Ernie Tedeschi

Phenomenal opportunity for macroeconomists of all levels. Truly cannot recommend the Yale Budget Lab team enough. I've worked extremely closely with most of the people there, and their simultaneous dedication to accuracy and usefulness while ensuring the work environment is enjoyable is unmatched.

Hi all! We're still waiting on the official posting - but @budgetlab.bsky.social is looking for a new macro hire to add to our team! We're agnostic on level (Recent PhD, decades of experience, MA+ research experience, who knows?) - we care more about flexible thinking and curiosity

Full report here: budgetlab.yale.edu/r...
10/10

FISCAL EFFECTS: New 2025 tariffs raise $2.5 trillion over 2026-35 conventionally-scored and $2.0 trillion dynamically-scored.
9/10

COMMODITY PRICE EFFECTS: Consumers face particularly high increases in leather and clothing in the short-run: prices increase 36% for leather products (shoes and hand bags), 34% for apparel, and 21% for textiles.
8/10

DISTRIBUTIONAL EFFECTS: Tariffs are a regressive tax, especially in the short-run. The average annual cost to households in the first and top income deciles from all 2025 tariffs are $1,350 and $5,350 respectively in 2025$. The median cost is $2,000 per household.
7/10

GLOBAL EFFECTS: In the long-run, China real GDP is -0.3% smaller, about 3/4 of the effect to the US. The economies of Mexico, Canada, the EU, and the UK are all larger.
6/10

SECTORAL EFFECTS: In the long-run, tariffs present a trade-off. Total US manufacturing output expands by 2.7%, but advanced manufacturing shrinks by 4.2%. Moreover, the manufacturing gains are more than crowded out by other sectors: eg construction output contracts by 3.7%.
5/10

ECONOMIC/LABOR MARKET EFFECTS: US real GDP growth is -0.5pp lower over 2025 & -0.4pp lower over 2026. The level of US real GDP is persistently -0.4% smaller in the long-run. By the end of 2025, the unemployment rate is +0.3pp higher & employment is -490K lower.
4/10

PRICES: The price level rises by 1.7% in the short-run (2-3 yrs) from all 2025 tariffs, assuming the Federal Reserve looks through their price effects. This is the equivalent of a $2,400 average per-household loss of purchasing power in 2025$.
3/10

TARIFF RATE: The September 25 announcement raises the average effective tariff rate by 0.5pp to 17.9% pre-substitution (as of Oct 1), the highest since 1934. After consumers & businesses shift their spending mix, the post-substitution rate is 16.7%, highest since 1936.
2/10

New @budgetlab.bsky.social tariff update out tonight, incorporating the heavy truck, furniture, and pharmaceutical tariffs announced by President Trump yesterday. Details are still sparse; we will update in the future as more specifics about the policy are published.
In brief...
1/10

The preliminary benchmark revision of -911K amounts to -0.6% to March 2025 payroll employment. Combined with 2-month revisions, recent total revisions are big but hardly unprecedented, & smoothed over the business cycle the payroll survey has gotten more accurate over time.

The larger-than-usual downward revision last month was in large part driven by a negative skew in the job growth distribution among late reporting firms. That’s unusual, but it’s happened before when the pace of job growth slows rapidly. This print is more evidence that was the case

Full report here: budgetlab.yale.edu/r...
12/12

3. The long-run hit to US real GDP levels is now only -0.1%, but there is still an outsized negative effect on advanced manufacturing (due to the remaining 232 tariffs).
4. The effective tariff rate would be 6.8%, still the highest since 1969.
11/12

But what if the IEEPA tariffs were both 1) overturned, & 2) not replaced? We show a "No IEEPA" scenario assuming a SCOTUS decision in June 2026. A few highlights:

1. IEEPA tariffs make up ~70% of the 2025 tariffs to date.
2. Revenues shrink to $700B over 2026-2035.
10/12

All tariffs to date in 2025 raise $2.4 trillion over 2026-35, with $454 billion in negative dynamic revenue effects, bringing dynamic revenues to $2.0 trillion.
9/12

Canada cessation of most retaliation significantly eases the economic burden they bear relative to our prior estimates: long-run Canadian real GDP is now 0.1% higher. China’s economy is -0.3% smaller, nearly 3/4 as large as the hit to the US.
8/12

In the long-run, tariffs present a trade-off. US manufacturing output expands by 2.7%, but these gains are more than crowded out by other sectors: construction output contracts by 3.8% and mining declines by 1.6%.
7/12

US real GDP growth over 2025 & 2026 is 0.5pp & 0.4pp lower respectively from all 2025 tariffs. In the long-run, the US economy is persistently 0.4% smaller, the equivalent of $120B annually in 2024$.
The unemployment rate rises 0.3pp by the end of 2025, & 0.7pp by end-2026.
6/12

The 2025 tariffs disproportionately affect clothing and textiles, with consumers facing 37% higher shoe prices and 35% higher apparel prices in the short-run. Shoes and apparel prices stay 13% higher in the long-run.
5/12

Tariffs are a regressive tax, especially in the short-run. The short-run burden on 1st decile households (as a % of income) is >3x that of the top decile (-3.5% versus -1.0%). The average annual cost to the 1st & top decile are $1,300 & $5,200 respectively; median is $2,000.
4/12

The price level from all 2025 tariffs rises by 1.7% in the short-run under our all-tariff baseline, an average per-household income loss of $2,300 in 2025$. The post-substitution price increase settles at 1.4%, a $1,900 loss per household.
3/12

Under our all-tariff baseline, consumers face an effective tariff rate of 17.4%, a 15.0pp increase from 2024 & the highest since 1935. After shifts in spending in reaction to the tariffs, the effective tariff rate will be 16.4%, a 13.9pp increase & the highest since 1936

2/12

New @budgetlab.bsky.social tariff analysis incorporating all tariffs through Sept 3. This is a major update. We:

• incorporate higher assumptions about Canada & Mexico tariff-free import shares;
• show 2 scenarios: all tariffs & no IEEPA tariffs after Jun 2026.

In brief...
1/12

Full @budgetlab.bsky.social report here: budgetlab.yale.edu/r...
13/13

INDUSTRIAL PRODUCTION. Industrial production is volatile, but industrial output in tariff-sensitive industries has risen sharply year-to-date by 3.5%, returning to early-2024 levels after a late-2024 decline.
12/13

FEDERAL RESERVE POLICY. Many factors beyond tariffs are affecting Fed policy expectations. The Fed itself has signaled one less cut in 2026 than it forecast last Dec, but markets expect meaningfully lower interest rates by the end of 2026 than they previously thought.
11/13

THE LABOR MARKET: Tariff-sensitive employment has grown so far in 2025, albeit by less than pre-2025 trend would have suggested; the difference is not significant. Tariff-sensitive manufacturing employment has fallen slightly YTD, the same pace as overall manufacturing.
10/13