Parting the economic data fog over tariffs
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The Supreme Court could rule on the legality of President Trump's tariffs as soon as Friday, and a raft of analysis will surely follow as economists and Wall Street researchers parse the fallout.
Why it matters: Yet figuring out what to make of that research may prove complicated, as Trump has Wall Street analysts already on edge with his often fiery condemnations of their work.
State of play: On Wednesday, Trump economic adviser Kevin Hassett called a paper from researchers at the New York Fed "an embarrassment" and said its authors should be "disciplined."
- The research found that American consumers and companies paid about 90% of the cost of Trump's tariffs last year following several other reports with similar conclusions.
The big picture: The dustup is a reminder of the trigger-happy political atmosphere around economic research — and whether the criticism is muffling commentary from Wall Street.
- Multiple firms have been toning down and censoring their research for fear of angering the White House, Bloomberg reported.
Flashback: In August, Goldman Sachs chief economist Jan Hatzius put out a report also saying Americans pay some portion of the tariff cost. Trump then posted that the bank's CEO Davis Solomon should fire the well-respected analyst.
- Earlier this year, Treasury Secretary Scott Bessent said the head of Deutsche Bank called him to say the bank "does not stand by" an analyst report that suggested European investors may step up sales of U.S. assets. The bank later said the independence of its research was "sacrosanct."
- And last April, a JPMorgan analyst voluntarily redacted his analysis of White House policy, literally blacking out portions of a report.
What they're saying: Asked whether the White House comments chill the speech of economists and analysts, spokesman Kush Desai said:
- "What should chill the work of these economists is the fact that they have consistently beclowned themselves by pushing one doom-and-gloom prediction and 'study' after another about President Trump's tariffs."
- Trump, Desai said, "implemented a historic tariffs agenda while cooling inflation, renegotiating trade deals, accelerating economic growth and securing trillions in investments — the exact opposite of what these economists predicted would happen."
Between the lines: Wall Street research isn't like a policy white paper or even an academic report. It's intended for investors.
- "I don't think people in Washington understand what our research reports are for," one person at a top Wall Street bank tells Axios. "They're written for clients."
- Banks have a fiduciary duty to their customers, so they can't really change their findings to suit the administration.
- This person's advice to bank analysts: Be clinical, not colorful and do good work for your clients and you'll "be fine."
Reality check: "I try not to be political, but on a scientific question or an economic question, I'm going to state exactly my mind," says David Kelly, chief global strategist at JPMorgan Asset Management.
- Analysts say what they think, he says, and those that don't have "no business doing the job."
Zoom in: The findings of the New York Fed report that Hassett criticized are not controversial among economists both conservative and liberal.
- "I think the findings of the paper are consistent with what standard economic analysis would suggest," Michael Strain, an economist at the conservative American Enterprise Institute, tells Axios.
- "I trust the Fed research," Kelly says. "I actually came up with the same result."
What to watch: The Supreme Court could issue its tariff ruling Friday or next Tuesday or Wednesday.
- As of Thursday morning, there was only a 26% chance the justices uphold the tariffs, per Polymarket.
