Ireland's Economy Just Shrank for the First Time Since 2023
Gross domestic product shrank 1% in the three months through June, after an increase of 7.4% in the previous period, the statistics agency in Dublin said on Monday.
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Yahoo
4 minutes ago
- Yahoo
Commentary: How markets will punish Trump as he fudges the economic data
President Trump is laying the groundwork for replacing real economic data with his own numbers. It's a terrible idea that will blow up in his face if he tries it — and cause the Trump presidency more damage than any legitimate numbers could. Trump fired the economist in charge of the Bureau of Labor Statistics on Aug. 1 after the latest employment report showed a sharp slowdown in hiring. The problem isn't the data or the economists who produce it. The problem is that, right on schedule, Trump's disruptive policies are messing up the economy. His tariffs are raising costs and jamming up business operations with new inefficiencies. His workplace raids, meant to ensnare unauthorized migrants, are reducing the labor supply and leaving some companies disastrously short of workers. After firing the BLS commissioner, Erika McEntarfer, Trump said in a social media post that she 'rigged' the job numbers to make him look bad. Trump specifically cited revisions in the jobs data for May and June that cut total employment by 258,000. That put average job growth during the last three months at an anemic 35,000 — 80% below the average pace of job growth during Joe Biden's last year as president, an underperformance that Trump must find intolerable. There are legitimate concerns about the quality of the surveys BLS conducts to compute the jobs data. Those are huge surveys relying on accurate and complete responses from thousands of firms and regular people. The methodology is complicated. Trump's own cutbacks to the agency make mistakes more likely. One of the main reasons BLS revises the data in the first place is to provide more accuracy as it refines the results of a given month. The downward revisions for May and June were large, but hardly unprecedented. Trump isn't talking about any of that. The employment numbers aren't rigged, and the few serious economic people in Trump's administration — Treasury Secretary Scott Bessent, White House economist Kevin Hassett — ought to be telling him that. A lot of economic data is unflattering to Trump, however, and there's a good chance it will get worse as tariffs and migration raids further stifle the economy. Trump acts like he knows it, and has been thinking for some time about how to provide alternate data that's more flattering to the Trump economy. For most of his second term, Trump has been raging about Federal Reserve Chair Jerome Powell, demanding that the Fed slash interest rates and musing about firing Powell. Trump has also floated the idea of appointing a 'shadow' Fed chair who would give more upbeat assessments of the economy than the Fed's sober analysis, and perhaps replace Powell when his term expires next Trump's commerce secretary, Howard Lutnick, wants to change the way the government calculates economic growth. In June, the BLS, which also calculates inflation data, said it was reducing the collection of pricing data in some parts of the country. Starting Aug. 14, it will cut the number of wholesale prices it measures. The agency says staffing shortages are the main reason it's dialing back data collection. Trump, of course, has slashed staffing at myriad government agencies as part of the so-called DOGE efficiency commission's work. Trump makes no secret of seeking to exert maximum control over all facets of government, including agencies established to be independent of political manipulation. He could very well co-op economic data by putting loyalists in charge of the relevant agencies and instructing them to make the data friendlier. He clearly wants a Federal Reserve that will juice the economy on his command, and if he appoints the right people for the rest of his presidential term, he might get that too. If any of that happens, it will backfire, maybe spectacularly. The simple reality is that nobody, not even the president, can fool markets, at least not for very long. Official government data is important, but businesses, investors, and consumers rely on thousands of data points that tell them almost everything they need to know about how the economy's doing. Presidents have tried many times to generate a counternarrative meant to persuade voters they're better off than they think they are. It never works. Ordinary workers know how far their paycheck stretches and whether they're getting ahead or falling behind. Most can tell you that without knowing whether the inflation or unemployment rate is going up or down. Businesses know what's happening with their order book and cash flow, and spend more or less accordingly. Investors read pricing signals the government can't control and buy, sell, or hedge based on what they see. The bond market is the ultimate arbiter of economic truth, and right now it's expressing concerns about the Trump economy and Trump's own policies. Joe Brusuelas, chief economist at RSM, points out there's a 'risk' or 'fear' premium in markets right now that's pushing long-term interest rates about 0.65 percentage points higher than they'd otherwise be. That interest rate premium is the extra amount investors demand in order to lock up their money in longer-term bonds. It compensates them for what they think is the risk of higher inflation in the future, along with uncertainty over other factors that could affect the value of their investments. The current term premium is not historically high. But it's higher than it has been for most of the last 15 years. And not all of it involves Trump's policies. Last fall, for instance, long-term rates rose by about a full point while the Fed was cutting short-term rates by a full point. That was a very unusual move, suggesting investors foresaw higher inflation over a five- to 10-year time frame and demanded higher rates to buy bonds maturing during that time. Still, Trump has inherited a dyspeptic bond market, and his tariffs clearly contribute to inflation expectations because they're a tax on imports that literally raises prices paid by businesses and consumers. Another problem is the massive amount of US government borrowing, which may finally be approaching unsustainable levels. If or when the day arrives when there aren't enough buyers for Treasury securities, the only outcome can be higher rates for all bonds to entice buyers. And higher long-term interest rates raise costs for every business or consumer borrowing money. The weird pricing action from last fall shows that if Trump did manage to force the Fed to slash short-term rates, long-term rates might actually rise, because investors would anticipate higher inflation