Weekly Economic Report 7.18.25

So, it was a big week for data – and for Fed officials. The data showed us that tariffs do raise relative prices for certain goods, but that they are not the driver of inflation -- yet. The retail sales report showed that consumers are still spending – at least on goods – despite somewhat higher prices. The initial claims data showed the number of continuing claims leveling off at 1.95 million (for six weeks) – after a strong summer surge, similar to last year. Industrial production showed – well nobody really cares. President Trump berated Powell for not lowering rates – though inflation remains at 2.7%, well above target, and the unemployment rate is still at a level most consider full employment. Governor Waller (slipping in the betting odds for Fed chair) reiterated his view that rates should come down next week. Mary Daly unexpectedly joined in. The President also cut a deal with Indonesia (an ASEAN member) for 19% tariffs in return for purchases of US food and energy. For the EU he signaled a 15-20% deal, down from 30% last week. The market anticipated each announcement with bated breath – and then largely did nothing when they came out.

EU07-18-2025.pdf

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