Latest news with #USLaborDepartment
Yahoo
18 hours ago
- Business
- Yahoo
US inflation accelerates to 2.7% as Trump's tariffs start to bite
Consumer prices rose 2.7% in June from a year earlier, the US Labor Department said on Tuesday, up from an annual increase of 2.4% in May. On a monthly basis, prices climbed 0.3% from May to June, after rising just 0.1% the previous month. Worsening inflation poses a political challenge for President Donald Trump, who promised during last year's presidential campaign to immediately lower costs. The sharp inflation spike of 2022-2023 was the worst in four decades and soured most Americans on former President Joe Biden's handling of the economy. Higher inflation will also likely heighten the Federal Reserve's reluctance to cut its short-term interest rate, as Trump is loudly demanding. Trump has often insisted in comments on social media that there is "no inflation" and that as a result, the central bank should swiftly reduce its key interest rate from its current level of 4.3% to around 3%. Excluding the volatile food and energy categories, core inflation increased 2.9% in June from a year earlier, up from 2.8% in May. On a monthly basis, it picked up 0.2% from May to June. Economists closely watch core prices because they typically provide a better sense of where inflation is headed. 'While US inflation remains on the benign side of things compared to recent history, today's figures perhaps mask darker signs that may just push the US one step closer to a stagflationary environment," Lindsay James, investment strategist at Quilter, said, adding that inflation as well as core inflation are both "moving away from the Federal Reserve's 2% target". The uptick in inflation was driven by a range of higher prices. The cost of gas rose 1% just from May to June, while grocery prices increased 0.35%. Appliance prices jumped for the third straight month. Trump has imposed sweeping duties of 10% on all imports, plus 50% levies on steel and aluminium, 30% on goods from China, and 25% on imported cars. Just last week, the president threatened to hit the European Union with a new 30% tariff starting 1 August. Related EU trade ministers discuss €72 billion retaliatory tariffs on US goods Which European economy stands to suffer the most from US tariffs? The acceleration in inflation could provide a respite of sorts for Federal Reserve Chair Jerome Powell, who has come under increasingly heavy fire from the White House for not cutting the benchmark interest rate. Powell and other Fed officials have emphasised that they want to see how the economy evolves as the tariffs take effect before cutting their key short-term rate. The Fed chair has said that the duties could both push up prices and slow the economy, a tricky combination for the central bank since higher costs would typically lead the Fed to hike rates while a weaker economy often spurs it to reduce them. Trump on Monday said that Powell has been "terrible" and "doesn't know what the hell he's doing". The president added that the economy was doing well despite Powell's refusal to reduce rates, but it would be "nice" if there were rate cuts, because people would be able to buy housing a lot easier". 'Trump continues to bang the drum for the strength of the US economy and the need for lower interest rates, but that is not what the data is suggesting," said James. "With labour markets remaining pretty solid so far, the objective of price stability would usually warrant either a hold or a hike in interest rates at the Fed." Last week, White House officials also attacked Powell for cost overruns on the years-long renovation of two Fed buildings, which are now slated to cost $2.5 billion (€2.14bn), roughly one-third more than originally budgeted. While Trump legally can't fire Powell just because he disagrees with his interest rate decisions, as the Supreme Court has signalled, he may be able to do so for a clear cause such as misconduct or mismanagement. 'It is now seeming likely that the second half of the year will see further price pressures, coupled with potentially stagnating growth," James said, adding that "so far inflation has been held in check by the high level of inventories built up before Liberation Day". Some companies have said they have already raised prices or plan to do so as a result of the tariffs, including Walmart, the world's largest retailer. Automaker Mitsubishi said last month that it was lifting prices by an average of 2.1% in response to the duties, and Nike has said it would implement "surgical" price hikes to offset tariff costs. But many companies have been able to postpone or avoid price increases, after building up their stockpiles of goods this spring to get ahead of the duties. Other companies may have refrained from lifting prices while they wait to see whether the US is able to reach trade deals with other countries that lower the duties. Sign in to access your portfolio
