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The Hill
5 days ago
- Business
- The Hill
Businesses raising prices due to tariffs
The Big Story Higher costs from tariffs were reported by businesses in all of the Federal Reserve's 12 regional districts, and many made the choice to raise prices as a result. © The Associated Press 'Many firms passed on at least a portion of cost increases to consumers through price hikes or surcharges,' the Fed's July Beige Book — an anecdotal survey of domestic economic conditions — reported. Those businesses that didn't push the additional costs through to their customers saw restricted profit margins, the beige book said, noting consumers' 'growing price sensitivity.' Inflation in the Labor Department's consumer price index jumped in June, partly as a result of the tariffs. While President Trump has instituted a 10-percent general tariff, along with China-specific tariffs and targeted tariffs on some individual goods, his country-specific 'reciprocal' tariffs have been paused until Aug. 1 as trade negotiations continue. Import prices advanced by 0.1 percent in June and deflated by 0.2 percent relative to last year, the Labor Department reported Thursday. The number was below economists' expectations and reflected lower energy prices. The Hill's Tobias Burns has more here. Welcome to The Hill's Business & Economy newsletter, I'm Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue. Did someone forward you this newsletter? Subscribe here. Essential Reads Key business and economic news with implications this week and beyond: Meta investors, Zuckerberg settle Facebook privacy suit Meta investors and Meta CEO Mark Zuckerberg settled an $8 billion lawsuit with shareholders on Thursday. Murkowski: Vought 'disrespects' the government funding process Sen. Lisa Murkowski (R-Alaska) on Thursday said she thinks White House budget chief Russell Vought 'disrespects' Congress's annual funding process after he said it should be 'less bipartisan.' What's the average salary in the US? Median weekly wages for full-time and salaried workers in the U.S. rose nearly 5 percent from last year, according to the latest report from the Bureau of Labor Statistics. The Ticker Upcoming news themes and events we're watching: In Other News Branch out with more stories from the day: Trump administration to subject solar and wind projects to elevated review The Trump administration plans to put solar and wind projects through an elevated review process, saying that moves toward approval will have to be vetted by Interior Secretary Doug Burgum's office. Good to Know Business and economic news we've flagged from other outlets: What People Think Opinions related to business and economic issues submitted to The Hill: You're all caught up. See you tomorrow! Thank you for signing up! Subscribe to more newsletters here
Business Insider
5 days ago
- Business
- Business Insider
Businesses warn the Fed that prices will likely start rising more rapidly by late summer
Businesses surveyed by the Federal Reserve said in the latest publication of its Beige Book economic report that tariffs have increased their costs either modestly or "pronouncedly." "Contacts in a wide range of industries expected cost pressures to remain elevated in the coming months, increasing the likelihood that consumer prices will start to rise more rapidly by late summer," the Fed wrote. The July report mentioned tariffs 75 times, which is fewer than the 107 and 122 times the word appears in the prior two reports, but well above the 23 and 49 mentions earlier in the year before President Donald Trump kicked off the trade war. While much of the earlier discussion focused on uncertainty around policy and rates, the talk now is of price hikes as tariffs become more entrenched. In particular, manufacturers reported being surcharged by their suppliers, especially for raw materials used in manufacturing and construction. Several consumer packaged goods companies told the St. Louis Fed that their cost increases would begin showing up on grocery shelves in the next 90 days, and a manufacturing company in Memphis said it had raised prices "significantly" to offset the tariff cost on steel and aluminum. Other businesses in the St. Louis district said they were managing costs in other ways, from a packaging company absorbing at least 10% in surcharges to stay competitive with larger manufacturers to a wellness center that started offering new add-on services in order to manage higher costs elsewhere. And while many businesses said they passed along costs to consumers through price hikes, others said they held off due to price-sensitive consumers, which tightened their profit margins. These new costs haven't yet appeared dramatically in the official data: retail sales continued a strong run last month, and prices have generally held steady. The latest consumer price index inched up by a modest 0.3% — far less than some economists were initially worried about. However, prices may not remain stable for much longer as tariffs (and concerns about tariffs) reshape pricing decisions. "It seems that prices have gone up out of fear that prices will go up," a construction materials supplier told the St. Louis Fed. The Trump administration recently sent tariff letters to nearly two dozen trading partners, threatening duties as high as 50% starting from August 1. None of the four existing trade agreements with the UK, China, Vietnam, and Indonesia has yielded tariffs below 10%, suggesting that the baseline tariff imposed on April 2 may be here to stay.
