Is the commentariat overselling the coming inflation increase?

To clarify, I concede that price increases are coming in Q2.

However, there are a couple of data points making me wonder if folks are potentially overestimating what is coming.

The Umich survey released last week showed that independent voters think inflation will surge to 6.2% (from 2.4% currently) and dems think it will surge to 7%.

The most recent estimate is that the effective total tariff rate for all foreign goods coming into our nation will be 18% using a dynamic model (26% static model)

With those 2 data points in mind, I came across this blurb on Twitter

quote:

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The National Bureau of Economic Research analyzed the 2018–2019 U.S. tariffs on Chinese goods. They found that for every 10% tariff, retail prices rose 1–2%. So even a 50% tariff, if applied, might cause retail prices to edge up 5–10% — not 50%.

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So, we are potentially looking at a 1.8-2.8% increase in the retail price for goods with a foreign input. But this basket of goods is just a subset of the total goods in our economy. Once you add all goods, the price increase is even more diluted.


There is one other data point to ponder:

Two separate March hard data points indicated we had outright deflation in March. If the coming price increases are happening at the same time that deflation in other sectors are happening, the tariff price increases may get “swallowed up” in larger trends.


In summary, I would be utterly shocked if umich is right and inflation jumps from 2.4 to 6%