The second half of 2025 is underway, and a sense of what we are in store for in H2 is materializing. InvestmentNews had a chance to ask Bill Adams, chief economist of Comerica, a few questions on his outlook for the next six months.
Bill Adams: I expect the CPI report to show tariffs starting to impact prices of electronics, appliances, and other big ticket consumer goods that are mostly imported. This will be offset by slower inflation of housing costs, with demand for home purchases and rentals tepid and supply increasing.
Bill Adams: One day tariffs are up, the next they are down. In the short run, tariffs are a big source of uncertainty for businesses and consumers.
Businesses ran up big stocks of inventories early in 2025 to try to get ahead of tariff increases, and it looks like imports are rising again in the third quarter as businesses hedge against tariff rates rising even further.
What is your view on investor sentiment regarding the present macro risks?
Bill Adams: Tariffs are a kind of a sales tax, and tax increases slow economic growth. But the tax and spending bill will cut other types of taxes more than the tariff increases are raising sales taxes, so the US economy’s slow patch during 2025’s tariff hikes will likely give way to stabilization in 2026 as income tax cuts kick in.
Bill Adams: Hiring is likely to be in slow gear in the second half of 2025 due to tariff-related uncertainty.
But come 2026, the boost to consumer demand from tax cuts will give the economy a shot in the arm and help labor demand to stabilize. Meanwhile, labor supply is growing much more slowly than in 2023 or 2024 due to immigration restrictions and an increased share of native-born Americans aging into retirement years. As a result, the unemployment rate is likely to fall in 2026.
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