Business Times
5 days ago
- Business
- Business Times
US weekly jobless claims fall; job growth appears steady in July
[WASHINGTON] The number of Americans filing new applications for jobless benefits fell last week, pointing to steady job growth in July, though some laid off workers are experiencing long spells of unemployment because of a moderation in hiring. Initial claims for state unemployment benefits dropped 7,000 to a seasonally adjusted 221,000 for the week ended July 12, the Labor Department said on Thursday (Jul 17). Economists polled by Reuters had forecast 235,000 claims for the latest week. Motor vehicle assembly plant closures for reasons including maintenance and annual retooling for new models could be influencing the data. Auto manufacturers typically idle assembly lines in summer, though the timing often varies, which could throw off the model that the government uses to strip out seasonal fluctuations from the data. Layoffs have remained generally low, though economic uncertainty stemming from trade policy has left companies hesitant to increase hiring. President Donald Trump last week announced higher duties would come into effect on August 1 for imports from a range of countries, including Mexico, Japan, Canada and Brazil, and the European Union. Trump in April slapped a 10 per cent duty on nearly all imports, while giving nations a 90-day period to negotiate trade deals. The Federal Reserve's Beige Book report on Wednesday described hiring as having 'remained generally cautious' in early July, attributed by many of the US central bank's contacts to 'ongoing economic and policy uncertainty.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The Fed said while reports of layoffs were limited in all industries, they were 'somewhat more common among manufacturers.' It noted that 'many contacts expected to postpone major hiring and layoff decisions until uncertainty diminished.' The claims report covered the period during which the government surveyed employers for the nonfarm payrolls component of July's employment report. Nonfarm payrolls increased by 147,000 jobs in June, though nearly half of the positions were in the government sector, mostly state education. Tepid hiring is underscored by the growing number of people collecting unemployment checks. The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 2,000 to a seasonally adjusted 1.956 million during the week ending July 5. The start of a new quarter could have influenced the current level of the so-called continuing claims. 'Eligibility for benefits can be affected by calendar-quarter considerations, leading to large swings in the underlying data,' said Lou Crandall, chief economist at Wrightson ICAP. Next week's continuing claims data could offer more clarity on the health of the labour market in July. Economists said the elevated continuing claims reading suggested an increase in the unemployment rate. While the jobless rate fell to 4.1 per cent in June after holding at 4.2 per cent for three straight months, that was mostly because people dropped out of the labour force. REUTERS
Int'l Business Times
5 days ago
- Business
- Int'l Business Times
Beige Book Flags Growing Pessimism As Tariffs And Labor Shortages Squeeze US Econom
The Federal Reserve's latest Beige Book, released Wednesday, revealed that while U.S. economic activity grew slightly in recent weeks, overall sentiment has turned more cautious. Businesses across multiple sectors reported concerns over persistent cost pressures and a tightening labor market. According to Reuters, nearly all 12 Federal Reserve districts reported modest to moderate growth, yet the tone was decidedly more pessimistic compared to earlier in the year. Many firms indicated that tariffs and labor shortages are weighing on hiring and expansion plans. Tariff Pressures Resurface Businesses in manufacturing, construction, and retail noted a resurgence in input cost increases, driven largely by import tariffs. Companies in the Atlanta, Dallas, and Philadelphia districts reported having to pass higher costs on to customers. In some cases, firms said they were eating the cost increases to remain competitive, putting pressure on profit margins. As explained by Investopedia, firms that rely on imported materials—such as metal parts and electronics—are facing the steepest price hikes. These cost burdens are expected to grow in the second half of the year as renewed tariffs on Chinese