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Stephanie Roth: latest market views
Wolfe Research
Summary
Stephanie Roth is Chief Economist at Wolfe Research, which she joined in late 2023 from J.P. Morgan Private Bank, and previously worked on the global economics team at Cornerstone Macro with Nancy Lazar.
Chorus has 10 views from Stephanie Roth across 2 episodes on Bloomberg Surveillance since November 6, 2026.
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Nominal GDP growth slows to about 4.5% in 2027, led by real growth rather than inflation.
The economy is buoyant and nominal growth will run slightly below recent levels, to about 4.5% in 2027. Growth is increasingly driven by real activity rather than inflation. The economy is on firm footing beyond the AI capex space, and this year's mix was distorted by inflation running hot for various reasons.
“I think it will be slightly less than where we've been running. You're probably talking more like a four and a half percent nominal GDP for '27 as opposed to something that's notably higher.”at 29:56
Inflation falls back to about 2.5% in 2027 as energy and one-off tariff effects roll off.
Energy prices will not repeat this year's year-over-year surge, and oil may come down sustainably, which produces disinflation on a year-over-year basis. Items elevated this year because they were largely one-off, such as airfares and tariff effects, will fade. That leaves inflation at about 2.5%, higher than the Fed would like but more tolerable.
“Energy prices are not gonna repeat... you're gonna have the tariffs, roll off the data... we're looking for at two and a half percent inflation, which is certainly higher than what the Fed would like.”at 30:45
Tariffs stay elevated for quite some time; revenues are too high to cut, even under a Democrat.
Tariff policy is largely unchanged because the revenues are too high to justify adjustments from a fiscal perspective. Even if a Democrat wins in 2028, tariffs may be reduced only on a targeted basis. Tariffs will remain elevated for quite some time because trimming them is unattractive from a deficit perspective.
“I think the tariff policy is largely unchanged. The revenues are kind of too high to really make any adjustments from that perspective. So tariffs are gonna remain.”at 31:50
Fed hikes in December, then once more around March 2027, before going on hold.
Base case is a December hike, provided financial markets hold up. The Fed has communicated that it wants to hike again and the data have been firm. A further hike is likely at the March meeting. Once inflationary pressure subsides and activity cools modestly, the Fed can wait and see and remain on hold for quite some time. Markets have been pricing those odds down over concerns about AI.
“So base case, they they still go in December... Then we think they'll probably go once more at the beginning of next year... probably at the March meeting. And then... they'll be kind of on hold.”at 32:54
Spending stays robust as top spenders mask softness at the bottom, tied to nominal income growth.
The lower end of the consumer has been much more challenged than others, but spending by higher spenders has stayed persistently strong and masks that softness. Spending is largely a function of nominal income growth, which depends on how many people are working and how much they are paid. Those trends are moving positively, so spending should remain fairly robust.
“The bottom end of the consumer has certainly been a lot more challenged than everybody else. But because the strength has been persistent across the spenders that spend more, it's been masking any softness.”at 33:49
Nominal GDP growth around 4.5% in 2027, driven by real growth; the economy is firm beyond AI capex.
Roth says the economy's buoyant, and slightly less nominal growth than recent years is expected. She expects 2027 nominal GDP around four and a half percent, increasingly driven by real growth rather than inflation. She argues the economy is running on firm footing beyond AI capex spending.
“You're probably talking more like a four and a half percent nominal GDP for '27 as opposed to something that's notably higher as where we've been.”at 25:22
Bloomberg Surveillance: Instant Reaction: US Adds 165,000 Jobs, Topping All Forecasts ·
Inflation should ease to about 2.5% in 2027 as energy and one-off tariff effects roll off.
Roth says energy prices will not repeat this year's year-over-year surge, and oil prices may sustainably come down, which gives disinflation. Tariff effects will roll off the data, and inflation that was elevated this year because of largely one-off factors will fade into next year. She expects about 2.5% inflation, above the Fed's preference but more tolerable.
“we're looking for at two and a half percent inflation, which is certainly higher than what the Fed would like, but something that's a lot more tolerable.”at 26:44
Bloomberg Surveillance: Instant Reaction: US Adds 165,000 Jobs, Topping All Forecasts ·
Tariffs will stay elevated for a long time because the revenue is too important to deficit financing to cut.
Roth argues tariff policy is largely unchanged because tariff revenues are too high to make adjustments. She expects tariffs to remain elevated for quite some time because of the deficit, and does not think even a Democratic president in 2028 would bring them down much beyond targeted cuts.
“my expectation is the tariffs will remain elevated for quite some time because from a from a deficit perspective”at 27:41
Bloomberg Surveillance: Instant Reaction: US Adds 165,000 Jobs, Topping All Forecasts ·
Expects the Fed to hike in December and again around March 2027, then hold.
Roth's base case is the Fed goes in December, given firm data and the Fed's stated desire to hike again. Markets have priced down the odds because of AI concerns, but she expects a hike around March next year, after which inflation pressure subsides, activity cools modestly and the Fed holds for quite some time.
“they're very likely to go in December. They certainly communicated that they want to hike again. The data have been firm. ... we think they'll probably go once more at the beginning of next year in Q3, probably at the March meeting”at 28:27
Bloomberg Surveillance: Instant Reaction: US Adds 165,000 Jobs, Topping All Forecasts ·
Consumer spending stays robust as top earners drive it, masking softness at the bottom end.
Roth says the bottom end of the consumer has been more challenged, but persistent strength among higher-income spenders has masked the softness. Spending should stay fairly robust because it is a function of nominal income growth tied to the labor market, and those trends are moving positively. Lower energy prices could also fuel a pickup next year.
“the strength has been persistent across the the the the spenders that spend more, it's been masking any softness that's been happening at the bottom.”at 29:25
Bloomberg Surveillance: Instant Reaction: US Adds 165,000 Jobs, Topping All Forecasts ·
Shows
- Bloomberg Surveillance · 2 episodes
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