due to looser monetary policy. Trump doesn't care about short-term rates, which only apply to banks making overnight loans. What he really wants is lower long-term rates, so that businesses and consumers borrow and spend more, stoking growth. Trying to force that to happen would probably have the opposite effect. The same thing would happen if Trump tried to fool the world by publishing bogus data showing the economy doing better than it really is. Every serious investor would know it's a sham. Uncertainty would worsen as opacity on some facets of the economy replaced transparency. That would cause upward pressure on the interest rate risk premium, pushing rates higher. Brusuelas's data shows a risk premium of more than 2 percentage points during some periods during the last 25 years. If there were such a premium today, the typical mortgage rate would be more than 8%, instead of 6.7%. In 2008, during the financial crisis, the term premium approached 4%, which would push interest rates today above 10%. That's the range, or trouble, Trump could cause in bond markets if he tries to manipulate the economy and fails. Would it cause a recession? Nobody knows, but that may be the wrong question. Americans are in a foul mood largely because they think management of the economy stinks and they feel prosperity slipping away. When Joe Biden was president, he repeatedly touted record job growth and other things going right, convincing approximately nobody that they were better off than their personal finances led them to believe. Americans want to feel like they're getting ahead at home and at work. Legitimate data won't convince them if they don't see it happening in their own lives, and bogus data won't do any better. Consumer attitudes have been at recessionary levels for much of the last five years, and if Trump starts producing doctored data, it may depress people even more. Truth has value, even to Trump. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices. 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
Wall Street Journal
6 minutes ago
- Wall Street Journal
Dow Bounces Back From Last Week's Slump
Stocks rallied Monday, with last week's worries about the economy giving way to broad dip-buying and rate-cut optimism. All three major U.S. indexes rose more than 1%, with each notching its largest daily percentage gain since May. The rally was broad-based, encompassing everything from utilities to meme stocks.
Forbes
35 minutes ago
- Forbes
Tariffs, Tax Cuts, And Tips: A Public Opinion Update
Polls these days seem to be generating more confusion than clarity. How Donald Trump will fare requires looking at longer-term polling trends. Tariffs: When Trump dropped the hammer on tariffs last week, only 23% of voters had heard 'a lot' about the deadline in a new Morning Consult poll. In Gallup's latest from its long trend on attitudes toward trade, far more people said that trade is an opportunity for growth (81%) than a threat to the economy (14%). That's an abstraction because as Gallup and other pollsters know, Americans believe many nations, especially China, haven't played by the rules. Americans felt Japan wasn't playing fairly in the 1970s, when sociologist Ezra Vogel's best-seller proclaimed 'Japan as #1: Lessons for America.' What Americans care about now is not free trade per se, but what tariffs will do to their bottom line. The uncertainty surrounding them doesn't help. In the new Economist/YouGov survey, 71%, including 55% of Republicans, said Donald Trump's tariffs would cause prices to increase. A CBS/You Gov survey found that 71% felt the president was not focusing enough on lowering prices, while 61% in another question said that he was focusing too much on placing tariffs on goods from other countries. In the new Fox News poll, only 36% approved of the job he was doing on tariffs. Tariffs are a high-wire act for Trump, and he's losing public support on the issue. Tax Cuts: In the Atlantic, David Graham suggests that 'If tax cuts are no longer political winners, that's a major shift in American politics.' Tax cuts have not been public opinion winners for a very long time. Whether cuts are proposed by Republicans or Democrats, Americans just don't believe they will see a tax cut. In five Gallup polls taken between June 1985 and September 1986, more people believed their taxes would go up rather than go down or stay the same under Reagan's proposed tax overhaul. When George HW Bush said 'Read my lips. No new taxes' in August 1998, people didn't believe him— seven in ten told NBC News/Wall Street Journal interviewers he might accept new taxes. Only two in ten believed he would not. Barack Obama fared better in early polls about whether he could keep his promise that 95% of Americans would not see their taxes increase 'by a dime' under his plans. Yet, by August 2009, when Fox News asked registered voters whether he was going to be able to keep the promise, 69% believed he could not. Since 1977, a majority in Gallup's polling have said that the taxes they pay in the following year will be higher. Americans may be thinking about their total federal, state, and local tax burden when they answer the question. Still, there is a long-standing skepticism of politicians' promises in general, and tax cut promises seem especially untrustworthy. NBC News and the Wall Street Journal started tracking attitudes about which party was better on the taxes in 1993, and they asked the question 35 times through 2018. Republicans had the edge in 13 questions asked between 1993 and 2004. As attitudes soured on the Bush presidency, Democrats took the lead in five questions asked between 2005 and 2008. Republicans regained a diminished edge through 2018. In a 2022 question asked by CNBC, Republicans still had a lead. Republicans' advantage is on holding the line on taxes, not cutting them. Neither party has a clear advantage on dealing with Big Beautiful Bill Act is such a hodgepodge that Trump may not suffer much from its overall unpopularity. Tips: Americans supported the provision in Trump's megabill to cut taxes on tips. Recent polls show no changes in Americans' tipping plans as a result. Ipsos found that 58% --up barely from 55% two years ago--say they always or almost always tip workers for services. Forty-two percent responded that they make a choice to tip workers based on the quality of the service. Twenty percent in another question said they tipped more than they should, while 72% said they tip the right amount, and 7% said they tip less than they should. Bankrate also recently released a survey showing that 38% are annoyed by pre-entered tip screens at coffee shops, food trucks, etc. In several new surveys, Republicans have the advantage as the party of change. That's important, but last week's GDP report, weak inflation numbers, and a disappointing jobs report suggest the President is facing significant headwinds.
