Powell Balances Inflation and Recession Risks

Powell Balances Inflation and Recession Risks

Jerome Powell’s cautious approach to handling inflation risks from Donald Trump’s new tariffs has drawn Trump’s ire, calling Powell “Mr. Too Late.” Yet for Powell, that’s preferable to being wrong. Only a few months ago, Powell was guiding the economy toward a soft landing—lower inflation and interest rates without raising unemployment. But Trump’s sweeping tariffs have complicated that goal, raising concerns about slower growth and higher inflation. Now, the Fed’s strategy is to hold rates steady long enough to keep inflation contained, but stay ready to cut them if the labor market weakens.

Fed officials are expected to keep rates unchanged at their May 6–7 meeting. Powell recently warned that tariff-driven inflation could persist longer than expected, emphasizing the need to prevent temporary price increases from becoming entrenched. The challenge is timing: moving too soon risks reigniting inflation, but waiting too long risks recession.

After successfully cooling inflation from a 40-year high, Powell’s reputation now hinges on managing these new pressures. Trump’s return and tariff threats complicate matters further. With inflation still above target and recession risks rising, Powell faces perhaps his greatest test yet: preserving the Fed’s credibility without triggering a deeper downturn.

Uber and Volkswagen Launch Robotaxis

Uber and Volkswagen of America are partnering to launch a commercial robotaxi fleet using Volkswagen’s all-electric ID. BUZZ microbus. The service will start in Los Angeles in 2026 with human safety operators and transition to full autonomy in 2027. This move builds on Uber’s strategy of integrating external autonomous systems into its network, following deals with Waymo, WeRide, Avride, and Nvidia. Testing in Los Angeles will begin later this year, pending regulatory approval.

Volkswagen’s autonomous division, VW ADMT, debuted in 2023 with a small fleet in Austin using Mobileye technology. For this new project, MOIA, a Volkswagen brand, will provide the ID. BUZZ vehicles, autonomous hardware, software, and backend fleet management.

Volkswagen sees this as a step toward reshaping urban mobility, while Uber’s CEO Dara Khosrowshahi highlighted the partnership as a major step toward the future of transportation. Uber has shifted away from developing its own self-driving tech after selling its Advanced Technologies Group to Aurora in 2020, opting instead to partner with companies already advancing in autonomous systems.

Meanwhile, competition is heating up as Tesla plans to launch its own robotaxi, the "Cybercab," starting trials in Austin mid-2025. True cost savings from autonomous fleets, however, are still years away.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.