Tariff ruling adds to uncertain times

The big development last week came Friday morning, when the US Supreme Court struck down President Trump’s global tariffs. Despite the strong 6-3 decision, the path from here is uncertain. For one, the ruling did not state whether the federal government must refund the previously collected tariffs. If that happens, the process will probably be messy, and likely to be worked out in the lower courts. Meanwhile, the White House has signaled its intention to replace the banned levies through other legal tools. Stay tuned.

Other economic data sent mixed signals last week. On the positive side, initial and continuing jobless claims remain relatively low, reinforcing the view the labor market has stabilized. On the negative side, fourth-quarter GDP disappointed, growing just 1.4% compared to estimates of 2.8%. Lower government spending during the shutdown appeared largely to blame. Additionally, the Core Personal Consumption Expenditures Index (PCE), the Feds preferred inflation metric because it strips out volatile food and energy prices, was slightly hotter than expected for the month of December, increasing 3% year-over-year and remaining above the Fed’s 2% target.