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Over the past couple of weeks there has been enormous attention on President Donald Trump's verbal dressing down of Fed Chair Jerome Powell, which will heat up again after the July Fed policy meeting.

Until there is something new to report on the frenemies, I am more focused on understanding what’s going on in the economy, which appears to be chugging along. To wit, I offer you "The Burrito Barometer."

I thought about this after Chipotle Mexican Grill released its second quarterly earnings report. The company said that its same-store sales dropped by 4 percent, which was one of the worst quarterly drops since the COVID shutdown in 2020.

Do these weaker-than-expected results indicate that consumers are under pressure, and cutting back on indulgences like a $15 fast-casual burrito? If so, does that mean that the economy is weakening and the Fed should cut rates?

I am willing to concede that this might be far-fetched, like the so-called “Hemline Indicator,” a theory that posited that shorter skirts indicated economic booms, while longer hemlines predict downturns. But there is ample evidence that growth is softening, though not collapsing.

As Goldman Sachs chief economist Jan Hatzius notes, “It does seem that growth actually has slowed a substantial amount,” and KPMG chief economist Diane Swonk chimes in with data from the Fed’s Beige Book for July, which “was not encouraging, as it revealed slowing growth amidst rising cost pressures.”

Both Hatzius and Swonk believe that growth this year will come in at around 1.5%, down from 2.5% in 2024, mostly due to the impact of tariffs.

So far, there has not been a big jump in the overall consumer inflation rate, perhaps because so many businesses loaded up on inventory in the first quarter. As those firms sell their existing inventory, they will be faced with much higher tariff rates on new orders, leading to a tick up in inflation.

According to economist (and Nobel Laureate) Paul Krugman, U.S. businesses are already “seeing a sharp rise in costs,” but “these costs haven’t been fully passed on to consumers, probably in part because businesses have been expecting tariffs to come down. But once businesses see how high tariffs on Japan and Europe are after they’ve made deals, their willingness to absorb the tariffs rather than passing them on to consumers will evaporate... U.S. consumers will soon be suffering.”

Some tariff-related price increases will be obvious, like when you buy an imported or domestic car, a computer, a new electronic gadget, toys, and furniture. If you are not in the market for those goods, be prepared for stealthier price increases, like those imposed by Amazon.

According to analysis by the Wall Street Journal, the so-called Everything Store “quietly raised prices on low-cost products such as deodorant, protein shakes and pet care items,” amounting to a 5.2% bump over the past five months.

Those kinds of increases are going to seem quaint, when compared to the cost of health care coverage in 2026. According to the Peterson-KFF Health System Tracker across 105 Affordable Care Act Marketplace insurers premiums will increase “by a median of 15%” and many ACA enrollees will see a drop in federal subsidies for their coverage, due to the change in tax policy that was enacted.

Separately, a survey from Mercer found that more than half of large employers (those with 500 or more employees) say they are likely or very likely to make plan design changes in 2026 that would shift more cost to employees, such as raising deductibles or out-of-pocket maximums.

All of those added costs might make you think twice about that Chipotle burrito!

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(Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com)

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