Despite the uncertainty of tariffs and inflation impacts, Miami’s economic growth is outpacing expectations and is performing better than many other US cities, according to local economists.  Miami’s growth rates in sectors like services and construction remain robust, said Manuel Lasaga, the p resident of StratInfo, a leading Miami-based business economics and finance consulting firm. “The outlook is positive, with Miami expected to continue growing faster than the national average into the first quarter of the year,” he said. “However, some of the main challenges Miami might face are the uncertainties from the impact of tariffs on the supply chain and the cost of goods for consumers, which is still unfolding. It may take up to six months to see these impacts.” The outlook for Miami remains positive, driven by robust consumer spending and construction. Economic growth, especially in the first quarter, is expected to be above national averages at about 2.5% to 3%. Some caution remains due to ongoing economic uncertainties, Mr. Lasaga continued. The effect of tariffs on inflation is unclear, he said, and the recent shutdown of the federal government has disrupted measurement of the consumer price index, making inflation trends difficult to interpret. “Fallout from the federal government shutdown has influenced the economy by impacting GDP (Gross Domestic Product) and creating additional economic uncertainty. The federal government shutdown affected the economy and made it difficult to measure inflation due to missing CPI (Consumer Price Index) data for the month of October and calculating the fourth quarter,” he continued. “The shutdown led to a significant number of federal employees being laid off temporarily, which reduced government spending and economic activity during that period.” As a result, the fourth-quarter GDP may show only marginal growth, acting as an outlier compared to the other quarters. For October, there was no official CPI released, meaning there’s no reliable data for that month’s inflation, Mr. Lasaga explained: “This makes it difficult to accurately gauge the true ongoing economic trends for Miami and the broader US during this period.” Potential solutions or approaches suggested include closely monitoring inflation and economic indicators as the effects of tariffs and the shutdown work their way through the economy, remaining vigilant regarding developments from the Federal Reserve, and being prepared for unforeseen impacts, he advised. Even though the current inflation rate stands at around 3%, and the Federal Reserve Funds rate is about 3.7%, those numbers could potentially change due to strong political pressure by the presidential administration for Chairman Jerome Powell to retire or leave the Federal Reserve before his term ends. This potential leadership change at the Fed creates uncertainty about future monetary policy, Mr. Lasaga added. “Especially interest rate decisions, which could impact inflation and overall economic stability,” he said. “Uncertainty surrounding the Fed’s direction under possible new leadership is a significant concern for economic outlooks, including for Miami.” In a more international economic outlook, the geopolitical considerations are a major focus for economists, said David Andolfatto, chair of the Department of Economics at the Miami Herbert Business School at the University of Miami. Key concerns include disruptions from US foreign and tariff policies, and the rerouting of international trade and supply chains due to new global tensions, he said. “The rise of China as a significant geopolitical rival to the US brings more general uncertainty from ‘tectonic shifts’ in global politics, such as the US withdrawal from traditional post-World War II roles,” Mr. Andolfatto said.” Historical parallels, like the Cold War era, illustrate the profound long-term impact that geopolitical events can have on economic conditions worldwide. These factors create ongoing uncertainty and are seen as having potentially lasting and significant effects on both the US and the global economy.” The global outlook is unpredictable due to geopolitical events such as developments in China and Iran, he added. “However, the US economy has shown resilience with inflation rates coming down from their 2022 peak but remaining above target, and unemployment is low though slowly ticking up due to firms hesitating to hire.” AI and automation are also causing profound technological disruptions that are likely to significantly impact the workforce, Mr. Andolfatto continued.  “There are concerns about potential labor displacement where advanced technologies could replace certain jobs, much as industrialization and mechanization did in the past,” he said. “In historical context, society has previously adapted during major shifts – from agriculture to manufacturing, and then to services.” AI will likely have noticeable effects in fields like healthcare and robotics, but while presenting challenges, past technological disruptions suggest society can adapt, he continued. If AI-driven productivity gains do not materialize, managing debt and inflation will become more difficult.Policymakers need to focus on contingency planning rather than firm forecasts, since global geopolitics often bring unforeseen disruptions, he said.  “The current administration’s attacks on Chairman Jerome Powell and the Federal Reserve are dangerous, as it sets a precedent that could allow future administrations to exert undue political influence over the institution,” he added. “Chairman Powell is a dedicated public servant and has maintained the Federal Reserve’s technocratic and nonpartisan approach,” Mr. Andolfatto said. “The concern is that continued attacks may erode institutional checks and balances, politicize the Fed, and ultimately harm the credibility and stability of American economic governance. There is uncertainty around aggressive tariff policies and growing debt, with concerns that certain fiscal policies could be inflationary and complicate the Fed’s job.” The post Economists rate Miami thumbs-up for its performance appeared first on Miami Today. ...read more read less