Euronews
20 hours ago
- Business
- Euronews
US inflation accelerates to 2.7% as Trump's tariffs start to bite
Consumer prices rose 2.7% in June from a year earlier, the US Labor Department said on Tuesday, up from an annual increase of 2.4% in May. On a monthly basis, prices climbed 0.3% from May to June, after rising just 0.1% the previous month. Worsening inflation poses a political challenge for President Donald Trump, who promised during last year's presidential campaign to immediately lower costs. The sharp inflation spike of 2022-2023 was the worst in four decades and soured most Americans on former President Joe Biden's handling of the economy. Higher inflation will also likely heighten the Federal Reserve's reluctance to cut its short-term interest rate, as Trump is loudly demanding. Trump has often insisted in comments on social media that there is "no inflation" and that as a result, the central bank should swiftly reduce its key interest rate from its current level of 4.3% to around 3%. Excluding the volatile food and energy categories, core inflation increased 2.9% in June from a year earlier, up from 2.8% in May. On a monthly basis, it picked up 0.2% from May to June. Economists closely watch core prices because they typically provide a better sense of where inflation is headed. 'While US inflation remains on the benign side of things compared to recent history, today's figures perhaps mask darker signs that may just push the US one step closer to a stagflationary environment," Lindsay James, investment strategist at Quilter, said, adding that inflation as well as core inflation are both "moving away from the Federal Reserve's 2% target". What became more expensive? The uptick in inflation was driven by a range of higher prices. The cost of gas rose 1% just from May to June, while grocery prices increased 0.35%. Appliance prices jumped for the third straight month. Trump has imposed sweeping duties of 10% on all imports, plus 50% levies on steel and aluminium, 30% on goods from China, and 25% on imported cars. Just last week, the president threatened to hit the European Union with a new 30% tariff starting 1 August. The acceleration in inflation could provide a respite of sorts for Federal Reserve Chair Jerome Powell, who has come under increasingly heavy fire from the White House for not cutting the benchmark interest rate. Powell and other Fed officials have emphasised that they want to see how the economy evolves as the tariffs take effect before cutting their key short-term rate. The Fed chair has said that the duties could both push up prices and slow the economy, a tricky combination for the central bank since higher costs would typically lead the Fed to hike rates while a weaker economy often spurs it to reduce them. Trump on Monday said that Powell has been "terrible" and "doesn't know what the hell he's doing". The president added that the economy was doing well despite Powell's refusal to reduce rates, but it would be "nice" if there were rate cuts, because people would be able to buy housing a lot easier". 'Trump continues to bang the drum for the strength of the US economy and the need for lower interest rates, but that is not what the data is suggesting," said James. "With labour markets remaining pretty solid so far, the objective of price stability would usually warrant either a hold or a hike in interest rates at the Fed." Last week, White House officials also attacked Powell for cost overruns on the years-long renovation of two Fed buildings, which are now slated to cost $2.5 billion (€2.14bn), roughly one-third more than originally budgeted. While Trump legally can't fire Powell just because he disagrees with his interest rate decisions, as the Supreme Court has signalled, he may be able to do so for a clear cause such as misconduct or mismanagement. What is ahead for the US inflation? 'It is now seeming likely that the second half of the year will see further price pressures, coupled with potentially stagnating growth," James said, adding that "so far inflation has been held in check by the high level of inventories built up before Liberation Day". Some companies have said they have already raised prices or plan to do so as a result of the tariffs, including Walmart, the world's largest retailer. Automaker Mitsubishi said last month that it was lifting prices by an average of 2.1% in response to the duties, and Nike has said it would implement "surgical" price hikes to offset tariff costs. But many companies have been able to postpone or avoid price increases, after building up their stockpiles of goods this spring to get ahead of the duties. Other companies may have refrained from lifting prices while they wait to see whether the US is able to reach trade deals with other countries that lower the duties.
