Latest news with #JasonFurman
Mint
14 hours ago
- Business
- Mint
US economy shrugs off trade war and soldiers on
President Trump is still issuing tariff threats, consumer spending is weakening, and the Mideast is in turmoil. So why did the S&P 500 hit a record high Friday? Investors may not think the economy is taking off, but they are probably relieved that the worst-case scenarios feared in recent months haven't come to pass. Trump's tariffs, deportations, and cuts to the federal bureaucracy have bent the economy but haven't broken it. The S&P 500 plummeted 19% from its previous high in February to its 2025 low on April 8. Behind the drop: fears that Trump's threatened tariffs of as high as 145% on China and 50% on other major trading partners would send inflation and interest rates up, sap business and consumer confidence, and spark a recession. Instead, Trump has significantly dialed back the tariffs from what he first proposed. Although tariffs did come into effect starting in February on China, Canada and Mexico, as well as on autos, steel and aluminum, the effect on inflation to date has been milder than feared. Oil prices leapt when Israel attacked Iran and the U.S. joined in, but have since fallen back. Even after President Trump's rollbacks, the average tariff in the U.S. is 18.8%, the highest since the 1930s. Economists at JPMorgan Chase put the probability of recession starting in the next four quarters at about one-third, down from 60% in early April. In recent months, business confidence fell amid tariff threats. Yet that sentiment never fully translated into behavior: businesses kept investing in equipment, factories and technology. They kept adding jobs, albeit at a slower pace than last year. 'The macro economy is doing decently," said Jason Furman, a Harvard economics professor who was an adviser to President Barack Obama. Especially when it comes to tariffs, the market is now more confident 'that Trump will back off if necessary," he added. 'In April I think the fear was he would just plow ahead no matter what. Now there is a sense that there are realities he won't try to blow past." Consumer confidence has also recovered a bit. The University of Michigan's consumer sentiment index rose 16% in June from May, though it remains 18% lower than in December. Wall Street analysts expect earnings at retailers and other S&P 500 consumer discretionary companies to fall in the second quarter from a year earlier. Earlier this year, 'consumers were really on a downward trend, they really were worried that the high levels of tariffs threatened and policy volatility could lead to very dire consequences," said Joanne Hsu, director of consumer surveys for the University of Michigan. Now, 'consumers don't think we're out of the woods, but they're less worried about the worst-case scenario.' Still, while consumer spending never collapsed, new data shows that it has weakened significantly. The labor market also appears to be softening. Annualized growth in gross domestic product is likely to average 0.8% over the first two quarters of 2025, according to S&P Global Market Intelligence, down sharply from 2.5% in 2024. The stock market isn't the economy, but it does capture in real time how investors feel about growth, profits, interest rates, and risk. While companies were cautious about the outlook a few months ago, their recent profit guidance has tended to be better than analysts expected, according to FactSet. The policy landscape has also become less unpredictable, easing investors' fears. Republicans' massive tax and spending bill remains up in the air, but that sort of risk is more familiar than the tariffs and steep cuts to the federal bureaucracy by Elon Musk's Department of Government Efficiency that regularly emanated from the White House in previous months. 'If you look at the beginning of the year, the main action economically was tariffs and DOGE, and both of those were very dramatic, very fast and of debated lawfulness," Furman said. 'Now the main thing going on is this fiscal bill, which I think is problematic. But it's sort of normal…things have moved more into the legislative arena, which is weirdly more predictable." In a recently released report, the White House Council of Economic Advisers predicted the Senate draft of Trump's 'one big beautiful bill" will significantly boost investment, wages and employment in the next four years relative to a scenario in which the 2017 tax cuts expire this year, as scheduled. This past week, Fed chairman Jerome Powell acknowledged there has been little evidence of tariffs pushing up inflation broadly thus far, and some Fed officials have said a rate cut should be on the table as soon as next month. That has caused some bond yields to drop, which is also good for the stock market. Still, tariffs' full effect could still lie ahead. A 90-day pause on Trump's steepest tariffs is to end July 9. Officials have said that deadline could slip as the U.S. and some partners close in on deals. But Friday, Trump said he had broken off talks with Canada and would issue new tariffs soon, and the administration is also carrying out probes that could yield new tariffs on semiconductors and pharmaceuticals. Trump's tariff threats spurred car sales earlier this year. Even after Trump's rollbacks, the average tariff in the U.S. is 18.8%, the highest since the 1930s, versus 2.4% in 2024, according to Preston Caldwell, chief U.S. economist at Morningstar. He thinks that will push inflation based on the index of personal-consumption expenditures to 3.2% in early 2026, versus 2.3% now. The biggest risk to the outlook appears to be the consumer. This past week, the Commerce Department sharply revised down consumption growth. That softness has persisted in the second quarter, with inflation-adjusted consumption slipping 0.3% in May from April, leaving the level of spending below December's. Particularly notable was softness in discretionary categories including air travel and hotels, which are especially sensitive to moods about the economy. Wall Street analysts now expect earnings at S&P 500 consumer discretionary companies, which includes retailers, restaurant chains and carmakers, to slip by 5.1% in the second quarter from a year earlier, according to FactSet, down from a 2.2% gain at the end of March. Write to Jeanne Whalen at Justin Lahart at and Te-Ping Chen at
CNBC
10-06-2025
- Business
- CNBC
I believe economic hard data over the soft data right now, says fmr. CEA Chair Jason Furman
Jason Furman, former CEA Chair & Harvard Professor, joins 'Closing Bell Overtime' to talk the state of the U.S. economy, upcoming inflation data, and more.
