In January, the US economy added 143,000 jobs, falling short of the expected 175,000. EY Chief Economist Gregory Daco joins Market Domination to analyze what the latest jobs report reveals about ongoing inflation trends.

Daco identifies a “paradox” in the Trump administration’s policies on tariffs, tax cuts, and deregulation, which market participants (^DJI, ^IXIC, ^GSPC) view as inflationary, despite inflation being a “key concern” for voters during the campaign.

With inflation expectations rising aggressively, Daco warns this is “not encouraging” because it will lead to consumers being “much more judicious when it comes to their outlays.” Despite the robust labor market, he emphasizes that “we have to be conscious of the potential risk or downside in a higher inflation, lower growth environment.”

However, the strong labor market, coupled with non-inflationary wage growth, is “supporting income, which in return is supporting consumer spending. So we are not at risk right now, but there are some potential cracks there forming,” Daco concludes.

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This post was written by Angel Smith