Evidence of tariff damage to US economy 'hard to find

Other than surveys, evidence of any damage from the tariffs on the US economy remains hard to find.

High frequency labour market data (notably jobless claims) indicates that while companies are slow to hire, no significant layoffs are taking place.

FOMC Chair Powell appears unconcerned during his presser last week, as he continued to describe the US economy as “solid”, while stressing that the bank needn’t be in a hurry to cut interest rates as it awaits further data on the fallout of the tariffs before deciding on its next policy move.

This week's spate of April economic data (inflation and retail sales) will be key.

Inflation is expected to rebound from its March trough, but tariffs will play a small part in this, since imports already on their way to the US in April were generally exempt from the tariffs. Likewise, April retail sales of imported goods were likely drawn from pre-tariff inventories.

The next inflation print will probably be more relevant, but the uncertainty highlighted by the Fed last week means that every data point will, nonetheless, be scrutinised to an unusually high extent.