usingShiftedArrays: lag"A Function that will return a dataframe of an index and its values from January 1959 to the most recent observation"functionpull_index(identifier::String) fred_result =get_data(f, identifier; observation_start="1959-01-01", frequency="m") raw_df = fred_result.data clean_df =DataFrame(; date=raw_df.date, value=raw_df.value)return clean_dfend#%% Create a function to add lags for up to two years"A function that will add (default 24) lags to a dataframe"functionadd_lags!(df::DataFrame, lag_length::Int=24)for i in1:lag_length string_name ="l"*string(i) symbol_name =Symbol(string_name)transform!(df, :value => (x ->lag(x, i)) => symbol_name)endend#%% Using these lagged values, add columns for the annualized percent change in the index at each lag"A function to calculate the annualized percent change based on a lag"functionannualized_percent_change(current::Vector{Float64}, lagged::Vector{Float64}, lags::Int64) percent_change = (current .- lagged) ./ lagged apc = ((1.+ percent_change) .^ (12/lags)) .-1return100.0.* apcend"A function to create a dataframe of annualized percent changes based on a dataframe of lags"functionapc_df(df::DataFrame) lags =size(df, 2) -2 clean_df =dropmissing!(df[lags+1:end, :]) current = clean_df[:, :value] lag_collection = []for i in1:lags string_name ="l"*string(i) symbol_name =Symbol(string_name)push!(lag_collection, clean_df[:, symbol_name])end inter =annualized_percent_change.(Ref(current), lag_collection, 1:lags) data_mat =hcat(inter...) col_names = ["pi"*string(i) *"m" for i in1:lags] rdf =DataFrame(data_mat, col_names) rdf.date = clean_df.datereturn rdfendsources = ["CPIAUCSL", "CPILFESL"]raw_data=pull_index.(sources)add_lags!.(raw_data)apc_dfs=apc_df.(raw_data)plot(1:24,collect(values(apc_dfs[2][end, 1:24])); label="Core CPI", xlabel="Months", ylabel="Annualized Inflation Rate, %", linewidth=2, )plot!(1:24,collect(values(apc_dfs[1][end, 1:24])); label="CPI", linewidth=2, )vline!([4.0]; linewidth=2, linestyle=:dash, label="Tariffs Announced",)
The base effects curve, as I have coined it is a way of looking at the trend in month inflation reports to see whether it is expected that inflation or disinflation will drop out of the reading in future updates to annual rates. What it looks like, with this limited data view is that since Trump’s tariffs were announced, the month-over-month inflation rates have increased, but that some of the late-Biden/Early-Trump disinflation could continue to become more prominent over the next seven months. That could lead to the full impact of Trump’s tariff-driven inflation coming to dominate inflation readings towards the end of the first quarter of next year, although there may be a deflationary impulse from economic weakness that could undermine the cleanliness of that prediction.
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Trade War
Goldman Sachs: As Businesses Max Out How Much Of Trump’s Tariffs They Will Bear, The Costs Will Shift To Consumers. According to Bloomberg, “Through June, businesses in the US absorbed more than half the cost of Trump’s tariffs, with the rest picked up by foreign exporters and American consumers, according to a research note Sunday from Goldman Sachs economists. In coming months, the burden will shift away from importers and the share shouldered by consumers will rise to 67%, it said.” [Bloomberg, 2025-08-11]
Small Business Impact
Chamber Of Commerce: Lacking The Resources Big Firms Have To Comply With Trump’s Tariffs, Small Businesses Were Expected To Pay More Than $200 Billion In Tariffs In Addition To Spending More On Compliance And Forecasting. According to Bloomberg, “Small US companies, the source of more than half of the country’s job creation in recent years, are struggling to comply with President Donald Trump’s new tariffs and cope with growing financial strains clobbering them from higher import costs. Last week’s country-specific levies varying from 10% to 50% landed with a one-two punch: additional red tape issued by Customs and Border Protection, and a need to increase customs bonds — guarantees that companies must buy from surety providers to ensure the government receives its tariff revenue, other taxes and any potential penalties. Big firms often have in-house resources to handle such administrative changes and costs, but compliance and forecasting in the new tariff regime are ‘where the smaller companies are really struggling,’ said Erin Williamson, vice president of US customs brokerage at Levallois-Perret, France-based Geodis, a leading global logistics firm. ‘They may not have that internal compliance group or the infrastructure to really sit back and say, “OK, this is going to be the impact to us. How do we pivot?”’ Williamson said in an interview Friday. The US Chamber of Commerce estimated this month that the country has about 236,000 small-business importers — those with fewer than 500 employees. The goods they bought from abroad were worth more than $868 billion in 2023. Based on an estimate before Trump’s duties took effect Aug. 7, the combined annual tariff hit to those companies is $202 billion, according to the chamber, the nation’s largest business lobbying group. That works out to about $856,000 per firm a year.” [Bloomberg, 2025-08-11]
Corruption
Following A Well-Worn Path Of Buying Influence, Binance Founder Changpeng Zhao Has Attempted To Purchase A Pardon From The Trump Administration For His Role In Facilitating The Financial Activities Of Bad Actors. According to the New York Times, “In 2023, as Changpeng Zhao, the founder of the giant cryptocurrency exchange Binance, prepared to plead guilty to U.S. money-laundering violations, he fashioned a crash course for himself on clemency politics, reading books about business tycoons who had received pardons, including Marc Rich and Michael Milken. Two years later, Mr. Zhao, a Chinese-born billionaire, is out of prison and mounting a pardon campaign of his own, backed by a sophisticated influence operation worthy of those high-profile predecessors. Even at a time when many pardon seekers are paying hefty fees to lobbyists and lawyers with connections to President Trump, Mr. Zhao’s push stands out. The stakes could be enormous for the crypto industry, and Mr. Zhao and his team are deploying the full playbook of techniques that have helped deep-pocketed interests win preferential treatment from Mr. Trump. Publicly, Mr. Zhao, in podcast interviews, has praised the president’s crypto policies. Behind the scenes, his team has hired lobbyists with ties to Mr. Trump’s orbit. Binance has also cultivated a business relationship with the Trumps, striking a deal that benefited the family’s own crypto firm, World Liberty Financial Mr. Zhao and Binance pleaded guilty to serious crimes in 2023, acknowledging that a flawed compliance system had allowed bad actors to move money on the platform. But the Trump administration appears to be considering the possibility of granting clemency. The White House has received pardon applications from both Mr. Zhao and Binance, according to two people briefed on the applications, one of whom said the White House indicated that they were being reviewed. And in private conversations with other executives, advisers to Mr. Trump have floated the possibility of a pardon for Mr. Zhao and discussed the possible political fallout, according to two people familiar with the matter, who spoke on the condition of anonymity to describe sensitive discussions.” [New York Times, 2025-08-09]