By
Gianluca Sidoti is an Independent Financial Advisor, Founder of TraDetector and Managing Partner at Citadines Capital SCF.getty
In recent months, core inflation has eased to a three-year low, a development many see as a positive sign for the economy. This trend indicates that inflationary pressures may be diminishing, potentially easing the cost of living for consumers and stabilizing the economic outlook.
However, this development comes amid a backdrop of complex economic policies that financial advisors should stay informed about, including President Biden’s tariffs on imported steel, electric vehicles, etc., and his administration’s efforts to manage student debt.
Understanding Core Inflation And Its Recent Trends
Core inflation, which excludes volatile food and energy prices, is a critical measure for understanding underlying inflationary trends. Several factors have been causing core inflation to cool. Firstly, supply chain disruptions that had caused shortages and price spikes are gradually resolving. Improved logistics and increased production capacities are helping to stabilize prices for many goods.
Secondly, monetary policy measures, such as the Federal Reserve’s interest rate hikes, are showing an impact, cooling demand and slowing price increases.
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The Role Of Tariffs In Inflation Dynamics
While the easing of core inflation is a positive development, it is important to consider the broader economic policies that are influencing the current landscape. One of the significant factors at play is President Biden’s tariffs on imported steel, electric vehicles, etc.
These kinds of tariffs, implemented to protect domestic industries, can have mixed effects on the economy. On the one hand, tariffs can help domestic producers by reducing foreign competition and allowing local industries to thrive. This can lead to job creation and increased industrial activity. However, tariffs also tend to increase the cost of imported goods, which can contribute to higher prices for consumers. For instance, higher steel prices can lead to increased costs for manufacturers that rely on steel, such as in the automotive and co …
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