Boston Globe
2 days ago
- Business
- Boston Globe
US manufacturers are stuck in a rut despite subsidies from Biden and protection from Trump
The US Labor Department reports that American factories shed 7,000 jobs in June for the second month in a row. Manufacturing employment is on track to drop for the third straight year. The Institute for Supply Management, an association of purchasing managers, reported that manufacturing activity in the United States shrank in June for the fourth straight month. In fact, US factories have been in decline for 30 of the 32 months since October 2022, according to ISM. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up 'The past three years have been a real slog for manufacturing,' said Eric Hagopian, CEO of Pilot Precision Products, a maker of industrial cutting tools in South Deerfield, Massachusetts. 'We didn't get destroyed like we did in the recession of 2008. But we've been in this stagnant, sort of stationary environment.' Advertisement Big economic factors contributed to the slowdown: A surge in inflation, arising from the unexpectedly strong economic recovery from COVID-19, raised factory expenses and prompted the Federal Reserve to raise interest rates 11 times in 2022 and 2023. The higher borrowing costs added to the strain. Advertisement Government policy was meant to help. Biden's tax incentives for semiconductor and clean energy production triggered a factory-building boom – investment in manufacturing facilities more than tripled from April 2021 through October 2024 – that seemed to herald a coming surge in factory production and hiring. Eventually anyway. But the factory investment spree has faded as the incoming Trump administration launched trade wars and, working with Congress, ended Biden's subsidies for green energy. Now, predicts Mark Zandi, chief economist at Moody's Analytics, 'manufacturing production will continue to flatline.' 'If production is flat, that suggests manufacturing employment will continue to slide,' Zandi said. 'Manufacturing is likely to suffer a recession in the coming year.' Meanwhile, Trump is attempting to protect US manufacturers — and to coax factories to relocate and produce in America — by imposing tariffs on goods made overseas. He slapped 50 percent taxes on steel and aluminum, 25 percent on autos and auto parts, 10 percent on many other imports. In some ways, Trump's tariffs can give US factories an edge. Chris Zuzick, vice president at Waukesha Metal Products, said the Sussex, Wisconsin-based manufacturer is facing stiff competition for a big contract in Texas. A foreign company offers much lower prices. But 'when you throw the tariff on, it gets us closer,' Zuzick said. 'So that's definitely a situation where it's beneficial.' But American factories import and use foreign products, too – machinery, chemicals, raw materials like steel and aluminum. Taxing those inputs can drive up costs and make U.S producers less competitive in world markets. Consider steel. Trump's tariffs don't just make imported steel more expensive. By putting the foreign competition at a disadvantage, the tariffs allow US steelmakers to raise prices – and they have. US-made steel was priced at $960 per metric ton as of June 23, more than double the world export price of $440 per ton, according to industry monitor SteelBenchmarker. Advertisement In fact, US steel prices are so high that Pilot Precision Products has continued to buy the steel it needs from suppliers in Austria and France — and pay Trump's tariff. Trump has also created considerable uncertainty by repeatedly tweaking and rescheduling his tariffs. Just before new import taxes were set to take effect on dozens of countries on July 9, for example, the president pushed the deadline back to Aug. 1 to allow more time for negotiation with US trading partners. The flipflops have left factories, suppliers and customers bewildered about where things stand. Manufacturers voiced their complaints in the ISM survey: 'Customers do not want to make commitments in the wake of massive tariff uncertainty,' a fabricated metal products company said. 'Tariffs continue to cause confusion and uncertainty for long-term procurement decisions,' added a computer and electronics firm. 'The situation remains too volatile to firmly put such plans into place.' Some may argue that things aren't necessarily bad for US manufacturing; they've just returned to normal after a pandemic-related bust and boom. Factories slashed nearly 1.4 million jobs in March and April 2020 when COVID-19 forced many businesses to shut down and Americans to stay home. Then a funny thing happened: American consumers, cooped up and flush with COVID relief checks from the government, went on a spending spree, snapping up manufactured goods like air fryers, patio furniture and exercise machines. Suddenly, factories were scrambling to keep up. They brought back the workers they laid off – and then some. Factories added 379,000 jobs in 2021 — the most since 1994 — and then tacked on another 357,000 in 2022. Advertisement But in 2023, factory hiring stopped growing and began backtracking as the economy returned to something closer to the pre-pandemic normal. In the end, it was a wash. Factory payrolls last month came to 12.75 million, almost exactly where they stood in February 2020 (12.74 million) just before COVID slammed the economy. 'It's a long, strange trip to get back to where we started,' said Jared Bernstein, chair of Biden's White House Council of Economic Advisers. Zuzick at Waukesha Metal Products said that it will take time to see if Trump's tariffs succeed in bringing factories back to America. 