Now We Know Who’s Paying the Tariffs

Producer prices surge, and real wages still aren’t rising fast enough

WSJ editorial. Excerpts:

"The producer-price index (PPI) in July rose 0.9% in the month and 3.3% over the last year."

"Prices for intermediate goods—components and raw materials—are also on the rise. Prices for materials used in durable-goods manufacturing increased 1.3% in a single month, and components for manufacturing increased 0.4% in the month.

This hasn’t shown up in consumer prices so far because many companies entered the Trump tariff era with large cash reserves or wider margins, so they can absorb these costs for the time being. But these companies can’t do this forever."

"Wall Street reacted badly to the producer-price news."

"Today’s producer prices tend to become tomorrow’s consumer prices"

"Inflation-adjusted average hourly earnings rose 0.1% in July after zero in June, and the 0.4% monthly growth in May and March could be blips instead of a trend. Real average hourly earnings rose only 1.2% over the last 12 months."