Trump's 'Tarifflation' In The Spotlight As Markets Shrug Off Cool Inflation Data, Economist Says

Another indicator of slowing inflation came in on Friday morning with a cooler-than-expected Producer Price Index that fell 0.4% month-over-month in March. On an annual basis, producer inflation slowed to 2.7%, well below economists’ estimates of 3.3% and down from 3.2% in February.

Economists are weighing in on the significantly lower inflation data that the market is ignoring.

Jamie Cox, managing partner for Harris Financial Group, clearly expressed that markets are more concerned with the escalating U.S.-China trade war than they are with the most recent inflation data.

"Disinflation should be dominating the headlines right now, but no one is paying attention. The potential inflation shockwave is covering over all other data," Cox said.

Bill Adams, chief economist for Comerica Bank, said that even though March's PPI reading surprised to the downside, “tarifflation will be much more important for the outlook than backward-looking data." The economist warned that if tariffs remain in effect, inflation will be much higher in the coming months.

Chris Zaccarelli, chief investment officer for Northlight Asset Management, also noted the improvement in inflation, but warned that the U.S. is not out of the woods in the trade war.

"Clearly if deals start getting done then that's a move in the right direction, but if three months go by and little progress is made on the trade-front then we may find ourselves right back where we started, with global markets in freefall," Zaccarelli said.

Frog Capital, a financial news and analysis account on X, pointed to Friday's PPI numbers as representative of a possible recession and that the Federal Reserve is misreading.

From today's PPI report.
These are numbers you only see in recession.
With this kind of print, your fed should be WAY more worried about deflation than inflation. pic.twitter.com/T2wI7GjqLk
— Frog Capital (@FrogNews) April 11, 2025

Markets React: All three major indexes were red on Friday after China responded with tariffs of 125% on U.S. imports. The SPDR S&P 500 ETF Trust SPY, tracking the S&P 500, was down 0.16% and the Invesco QQQ Trust QQQ, tracking the Nasdaq 100 index, fell 0.093% in Friday's midday trading.

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