'The fact is that manufacturing doesn't turn on a dime,' he said. 'It takes time to switch gears.' Hagopian at Pilot Precision is hopeful that tax breaks in Trump's One Big Beautiful Bill will help American manufacturing regain momentum. 'There may be light at the end of the tunnel that may not be a locomotive bearing down,' he said. For now, manufacturers are likely to delay big decisions on investing or bringing on new workers until they see where Trump's tariffs settle and what impact they have on the economy, said Ned Hill, professor emeritus in economic development at Ohio State University. 'With all this uncertainty about what the rest of the year is going to look like,' he said, 'there's a hesitancy to hire people just to lay them off in the near future.' 'Everyone,' said Zuzick at Waukesha Metal Products, 'is kind of just waiting for the new normal." Advertisement
Business Recorder
04-07-2025
- Business
- Business Recorder
Dollar advances after US jobs data
NEW YORK: The US dollar rose against major currencies including the yen, euro and Swiss franc on Thursday after data showed that the US economy created more jobs than analysts estimated, signaling the Federal Reserve might take longer to cut interest rates. The dollar strengthened 0.70% to 144.705 versus the Japanese yen and was up 0.40% to 0.79510 against the Swiss franc. The US currency is on track to notch a second consecutive session of gains against both safe-haven currencies. The euro was 0.26% weaker at $1.1769. It is on track for the second straight day of losses. US Labor Department data on Thursday showed that nonfarm payrolls increased by 147,000 jobs in June. Economists polled by Reuters had forecast a rise of 110,000. The report was published a day early because of the July 4 US Independence Day holiday. 'It will be very difficult for the Fed to cut rates in this environment, with the labor market so strong,' said Axel Merk, president and chief investment officer at Merk Hard Currency Fund in California. 'The argument that Jerome Powell has made for the Fed to stay on the sidelines continues to hold.' The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.27% to 97.01, on track for two straight sessions of gains, although it is still near multi-year lows. The rise in the dollar following the data was accompanied by an increase in US Treasury yields. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 9.1 basis points to 3.88%. The yield on benchmark US 10-year notes rose 4.1 basis points to 4.344%. Wall Street stock indexes including Dow Jones Industrial Average, the benchmark S&P 500 and the Nasdaq Composite were all up on the session. Republicans in the US House of Representatives advanced President Donald Trump's massive tax-cut and spending bill toward a final yes-or-no vote early on Thursday. The US has lifted restrictions on exports to China for chip design software developers and ethane producers, a sign of easing trade tensions between the countries. The dollar strengthened 0.06% to 7.164 versus the offshore Chinese yuan. The British pound rose after losing ground in the previous session following a selloff in gilts. British Prime Minister Keir Starmer's office backed finance minister Rachel Reeves, easing concerns over her future. The pound strengthened 0.15% to $1.3656.
Mint
03-07-2025
- Business
- Mint
Wall Street Today: S&P 500, Nasdaq rise as job data exceeds market expectations amid Trump tariff concerns
Wall Street Today: US stocks on the Dow Jones, Nasdaq, and S&P 500 rose on Thursday's stock market session after the US Labor Department data revealed a strong job report for the economy amid the raging concerns over U.S. President Donald Trump's tariff policies. According to an AP report, the US economy added 147,000 jobs in June 2025. The unemployment rate dropped 4.1% compared to its earlier level of 4.2%, showing that the US labor market remains resilient despite the effect of the raging Trump tariffs. At 9:30 a.m. (EDT), The Dow Jones Industrial Average opened 0.18% higher at 44,565.75 points, compared to 44,484.42 points at the previous stock market close. The index is currently trading 0.78% higher at 44,843.24 points as of 10:58 a.m. (EDT). Travelers Cos. Inc., Boeing Co., JPMorgan Chase & Co., Cisco Systems Inc., Microsoft Corp., Salesforce Inc., International Business Machines Corp., Nvidia Corp., American Express Co., UnitedHealth Group Inc., Goldman Sachs Group Inc., Visa Inc., Amazon Inc., Apple Inc., Sherwin-Williams Co., Caterpillar Inc., Honeywell International Inc., Chevron Corp., Walmart Inc., Walt Disney Co., Amgen Inc., Coca-Cola Co., Johnson & Johnson, and Home Depot Inc. were among the other shares which were the top gainers as of the early market session. Verizon Communications Inc., McDonald's Corp., Procter & Gamble Co., Nike Inc., Merck & Co. Inc., and 3M Co. were the top laggards according to Marketwatch data. The S&P 500 index rose 0.31% at the opening bell to 6,246.46 points, compared to 44,484.42 points at the previous US market close. The index is currently trading 0.77% higher at 6,275.62 points as of 11:01 a.m. (EDT), according to the data collected from Marketwatch. The Nasdaq Composite index opened 0.51% higher at 20,497.663 points on Thursday's Wall Street session, compared to 20,393.13 points at the previous market close. Marketwatch data shows that the index is trading 0.96% higher at 20,588.28 points as of 11:04 a.m. (EDT). (This is a developing story. Please check back for updates.) Read all stories by Anubhav Mukherjee Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
