Trump's tax bill is 'not great news for the economy,' long-term economist says

Economic Impact of Fiscal Policy - Trillions of dollars are expected to be added to the bottom line due to the tax bill, which is not good news for the US economy [2] - Increased US fiscal deficit scrutiny from both foreign and domestic investors is observed [3] - Failure to control spending could lead to rising debt-to-GDP ratio, deficit-to-GDP ratio, and interest payments [3] - Higher long-term yields could result in higher borrowing costs for consumers, affecting credit cards, mortgages, and auto loans [3] Federal Reserve Considerations - The Federal Reserve faces another challenge in light of the potential longer-term implications of increased costs for consumers [4] - The Fed is currently focused on the economy, labor market, and the impact of tariffs on inflation [5] - The market anticipates a couple of rate cuts this year starting in September, but there's a risk of delay due to tariff fallout [5][6] Tariff Impact and Consumer Behavior - Modeling the impact of tariffs is difficult due to the unprecedented nature of the situation [7][8] - Tariffs are expected to have an inflationary impact, potentially slowing down consumer spending [8] - The average effective tariff rate started the year at 2%, peaked at 26% (the highest in over a century), and is now around 15-16%, roughly eight times higher than the start of the year [8] - Consumers are increasingly considering tariffs, job prospects, and the employment situation [11] - Consumers are still spending on discretionary goods and services, indicating some level of comfort [15] Labor Market Assessment - The job market is expected to cool, with around 120,000 jobs added in June [13] - The jobless rate is expected to tick slightly higher to about 43% [13] - Uncertainty surrounding tariffs is making consumers cautious about jobs and inflation [13][14]