CNBC
19-05-2025
- Business
- CNBC
I don't expect much growth to come from tax cuts, says Fmr. CEA Chair Jason Furman
Jason Furman, Former CEA Chair, joins 'Closing Bell: Overtime' to discuss the U.S. budget, debt & deficits an Moody's downgrade.
Yahoo
19-05-2025
- Business
- Yahoo
There's 'something very different' about Moody's US credit downgrade
Last Friday, Moody's downgraded its US credit rating from AAA to Aa1, citing growing concerns around the government's ability to pay back its debt. Jason Furman, economic policy professor at Harvard University's John F. Kennedy School of Government, sits down with Madison Mills on Catalysts to speak more about Moody's downgrade, especially as US lawmakers debate new bills and policies around national debt and deficit, tax cuts, and the budget. Furman acted as the Council of Economic Advisers (CEA) chairman under President Obama from 2013 to 2017. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Treasury Secretary Scott Beson dismissed Moody's downgrade of US credit as a lagging indicator in an interview with NBC on Sunday. Moody's stripping the US of its last AAA credit rating Friday, pushing up yields and weighing on the dollar. So, what does the downgrade mean for the broader US economy? Joining me now, we've got Jason Furman. He's a professor of practice at Harvard University, former CEA chairman under former President Obama. Uh Jason, it's always great to speak with you. Thank you for being here this morning. Just break this down for me. What does a downgrade like this mean for the US economy, for consumers? Look, there's no better understood security in the world than US Treasuries. So, no one needed this report um to learn anything. Um but it's not um backward looking. Congress is in the process right now of adding trillions of dollars to what is already a very high deficit. The debt is on track to continue to rise um relative to the economy. And so, the fiscal situation really is quite serious even if we didn't learn something new about it on Friday. So, talk to me then if if the deficit situation is quite serious in your view, how serious is it? Can the US pay back its debts? Look, we can. Um we're a large economy. You can roll it over, you can pay it down over time. Um but for a way to that to work, we need our debt falling as a share of GDP rather than rising as a share of GDP. In order to get there, um we're going to need to make a meaningful adjustment and adjustment about the size of what we did in the early 1990s. Economically, that's absolutely doable. Um politically is the much bigger challenge. Yeah, and and obviously this downgrade coming as the House Budget Committee last night has approved Trump Trump's tax bill. I'm curious from your perspective, is this downgrade sort of a direct warning to Washington about those tax plans, especially given Moody's citing the fact that this tax plan could increase the deficit to 9% of GDP by 2035 when it's currently at around 6%. Yeah. I mean, there's something very different about this downgrade than the last two. Um the first one, S&P, was all fears that government dysfunction. We'd just gone through the debt limit. Um there was this question of whether political paralysis could lead you to not pay the debt back. Um this time, it's unified Republican control and what Moody's is concerned about is what those unified Republicans um will do. Right now, um they are set on increasing the debt with the only debate being uh by how much. 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
19-05-2025
- Business
- Yahoo
There's 'something very different' about Moody's US credit downgrade
Last Friday, Moody's downgraded its US credit rating from AAA to Aa1, citing growing concerns around the government's ability to pay back its debt. Jason Furman, economic policy professor at Harvard University's John F. Kennedy School of Government, sits down with Madison Mills on Catalysts to speak more about Moody's downgrade, especially as US lawmakers debate new bills and policies around national debt and deficit, tax cuts, and the budget. Furman acted as the Council of Economic Advisers (CEA) chairman under President Obama from 2013 to 2017. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. 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
