New York Fed: “Consumers bear the tariff burden”…White House: “Authors should be disciplined” [Fed Watch]

New York Fed: “U.S. companies and consumers are shouldering most of the tariff burden”

Kevin Hassett: “The author should be disciplined…a very embarrassing report”

Kevin Hassett, director of the White House National Economic Council (NEC), sharply criticized a tariff-related report released by the Federal Reserve Bank of New York. The report concludes that U.S. companies and consumers are bearing most of the tariff burden.

In a CNBC interview on the 18th (local time), Hassett argued that the paper’s authors “should be disciplined.” He said, “This paper is the worst I’ve seen in the history of the U.S. central bank (Fed),” calling it “a very embarrassing report.”

The paper at issue was posted on the New York Fed’s website on February 12. The researchers analyzed whether countries exporting products to the United States are lowering prices to absorb the tariff burden, or raising prices and passing it on to consumers and companies. They concluded that about 90% of the additional costs from tariffs are being borne within the United States. They added, however, that the impact tended to ease somewhat over time.

Hassett criticized the researchers for ignoring key elements of how tariffs work and focusing only on price changes. He said they should also have considered the effects of U.S. companies shifting production back home, which would raise wages and benefits.

Appearing on CNBC’s “Squawk Box,” Hassett said, “This report reached a highly partisan conclusion based on an analysis that wouldn’t be accepted even in an introductory economics class,” adding, “As a result, it became big news.” He continued, “People associated with this paper should be disciplined.”

He emphasized that tariffs had little impact on prices and instead helped improve living standards.

Hassett said, “Prices came down and inflation slowed over time,” adding, “Import prices fell sharply early in the year and then stabilized. Last year, real wages rose by an average of $1,400. That means consumers were better off because of the tariffs.” He continued, “If the New York Fed’s analysis were right, consumers couldn’t have been better off,” adding, “It’s hard to understand who approved this paper.”

Meanwhile, the January Consumer Price Index (CPI) rose 2.4% year on year. Core CPI excluding food and energy rose 2.5% in January, marking the lowest annual increase since March 2021.

New York=Correspondent Park Shin-young nyusos@hankyung.com