Our Chief Economist Joe Brusuelas and Neil Bradley, executive vice president for the U.S. Chamber of Commerce, had a wide-ranging conversation on Wednesday on the state of the middle market and the American economy.
From tariffs to inflation to recently enacted appropriations legislation, Brusuelas and Bradley discussed the impact of these issues on American middle market businesses.
“We are entering a period where inflation is advancing at a quicker pace than growth,” Brusuelas said. He said with the impact of tariffs, the inflation rate will exceed 3% by the end of the year.
But the unemployment rate will not have a repeat of the 1970s.
The immigration crackdown, to start with, is restraining the labor supply. But there are other pressures.
“The real issue in the labor market is the retirement of workers in the baby boom generation,” Brusuelas said.
Rates are rising, but the increase is “meaningful, but not economy-destroying,” Bradley said. Still, the tariffs will add real costs for businesses, especially smaller firms that do not have the resources to absorb higher costs, he added.
“Businesses will ultimately pass long these higher costs to customers,” Brusuelas said, citing RSM’s surveys of middle market businesses.
Brusuelas foresees the year ending at about 1% growth and 3% inflation.
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