Extended Tariff Adjustments Ahead

Federal Reserve Bank of Atlanta President Raphael Bostic highlighted on Thursday that businesses, especially small firms with narrower supply chains, are expected to grapple with tariff adjustments well into 2026. During a Q&A session at the Florida Institute of CFOs, Bostic pointed out the complexities in assessing the exact impact of tariffs, suggesting a longer adjustment period than initially anticipated.

Challenges for Small Businesses and Consumers

Small businesses are bearing the brunt, often compelled to pass on costs to consumers through price hikes. Bostic also flagged the likelihood of more price volatility, with lower-income consumers feeling the pinch as their pandemic savings dwindle.

Economic Outlook Amid Uncertainty

While the broader economic fundamentals remain robust, Bostic cautioned about persistent uncertainties surrounding inflation and employment. "The response of consumers to another round of price increases remains uncertain," he emphasized, underscoring the delicate balance the economy faces.