Weekly Signal & Noise Filter

Tariff Derangement Syndrome

“No inflation, no recession, due to tariffs”.

-U.S. Treasury Secretary, Scott Bessent

The directional change in the data, and the velocity of this change, is on the other side of Secretary Bessent’s inflation view.

• At present, the magnitude of the change is not suggesting a post-pandemic style inflation.

• There will, however, be an inflationary impact that will makes its way through the economy over time.

• Transforming the underlying data into Z-scores, which norms it to terms of a standard deviation from a historical mean, gives a deeper appreciation for the incoming price shock.