Walmart contends with tariffs.

I'm David Brancaccio in Los Angeles.

First, the head of America's central banking system warned today of possibly higher long-term interest rates ahead and suggested that supply chains could get snarled by tariffs, which suggests maybe shortages.

On Thursdays, we consult Diane Swank, chief economist at the audit tax and advisory firm, KPMG.

Hey there.

Good morning.

When you get the person who's arguably the most powerful economic policymaker in the land,

Jerome Powell at the Fed, talking about supply shocks, that brings back bad memories of COVID.

Certainly, we get your attention.

Absolutely.

This is one of the things the Federal Reserve is looking at is that they're concerned

that the kind of paralysis and panic we've seen from the on-again, off-again tariffs

and the lifting of tariffs and then lowering them for a pause for 90 days,

that that is creating an environment that's not unlike the disruptions we saw to supply chains

during the height of the pandemic and then the inflation that ensued thereafter.

And that is something the Federal Reserve is very worried about.

They're worried about a bout of stagflation,

but they're worried about the fact that we're setting up in the pipeline,

these sort of stops and starts,

that add frictions to the economy and friction as heat in the form of inflation.

And what is worrisome is that they don't see it going away anytime soon,

that they see us in a period of extended supply shocks, which is not unlike what we saw also in the 1970s.

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