Moody's warns tariffs hurt US economy
- Mark Zandi of Moody’s Analytics said on May 4 that a full year of data since Trump’s “Liberation Day” tariffs shows clear economic damage. - Zandi said job growth has “come to a standstill” outside healthcare, while the PCE inflation rate has climbed to 3% from 2.5%. - The warning matters because tariffs were sold as leverage, but now look more like a drag on growth.
Tariffs are supposed to protect domestic industry or pressure trading partners. But the basic tradeoff is simple — they also raise costs at home. That tension is the whole story here. Mark Zandi, the chief economist at Moody’s Analytics, now says the U.S. has enough post-tariff data to stop guessing: the damage is showing up in jobs, prices, and growth. (bsky.app) ### What changed this week? What changed is that Zandi moved from warning about possible harm to saying the evidence is now in. In a May 4 post, he said there is “a year’s worth of economic data” since Trump’s “Liberation Day” tariff push and that the data are “definitive.” That is stronger than the usual eco(bsky.app) he is talking about what he thinks the numbers already show. (bsky.app) ### What is “Liberation Day” here? This refers to the tariff escalation Trump announced in 2025 — much higher duties on a broad set of imported goods and countries. Earlier in March 2025, Zandi was already warning that tariffs on Canada, Mexico, and China would hit household budgets and lift prices on everyth(bsky.app)-round inflation shock is no longer hypothetical. (mynspr.org) ### Why does Zandi think the economy is being hurt? He points to two things that matter fast in everyday life — hiring and inflation. On hiring, he says job growth has basically stalled since the tariff shock, with healthcare the main area still adding payrolls in(mynspr.org)re the tariffs and still above the Federal Reserve’s 2% target. (bsky.app) ### Why would tariffs hit both jobs and prices? Because tariffs work like a tax wedge inside supply chains. Importers pay more. Some of that gets eaten in margins, but a lot gets passed through. Businesses then face a choice — charge more, hire less, or delay investment. Consumers feel the higher prices first(bsky.app)aid out back in March 2025 when he said households would end up paying more for the same basket of goods. (mynspr.org) ### Is this just about tariffs? Not entirely — and that is the catch. Zandi also says the fallout from the Iran war, especially through energy and commodity prices, could do even more damage than the tariffs themselves. So this is not a clean lab experiment. But his point is that tariffs weakened the economy before that extra shock hit, which leaves less cushion now. (bsky.app) ### Why does a Moody’s economist warning matter? Because Moody’s is not some fringe anti-tariff voice. Its economics team is widely used by investors, businesses, and policy people trying to map risk. When someone in that lane says the data are now “definitive,” the argument shifts. The question stops being w(bsky.app) before growth rolls over. (moodys.com) ### So what should readers take from this? The big shift is from theory to scoreboard. For months, the tariff debate was political — leverage versus protectionism, toughness versus globalization. Zandi is saying the economic bill is now visible. Prices are higher, hiring is softer, and the economy’s resilience is about to be tested. (bsky.app) ### Bottom line This story is not really about one economist’s hot take. It is about a mainstream forecaster saying the tariff era has moved from promise to measurable cost. If that view spreads, tariffs stop looking like a negotiating tool and start looking like self-inflicted economic drag. (bsky.app)
