Lelo Nxumalo

The link between global trade and domestic inflation When import prices surge—whether from tariffs, supply chain disruptions, or currency fluctuations—how much of that increase actually shows up in the prices consumers pay at the store? This question has become increasingly important in our globalized economy, especially as policymakers debate trade policy and try to forecast inflation. The 20-30% Rule A robust finding in economics research is that import price passthrough to consumer prices in the United States is around 20-30%. This means that if import prices increase by 10%, consumer prices typically rise by 2-3%. Key studies establishing this benchmark include: Campa & Goldberg (2005): Found 25% passthrough for the US over 1975-2003 McCarthy (2007): Estimated 20-30% passthrough using structural VAR model...

Between 2017 and 2025, U.S. merchandise import figures seemed to surge dramatically, with headlines often citing record-breaking nominal numbers. However, a significant portion of this apparent growth was not an increase in the volume of goods Americans purchased but was pure inflation. When adjusted for rising prices using the Bureau of Economic Analysis (BEA) chain-linked methodology, the story of real import growth is far more modest. The Inflation Illusion Headline numbers can be highly deceptive. In 2024, U.S. goods imports hit a nominal record of $3,295.6 billion . But when adjusted for inflation (using 2017 chained dollars), real imports were $2,870.2 billion . Figure 1: U.S. merchandise imports in nominal (current) dollars vs. chain-linked real terms (2017 base year). The widening gap reveals how import price inflation masked true volume trends. The most dramat...

As climate change accelerates, a fundamental question of justice emerges: Are countries consuming their "fair share" of the global carbon budget? Using comprehensive data from 110 countries spanning three decades, we can document the stark reality of carbon inequity—not as speculation, but as historical fact. The concept is straightforward: each country's fair share is based on its proportion of global population. A nation with 5% of the world's people should account for roughly 5% of global emissions. After Fanning et al (2022) , I measure this using a Fair Share Ratio, where 1.0 means exact fairness, above 1.0 indicates overconsumption, and below 1.0 shows underconsumption. The Persistent Divide Data from the Global Carbon Project (GCP) reveals a troubling pattern that has endured for over 30 years. Looking at the distribution of countries relative to their fair share, we see a fundamental global inequity. Source: Own a...

In Fall 2013, as a student in Professor Robert Lawrence's Political Economy of Trade course at the Harvard Kennedy School, I explored a fundamental question: Do the anti-dumping and subsidies rules of the WTO help ensure that trade is fair and beneficial? My answer then was cautiously optimistic but wary. Drawing on economists like Alan Sykes, I noted a critical paradox: while subsidized or dumped imports may violate trade rules, they often benefit importing countries through lower prices and improved terms of trade. The economic case for trade remedies was weak—"the only plausibly useful function of antidumping laws from an efficiency standpoint is the avoidance of predatory pricing," which antitrust laws could handle. Yet anti-dumping duties were already the most frequently used trade remedy, with China as the primary target. I concluded that these remedies served more as political safety valves than economic tools—necessary to maintain support for open trade, even wh...

Today's release of the August 2025 Personal Consumption Expenditures (PCE) inflation data drew widespread media attention, with coverage highlighting both the persistence of inflation and its implications for Federal Reserve policy. Across outlets, analysts pointed to resilient consumer spending and income growth as signs of underlying economic strength, even as inflation remains above the Fed's 2% target. The consensus among media reports is that while inflation is not worsening, its stubbornness continues to challenge policymakers navigating a softening labor market and evolving rate expectations. To provide deeper insights into inflation's trajectory, I've developed a forecasting framework that combines two econometric approaches — ARIMA time series modeling and Phillips Curve analysis—to predict Core PCE inflation. This analysis presents a unique opportunity to validate my forecasting methodology against eight months of 2025 data. ...