become prominent in the food, hospitality, landscaping, and construction/demolition industry, and that is gonna trigger some shortages that will drive up the prices of goods and services, fueling inflation.

[Hugin]

5. It's under reported that that labor force has also become critical for the assisted healthcare industry.

Which is already facing a crippling labor shortage.

[BumRushDaShow]

6. They are already clearing out the Haitian healthcare workers

and don't be surprised if they start gutting the Filipinos, who are pretty dominant in those facilities (even if they ARE citizens, green card holders or have work permits).

The ultimate "death panels".

[flamingdem]

9. Every nursing home, assisted care this is the case

pretty much from what I've seen

[nowforever]

3. I see much higher inflation

The tariffs, loss of immigrant work force and oil price rise will easily bring inflation rate to 7% minimum.

[twodogsbarking]

7. I would expect shortages and higher prices due to demand. I seem to recall economics.

[JT45242]

8. 3% seriously -- that is such an underestimate to not be laughable but to be dangerous

The lowest estimate is 14% of goods are directly imported into the US. If they used 25% of that number you would get around 3.5%.

But so many goods have precursors and intermediate goods that are imported that the numbers is likely much closer to 35% of all goods. Even if yu say that the 20% with at least partial production outside the country represents half the cost. That would be another 2.5% inflation minimum,

That gets you to 6% inflation really fast.

No increase of the interest rate can slow that inflation because companies will not eat those losses and many of these will be essential goods.

Then throw on top of that the supply/demand issues that will come from disrupted supply chains and added costs associated with that and we will see double digit inflation.

And I haven't evene mentioned the skyrocketing cost of foood since frams will have to charge a lot more to overcome the rotting losses of food in the fields because they have no workers.

Went to get OJ the day before yesterday, it was $7 a gallon. Routinely has been $3-4 for years at Walmart.

It is going to get really bad, really fast.

[IronLionZion]

10. Lowering prices by increasing them

Tariffs and mass deportations of workers can all help increase prices. MAGA

[progree]

11. Consumer sentiment surges, but still worse than anytime since the peak inflation months of 2022 except

for one month (April?) in 2023, just barely; and except for the disastrously low previous 3 months (March, April, and May of this year).

Consumer sentiment surges in first improvement since December, CNN, 6/13/25
https://www.cnn.com/2025/06/13/economy/consumer-sentiment-may

Consumer sentiment surged 16% this month to a preliminary reading of 60.5, the University of Michigan said in its latest survey released Friday. That was the first increase in sentiment since December, ... ... This month’s uptick in sentiment was largely attributed to trade tensions easing from a fever pitch in April. Still, sentiment is about 20% below December,

There are giddy bubbly headlines out there, but as always, look at the graph for perspective.

========================================================

From the source: https://www.sca.isr.umich.edu/

Year-ahead inflation expectations plunged from 6.6% last month to 5.1% this month. Long-run inflation expectations fell for the second straight month, stepping down from 4.2% in May to 4.1% in June. Still, inflation expectations remain above readings seen throughout the second half of 2024, reflecting widespread beliefs that trade policy may still contribute to an increase in inflation in the year ahead.

====================================================
At 2:07 PM Central, Dow down 824 points (1.9%), S&P 500 down 1.2%

[Justice matters.]

12. Because of cheaper gas in that period, which is about to end.

If not ended already. Oil Futures are increasing, in spite of OPEC's increases in production.

[Grins]

13. Thanks for posting this. And thanks to those who commented.

Lots of good stuff. And we're only scratching the surface of the stupidity from "The Pride of Wharton™. They must be so proud...