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New York Post
5 days ago
- Business
- New York Post
Trump's economic agenda leading to decades-high wage increases, capital expenditures and record tariffs revenue: Treasury
WASHINGTON — President Trump's handling of the economy has succeeded in bringing some of the biggest increases in a decade or more to tariffs revenue, blue-collar wages and capital investments, a senior Treasury official told The Post. Those 'ABCs' — described as 'America First' trade, a 'Blue-Collar Boom' and a 'Capital Expenditures Comeback' — are also rebutting Trump critics who claimed the president's tax-and-tariff agenda would upend the global economy, said Joe Lavorgna, who serves as counselor to Treasury Secretary Scott Bessent. As the US agreed to another trade deal with Japan this month, Lavorgna pointed to Treasury revenue from tariffs topping $200 billion in fiscal year 2025 — a record — and approaching 'more than $300 billion' by the end of the calendar year. Blue-collar workers have also seen real wage growth of 1.7% since Trump took office, Bessent previously told Post columnist Miranda Devine on 'Pod Force One,' the highest level of any presidential administration since at least Richard Nixon. 'These are … the laborers, the backbone of the market,' Lavorgna added. 'They didn't graduate from fancy colleges — in most cases probably they didn't graduate from college at all — that are punching a time check when they come into work.' 4 President Trump's handling of the economy has succeeded in bringing some of the biggest increases in a decade or more to tariffs revenue, blue-collar wages and capital investments, a senior Treasury official told The Post. / MEGA In the first half of the year, he noted, capital expenditures surged 16.6% — the largest two-quarter gain since 1997, excluding the rebound coming out of the COVID-19 pandemic. Business equipment production also rose 11% (annualized) in the second quarter after jumping 23% in the first quarter of the calendar year. 'We think it's tied into the One Big Beautiful Bill,' Lavorgna claimed, pointing to provisions that allow businesses to write off production expenses and other investments. 4 Blue-collar workers have also seen real wage growth of 1.7% since Trump took office, Bessent previously told 'Pod Force One,' the highest level of any presidential administration since at least Richard Nixon. REUTERS Last week, Trump touted more than $100 billion in investments for the artificial intelligence and energy industries at a summit in Pittsburgh, one of several events that have spurred economic growth. Japan's trade deal also pencilled in $550 billion in US-based investments. 'If you have more capital, people can produce more,' he went on. 'You're raising productivity and lending standards, living standards … at the same time, people are taking on bigger paychecks … that reinforces the blue-collar boom.' 4 Lavorgna said the largest growth sectors domestically have been in communications equipment, computers and AI. Akarawut – The economic shifts are still keeping core inflation to around 2%, while the current consumer price index hit 2.7% over the past year, per the US Bureau of Labor Statistics. Some trade deals have yet to be inked that could affect those rates — including an anticipated deal with the European Union, which Trump recently threatened with up to 50% duties. Lavorgna said the largest growth sectors domestically have been in communications equipment, computers and AI. 4 Last week, Trump touted more than $100 billion in investments for the artificial intelligence and energy industries at a summit in Pittsburgh, one of several events that have spurred economic growth. Getty Images 'As these trade deals have come through and these other countries such as Japan have committed to making major capital investments in the US, it's clear that the tariffs have had their desired effect,' he said. 'We've got the revenues. We haven't had the inflation, and we're getting the capital commitments of reshoring here. So to me, it's a win-win-win.'
