After pundits, experts, and the mainstream media predicted that tariffs would raise inflation, that scenario did not yet play out. Additionally, the job market growth in September also contradicted those warnings.
In September, the BLS posted an increase of 119,000 jobs, little changed since April. Tariffs should have raised the price of goods and hurt demand. That would pressure firms to pass tariffs to consumers. Companies should have cut more jobs to cover the tariff-related costs. Instead, the job market is steady, and inflation is modest.
The media warned that those favorable conditions might end. In 2026, companies might implement permanent changes to account for tariffs. Instead of raising prices, importers and firms like Costco (COST) and Walmart (WMT) might keep prices largely unchanged. They might cut jobs to offset tariffs.
In the Institute for Supply Management’s November survey of factory conditions, the expansion level reading was 48.2%. The measure is below 50%, which signals a contraction. Expect companies that relied heavily on inexpensive Chinese parts to cut the most jobs. Companies in the electrical, appliance, and components business might lower staff counts the most.
Stocks To Watch
Firms in the beverage and consumer goods sector pulled back recently. Coca-Cola (KO) and Pepsi (PEP) are in a holding pattern. Investors are confident that tariffs will not hurt demand. Procter & Gamble (PG), however, closed at a new 52-week low. At a 21 times price-to-earnings ratio, PG stock is starting to look attractive at this level.
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