What does a donut tell us about the state of the economy?
Chicago Federal Reserve President Austan Goolsbee thought about that Wednesday as he toured Mel-O-Cream Donuts in Springfield, Illinois.
Even inside a donut shop, the effects of tariffs on the economy can be seen. “It’s sort of surprising, because donuts seem like a very local product, and yet they get some ingredients like palm oil that are coming from Indonesia,” Goolsbee said. The Trump administration set tariffs on Indonesia at 19%.
“They have to now figure out what are the tariff rates, and the tariffs went up a significant amount. If that happens, that could have a multi-thousand-dollar impact on their operation,” he continued. But, he added, “I hope it’s not a sign of something more extended or broader in the way that the Covid inflation ... generated its own snowballing, in which it was supposed to go away and it didn’t go away.”
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