US Economic Weekly

Research evidence excerpt

US Economic Weekly

Nomura | US Economic Weekly 24 July 2026

slowed to 0.7% q-o-q from 0.9%. Private sector wages likely remained steady, while state

and local government wages slowed. The benefits component also moderated following a

strong uptick in Q1. Our forecast for ECI points to easing wage pressures (Fig.6), in line

with alternative wage indicators, suggesting labor-intensive services inflation are likely to

continue to moderate.

Fig. 5: Core PCE inflation likely moderated sharply to 0.175% Fig. 6: We expect ECI growth slowed in Q2, pointing to easing

m-o-m in June wage pressures

Decomposition of m-o-m core PCE inflation by data source Measures of wage growth

Source: BLS, BEA, Haver, Nomura

Note: Q2 ECI refers to Nomura’s forecast

Source: Atlanta Fed, ADP, BLS, NBER, Haver, Nomura

New tariff announcements point to continuity

The TrumpadministrationannouncednewtariffsunderSection301 to replace expiring

Section 122 universal 10% tariffs. A transition to Section 301 from Section 122 tariffs will

likely increase the average effective tariff rate by about 1pp to 8%, broadly in line with our

expectation (Fig.7).

However, there are mitigating measures in the announcement. The additional impact on

imports from some major trading partners will be net out the MFN duties. In addition, the

general exemption product list was expanded including some consumer/food products (

Fig.8). Those modifications suggest that the Trump administration did not intend to

escalate tariff policy substantially.

We continue to expect that increased focus on affordability issues and elevated inflation

will likely prevent US tariff policy from escalating drastically going forward. We maintain

our expectation for the terminal average effective tariff rate at the 8-9% range.