goods take effect. Labor Shortages Worsen with Immigration Crackdown A recurring theme across the report was the tight labor market, particularly for low-wage and seasonal workers. Multiple districts attributed the shortages to stricter immigration policies, which have reduced the availability of essential labor in sectors like agriculture, hospitality, and construction. According to Fintel, the St. Louis and Minneapolis districts noted delayed building projects due to a lack of workers. Meanwhile, in the New York region, many small businesses that rely on seasonal immigrant labor have either shortened hours or remained closed entirely. To cope, companies are increasingly turning to automation and AI-based solutions, but these strategies are longer-term and capital-intensive—leaving a short-term gap that could hinder recovery. Inflation Pressures Show Mixed Signals The Beige Book described price growth as "modest to moderate," but highlighted that businesses expect price pressures to accelerate in the coming months. Tariff-related costs, rising wages, and housing expenses were all flagged as potential contributors to a new inflation wave. Economists interviewed by Barron's said the Fed may be facing a "policy catch-22": cut rates too soon and risk feeding inflation; hold rates too long and risk undercutting growth. Fed Holds Steady, But Uncertainty Grows Despite the challenges, the Federal Reserve is expected to keep interest rates unchanged at its next policy meeting. As of now, the benchmark rate remains between 4.25% and 4.50%, with markets pricing in a potential cut by the fall—if inflation continues to ease and labor market strains intensify. Several Fed officials, including those from the Cleveland and Boston districts, have signaled in public comments that they remain cautious, prioritizing inflation control over short-term stimulus. The general tone of the Beige Book suggests a Fed that is data-dependent and hesitant to act prematurely, especially in the face of external political pressure to lower rates—a reference to recent comments from President Trump urging aggressive cuts. What It Means Tariffs are hitting margins again, particularly for import-heavy industries. Labor shortages remain critical, especially where immigration crackdowns have hit hardest. Price pressures could reaccelerate, keeping the Fed in wait-and-see mode. Business sentiment is weakening, a potential sign that growth may stall later this year.
Fibre2Fashion
5 days ago
- Business
- Fibre2Fashion
US economic activity rises slightly between late May, early July: Fed
US economic activity increased slightly between late May and early July, contributing to cautious sentiment among businesses, the Federal Reserve (Fed) said in its latest Beige Book. "Five districts reported slight or modest gains, five had flat activity, and the remaining two districts noted modest declines in activity," the Fed said. US economic activity increased slightly between late May and early July, contributing to cautious sentiment among businesses, the Federal Reserve (Fed) said in its latest Beige Book. All 12 Fed districts cited price increases, with seven districts characterising them as 'moderate' and five as 'modest'. Businesses in all reported experiencing modest to pronounced input cost pressures related to tariffs. All 12 Fed districts cited price increases, with seven districts characterising them as 'moderate' and five as 'modest'. 'In all twelve districts, businesses reported experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction,' the report said. 'Many firms passed on at least a portion of cost increases to consumers through price hikes or surcharges,' though some held off 'because of customers' growing price sensitivity,' leading to 'compressed profit margins'. The report, published eight times a year, said the latest survey saw an improvement over the previous report in which half of districts reported at least slight declines. Employment 'increased very slightly overall,' and many 'expected to postpone major hiring and layoff decisions until uncertainty diminished.' "Contacts in a wide range of industries expected cost pressures to remain elevated in the coming months, increasing the likelihood that consumer prices will start to rise more rapidly by late summer," the report added. Businesses are responding cautiously, with many delaying hiring and pricing decisions until there's more clarity. Fibre2Fashion News Desk (DS)
