Economist Claudia Sahm joins Rob Isbitts to talk inflationary pressures (1:10). Are tariffs inflationary and who ends up paying them? (4:35) This is an excerpt from a recent Investing Experts conversation.Episode transcripts: seekingalpha.com/wsbShow links: Dollar sinks on economic worries ahead of the Fed meet-Currency RecapWholesale egg prices drop, but retail rates could take time to catch upFederal Reserve expected to hold rates, while uncertainties put the dot plot, SEP in focusSign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Full Episode
I'm Rob Izbits and you may know me on Seeking Alpha under the profile name Sun Garden Investment Publishing. I also lead the investing group Sun Garden YARP Portfolio. So my guest today, and I've followed her work for a long time and it's great to finally meet her. Claudia Somm is the chief economist at New Century Advisors and a former Federal Reserve economist.
She is also the creator of this SOM rule that is spelled S-A-H-M if you're Googling it, which you should. That's a recession indicator, highly regarded expert on monetary and fiscal policy, had a lot of experience over the years advising key decision makers at the Fed, at the White House, in Congress. So she's just about done it all under the topic of economics and economic strategy.
So it is a pleasure to welcome Claudia Somm.
Thank you. It's wonderful to be here.
I have three questions on the subject of inflation. First, when you look back just a few years, was it inevitable that we would get higher inflation in 22? And then I want to talk about where the balance of risks is now, and then we're going to hit the T word tariffs.
To some extent, the pandemic and some of the public health responses, which I think were necessary, created an environment that was going to cause inflation. And this goes back to what I was talking about with these supply dimensions. And it's not just that countries shutting down or putting real public health restrictions on methods, say global supply chains, really ground to a halt.
And so we had issues in terms of getting goods there. But one aspect that I don't think it's talked maybe enough about is at the very beginning of the pandemic, there were initially restrictions on people being able to go out and buy services. And then even in places that didn't have the restrictions, The pandemic itself was a restriction, right? People didn't want to get sick.
They were afraid they did. So you saw early in the pandemic, this massive pullback on spending on services, right? So it is true that the government gave out a lot of stimulus relief to families, particularly like bottom 70%, 80% by income, but you had also higher income families who who just weren't out there spending.
And so you can see this like just outsize divot in the amount of spending that happened. Well, that also was part of the, what later was referred to as the excess savings. Like even just that pent up demand of where we had a bunch of money that had been set aside, people hadn't been able to go out and spend.
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