However, revised government numbers for Q1 indicate stronger business investment and a greater accumulation of inventories than initially reported.

“For now, distributors are not passing on all these extra costs to consumers. It will take more time to assess whether a sustained squeeze on margins is occurring.”

Referring to yesterday’s inflation report and calling the Fed chair “Too Late Powell,” the president said on social media that waiting to understand tariffs’ effect on prices is “not fair to America.”

Muted U.S. inflation suggests companies are feeling little urgency so far to pass along the cost of tariffs to consumers.

Unit labor costs—what businesses pay employees to produce one unit of output—jumped 5.7 percent in the January-to-March period, the most in a year.

Imports surged in Q1 as companies scrambled to secure merchandise ahead of tariffs’ implementation, while the core PCE price index rose more than expected.

“Immigration was an important driver of the labor market rebalancing [after the Covid-19 pandemic]. Reduced immigration could therefore fuel renewed inflationary pressures.”