Time of India
22-07-2025
- Business
- Time of India
How the ghost of 'transitory' inflation is haunting the rate debate
Joseph Lavorgna, counselor to Treasury Secretary Scott Bessent, believes tariffs are not inflationary and says economists who have been predicting that prices would rise due to President Donald Trump 's import duties are wrong. Where many such economists saw effects of tariffs in consumer price inflation data last week, Lavorgna was not persuaded. Economists had been predicting tariffs would show up in numbers month after month, but the data in aggregate has remained muted, he said. "Almost every economist has gotten it wrong," Lavorgna told me, and added that he and his colleagues in the administration felt that mainstream economists' analyses had been clouded by political bias. At any rate, he said, inflation is a perpetual rise in prices, rather than a one-time increase in price levels. "To the extent there is a negative effect -- which we have yet to see -- it would be a one-off price level adjustment," he said. Explore courses from Top Institutes in Please select course: Select a Course Category Degree Data Science Finance Data Science CXO MCA Product Management Management MBA PGDM healthcare Technology Design Thinking others Cybersecurity Data Analytics Leadership Public Policy Digital Marketing Operations Management Project Management Others Skills you'll gain: Data-Driven Decision-Making Strategic Leadership and Transformation Global Business Acumen Comprehensive Business Expertise Duration: 2 Years University of Western Australia UWA Global MBA Starts on Jun 28, 2024 Get Details Lavorgna's comments underscore how a debate over inflation is once again turning on the question of whether any price rise from Trump's tariffs would be fleeting or not. It's an echo of what happened after the COVID-19 pandemic, when the Fed thought inflation was transitory - and it turned out not to be. Now, while some administration officials and Fed governors expect any impact from tariffs to be temporary, other economists and market participants remain convinced that the president's conventional wisdom-defying policy could lead to bad outcomes, like slower growth and inflation. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Top 32 Most Beautiful Women In The World Undo These people want to see more data as they argue that there are still many unknowns around inflation - it could rise in the coming months as much uncertainty remains around what the final tariffs would be; price increases could spill to other areas; and tariffs could cause inflation expectations to rise. There are also many unknowns about the eventual impact of the import duties - and other administration policies like those on immigration - on the economy. "Even if you think of this as a one-time increase in costs, what is more likely to happen is that firms are not going to pass it on all at once," said Alberto Cavallo, a Harvard University professor who has built a model to track the price impact of tariffs. Live Events "They're going to do it gradually. And that gradualness tends to push inflation upward for a significant amount of time." My colleagues at Reuters have developed a tracker to see how companies are responding to tariffs. What happens with inflation is of immense importance all around -- to global markets, investors and consumers, who endured hardship as easy monetary policies and supply chain disruptions following the COVID-19 pandemic led to inflation levels not seen in more than a generation. Unhappiness with high prices was as one of the reasons behind Trump winning the presidential elections. Trump has directed his ire over the disagreement on rates most intensely against Jay Powell, the Federal Reserve chair, leading some investors to worry about the independence of the central bank. With Trump calling for the central bank to cut rates by as much as 3 percentage points while the economy is still holding up, the risk, some economists and investors say, is that such a stimulus would bring a repeat of what happened after the pandemic. "It makes sense for the Federal Reserve to wait and see before they make a big decision," Cavallo said. CONTRADICTORY FINDINGS Cavallo's research, which is updated frequently to account for the changes in Trump's tariff levels, analyzes pricing on the websites of four large U.S. retailers. As of July 14, the analysis found "rapid pricing responses, though their magnitude remains modest relative to the announced tariff rates and varies by country of origin." The findings echo other attempts to unpack what's happening behind aggregate inflation numbers. A paper in May by Fed economists dug inside a closely watched inflation gauge called PCE. It showed tariffs on Chinese imports in February and March had already affected consumer prices. The administration, too, has done its own analyses and published a counterview to these findings earlier this month. Using techniques similar to the Fed paper, the Council of Economic Advisers, the White House's think-tank, found that prices of imported goods had fallen this year. None of the papers provide a comprehensive view of what's happening, however, and acknowledge various limitations of their findings. The debate over the effect of tariffs is also starting to divide Fed officials. Fed Governor Chris Waller, who is seen as a potential candidate to succeed Powell, for example, favors a rate cut at the July meeting because he feels the tariffs are likely to have a limited impact on inflation, and he is concerned the economy and private sector hiring are starting to slow. Others, like New York Fed President John Williams, have professed caution, saying it was still early days. "Comments coming from Fed officials suggest that the FOMC is cleaving," Thierry Wizman, Global FX & Rates strategist at Macquarie Group, wrote in a note on Friday, referring to the central bank panel that sets monetary policy. Should it persist, it could "evolve into a split along political lines, with one side swayed by political motives, and the need to accommodate fiscal policy, at the expense of adherence to the price stability mandate." "This would contribute to U.S. yield-curve steepening," Wizman wrote.
