Latest news with #Economists
Bloomberg
3 days ago
- Business
- Bloomberg
German Inflation Unexpectedly Cools to Match ECB's 2% Target
German inflation unexpectedly eased this month, matching the European Central Bank's goal for the first time in almost a year. Consumer prices increased 2% from a year ago, down from 2.1% in May, Destatis said Monday. Economists surveyed by Bloomberg had expected a slight acceleration to 2.2%.
Yahoo
5 days ago
- Business
- Yahoo
Trump has ramped up pressure on Fed Chair Powell to cut rates. There's one big reason it probably won't work.
Trump's pressure campaign on Fed Chair Powell probably won't work. Trump has bashed the Fed chair, and a report this week said he could announce his replacement early. But Powell will likely want to preserve the Fed's independence from politics, economic experts say. President Donald Trump has demanded Federal Reserve Chair Jerome Powell lower interest rates this year, but there's a big reason why his pressure campaign will probably prove futile. That's because Powell, who's 11 months away from the end of his term as central bank chief, is likely going to want to preserve his legacy and protect the Fed's independence, even as he faces withering criticisms from the president, according to economic experts. The president is reportedly considering announcing Powell's successor as soon as this fall, The Wall Street Journal reported this week, a move that could be read as trying to undermine Powell's influence before the end of his term next May. The president also took to Truth Social this week to call the central bank leader "too late" and a "very dumb, hardheaded person." Later, when speaking at a news conference on Thursday, Trump added that he believed Powell was "terrible" and "very stupid," and that the Fed Chair had "a very low IQ for what he does." David Rosenberg, a top economist and CEO of Rosenberg Research, told Business Insider he believed the insults Trump hurled at Powell this week were "self-defeating." If anything, they will make Powell less likely to cut rates, as the central bank chief will try to avoid creating the impression that the Fed is buckling under political pressure, Rosenberg said. "Donald Trump has shot himself in the foot," Rosenberg said. "Of course, Jay Powell, less than a year away from the expiration of his tenure, is going to want to preserve his legacy. And the Fed continues to feel some shame and a loss of credibility from inflation being transitory back in 2021 and 2022," he added, pointing to when the Fed brushed off rising inflation as a temporary phenomenon before embarking on a steep rate-hike cycle to combat it. In the past, economists have warned the Fed could damage its credibility by not remaining independent, something that could lead to higher inflation in the long run. The idea that Powell will remain focused on preserving the Fed's independence is a prominent narrative swirling in markets at the moment, according to Mohamed El-Erian, the chief economic advisor at Allianz. "That Chair Powell now is in love with the notion that his legacy will be protecting Fed independence," El-Erian said in an interview on CNBC on Thursday. "That will replace any concerns about the inflation surge we've had," he added. Forecasters also doubt rates will fall all that much, regardless of what Trump or Powell do. While Trump is likely to pick a more dovish successor to Powell, lowering interest rates will be harder than simply getting a new Fed chief, El-Erian said, as the new Fed Chair would need to come to a consensus on where the Fed funds rate should be with other central bankers. "It's not as straightforward as, 'I pick this person. By definition, rates are going to come down,'" he said. Jim Zelter, the president of Apollo Global Management, said he believes rates would likely stay higher in the short term. The US is still dealing with inflationary pressures in the supply chain and the job market, and economic benefits from AI and other tech advances are still far out into the future, he said. "I have a view that rates are going to be a little bit stickier and higher in the US than people think," Zelter said, speaking to Bloomberg this week. Investors grew more bullish on the prospect of rate cuts this week, but still don't expect the Fed to significantly reduce interest rates anytime soon. Markets are pricing in a 79% chance the Fed will keep rates steady at its July meeting, according to the CME FedWatch tool. Trump has feuded with Powell for years over lowering rates, but the president appears to be even more dogged in his attempts to spar with Powell and push for rate cuts this year, after promising Americans lower borrowing costs on the campaign trail. In April, Trump teased firing Powell before walking back those comments as markets balked at political meddling with central bank policy. In October, Treasury Secretary Scott Bessent — who is one of the contenders for the next Fed Chief, according to the Journal's report — also floated the idea of a "shadow Fed Chair." The shadow chair would be a Fed Chair announced before the end of Powell's term, who could indicate to markets what to expect after Powell is gone, Bessent told Barron's at the time. Zelter said he doubted Trump would follow through and announce a new Fed Chair extremely early. That's because Trump is in a convenient position right now to blame the Fed for things happening in the economy, Zelter said. Read the original article on Business Insider Erreur lors de la récupération des données Connectez-vous pour accéder à votre portefeuille Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données
