Goldman Sachs Predicts Consumer Burden from Tariffs

Amidst criticism from former U.S. President Donald Trump, Goldman Sachs reaffirms its stance that tariffs will predominantly affect consumers. Economist David Mericle, in a CNBC interview, emphasized that consumers could bear about two-thirds of the tariff burden by fall, a finding he staunchly supports.

Political Tensions and Economic Insights

Trump's direct critique of Goldman Sachs CEO David Solomon on Truth Social didn't sway the firm's confidence in its research. The report, authored by Elsie Peng, suggests a shift in tariff burden from exporters to consumers, potentially raising the core PCE price index to 3.2% by year-end.

Market Reactions and Federal Reserve's Role

Mericle highlighted the possibility of U.S. producers increasing prices under tariff protections. Despite these pressures, he anticipates some Federal Reserve rate cuts, influenced more by labor market conditions than tariff impacts alone.

Recent economic indicators, including a lower-than-expected CPI and revised nonfarm payrolls, have fueled speculation about imminent rate cuts, reflecting in financial market pricing.