Axios
22-07-2025
- Business
- Axios
Scoop: The overlooked data Trump economists see predicting a boom ahead
Trump administration economists are spotlighting a little-noticed piece of federal data they argue shows a business investment surge is in the works — one that could have lasting consequences for U.S. growth. The big picture: Industrial production of business equipment is an early indicator of capital spending, which ultimately fuels higher productivity and higher incomes. It has surged in the first half of the year, per Federal Reserve industrial production data. These are the goods companies buy in order to increase their productive capacity — a bet on future growth. It includes everything from tractor-trailers to computer servers to industrial machinery. Axios has learned that Treasury officials will soon begin highlighting this data as a key economic achievement of the administration. What they're saying: "Business equipment spending leads to capital deepening," Treasury Department counselor Joe Lavorgna tells Axios. "You give workers more capital, and they can produce more with that capital." Lavorgna said that in his former role as a private-sector forecaster, he found that the business equipment data was a strong indicator of underlying capital spending trends. By the numbers: Production of business equipment in the second quarter averaged 7.9% higher than in the final three months of last year, which works out to a 16.5% annual rate. That was the highest two-quarter rise since 1997, other than in the immediate pandemic bounce-back in 2020. Zoom out: Lavorgna argues that this reflects businesses' enthusiasm about more favorable tax treatment for investment spending under the administration's signature tax legislation that passed earlier this month. "If you're confident that bill is going to get done at some point during the year, you started your capex early, and that's exactly what's happened." The passage of the "One Big Beautiful Bill," he said, "is likely to extend what we think will be a boom that will only be further reinforced by all the good news on AI" and its implications for worker productivity. The bottom line: Trump administration officials view increasing business capital investment as the linchpin of their economic agenda, including ultimately driving gains in blue-collar wages.
Yahoo
26-06-2025
- Business
- Yahoo
White House pushes back on 'remarkably low' GDP forecasts for Trump-GOP tax bill
The Trump administration is pushing back on projections for the so-called "One Big, Beautiful Bill," arguing the scoring understates the economic growth the bill would fuel and, as a result, projects higher budget deficits. The nonpartisan Congressional Budget Office (CBO), which is responsible for analyzing the cost of legislation moving through Congress, estimated that the Republican reconciliation package of tax cuts and spending reforms would increase budget deficits by about $2.4 trillion over a decade on a static basis. CBO's dynamic score, which factors in macroeconomic effects, projects higher revenues from additional economic activity totaling about $124 billion. However, it also factors in higher interest costs, resulting in deficits that are $356 billion wider over a decade and bringing the additional deficits to nearly $2.8 trillion in the next 10 years. "The fundamental issue that we have is the overly pessimistic forecast that the CBO has for GDP growth. They're assuming over the next 10 years the economy averages just 1.8% growth, which is remarkably low," Joseph Lavorgna, counselor to Treasury Secretary Scott Bessent, told FOX Business in an interview. "When you start off with such soft growth, by definition, you are going to get weak revenues, and therefore you will get larger deficits than what will actually come to pass." Deficits From 'Big Beautiful Bill' To Rise Nearly $2.8T Under New Dynamic Estimate: Cbo Lavorgna said that it's "very rare" for the economy to grow at that slow a rate for over a decade, and it last happened during the Obama administration, adding that it "runs counter to what we've seen both in the Trump 1 administration and the second administration, where we've seen productivity trends accelerate." Read On The Fox Business App He explained that he expects those productivity trends to accelerate upon passage of the bill because it would "increase capital deepening, meaning capital investment by companies, higher capital investment lifts productivity, lifts wages, lifts overall GDP." "When you assume very tepid growth, by definition, you're going to see very tepid revenues — they're interconnected," Lavorgna said. Over 300 Economists Urge Trump, Gop Leaders To Extend Tax Cuts Before Massive Tax Hike Hits Americans "The 'One Big Beautiful Bill' will increase the economy's speed limit by providing additional plant and equipment that will be used by companies that will employ workers to produce the things that both businesses and U.S. consumers want," he explained. "More goods, more services at lower prices, which was the case back under the first Trump administration — we had record gains in real median household income in 2018 and 2019." CBO's analysis projected that real gross domestic product (GDP) would be 0.4% higher at the end of 2034 than compared with the current law baseline. Other analyses have yielded similar figures, including those by the Penn Wharton Budget Model, which also estimated a 0.4% GDP boost, and the Joint Committee on Taxation. Larger Tax-cut Proposal Not Enough To Offset Drag On Growth From Tariffs: Goldman Sachs The Trump administration disagrees, arguing that the boost to economic growth will be larger. The White House's Council of Economic Advisors on Wednesday released an analysis which found that GDP would be 2.4% to 2.7% higher after a decade under the legislation. "Passage of this bill that codifies and makes permanent a lot of the positive, pro-growth pieces in what was known as TCJA will just solidify these trends in addition to some other benefits, such as expensing that goes back to the beginning of the year and also, of course, what you have on factories," Lavorgna said. "All those things will increase the economy's ability to grow, and grow without generating inflation," he article source: White House pushes back on 'remarkably low' GDP forecasts for Trump-GOP tax bill 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