Reuters
6 days ago
- Business
- Reuters
US consumer spending falls unexpectedly in May
WASHINGTON, June 27 (Reuters) - U.S. consumer spending unexpectedly fell in May as the boost from the pre-emptive buying of goods like motor vehicles ahead of tariffs faded, while monthly inflation increases remained moderate. Consumer spending, which accounts for more than two-thirds of economic activity, dropped 0.1% last month after an unrevised 0.2% gain in April, the Commerce Department's Bureau of Economic Analysis said on Friday. Economists polled by Reuters had forecast consumer spending would edge up 0.1%. President Donald Trump's sweeping tariffs, which have led businesses and households to front-run imports and goods purchases to avoid higher prices from duties, have muddled the economic picture. Economists warned it could take time for the tariff-related distortions to wash out of the data. A record goods trade deficit in the first quarter, thanks to a deluge of imports, accounted for much of the 0.5% annualized rate of decline in gross domestic product during that period. Consumer spending also nearly braked last quarter after being propelled by households pulling forward goods purchases. Households also spent less on services last quarter, helping to restrain growth in consumer spending to only a 0.5% pace, the slowest rate since the second quarter of 2020. That data potentially puts spending on a slow growth path in the second quarter. The combination of soft consumer spending and inflation is, however, unlikely to spur the Federal Reserve to resume cutting interest rates in July. Fed Chair Jerome Powell told lawmakers this week that the U.S. central bank needed more time to gauge the impact of tariffs on prices before considering a rate cut. Economists argue that price increases have remained moderate because businesses are still selling inventory accumulated before the tariffs went into effect. They expect inflation will start picking up, beginning with consumer price data for June. The Personal Consumption Expenditures (PCE) Price Index gained 0.1% in May, matching the rise in April, the BEA said. In the 12 months through May, PCE inflation increased 2.3% after climbing 2.2% in April. Stripping out the volatile food and energy components, the PCE Price Index increased 0.2% last month. That followed a 0.1% rise in the so-called core PCE inflation in April. In the 12 months through April, core inflation advanced 2.7% after rising 2.6% in April. The Fed tracks the PCE price measures for its 2% inflation target. The central bank last week left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December.
Yahoo
6 days ago
- Business
- Yahoo
US consumer spending falls unexpectedly in May
WASHINGTON (Reuters) -U.S. consumer spending unexpectedly fell in May as the boost from the pre-emptive buying of goods like motor vehicles ahead of tariffs faded, while monthly inflation increases remained moderate. Consumer spending, which accounts for more than two-thirds of economic activity, dropped 0.1% last month after an unrevised 0.2% gain in April, the Commerce Department's Bureau of Economic Analysis said on Friday. Economists polled by Reuters had forecast consumer spending would edge up 0.1%. President Donald Trump's sweeping tariffs, which have led businesses and households to front-run imports and goods purchases to avoid higher prices from duties, have muddled the economic picture. Economists warned it could take time for the tariff-related distortions to wash out of the data. A record goods trade deficit in the first quarter, thanks to a deluge of imports, accounted for much of the 0.5% annualized rate of decline in gross domestic product during that period. Consumer spending also nearly braked last quarter after being propelled by households pulling forward goods purchases. Households also spent less on services last quarter, helping to restrain growth in consumer spending to only a 0.5% pace, the slowest rate since the second quarter of 2020. That data potentially puts spending on a slow growth path in the second quarter. The combination of soft consumer spending and inflation is, however, unlikely to spur the Federal Reserve to resume cutting interest rates in July. Fed Chair Jerome Powell told lawmakers this week that the U.S. central bank needed more time to gauge the impact of tariffs on prices before considering a rate cut. Economists argue that price increases have remained moderate because businesses are still selling inventory accumulated before the tariffs went into effect. They expect inflation will start picking up, beginning with consumer price data for June. The Personal Consumption Expenditures (PCE) Price Index gained 0.1% in May, matching the rise in April, the BEA said. In the 12 months through May, PCE inflation increased 2.3% after climbing 2.2% in April. Stripping out the volatile food and energy components, the PCE Price Index increased 0.2% last month. That followed a 0.1% rise in the so-called core PCE inflation in April. In the 12 months through April, core inflation advanced 2.7% after rising 2.6% in April. The Fed tracks the PCE price measures for its 2% inflation target. The central bank last week left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
First-Quarter GDP Revised Down as Consumer Spending Growth Weakens
The US economy contracted more than previously estimated in the first quarter as consumer spending w Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
