U.S. inflation edges up as Trump renews criticism of Fed chief
The Federal Reserve's preferred inflation gauge rose 2.3 percent in May, but consumer spending pulled back in part due to autos
By Beiyi SEOW
The U.S. Federal Reserve's preferred inflation measure logged a mild uptick Friday while spending weakened, triggering another tirade by President Donald Trump against the central bank chair for not cutting interest rates sooner.
"We have a guy that's just a stubborn mule and a stupid person," Trump told an event at the White House, referring to Fed Chair Jerome Powell. "He's making a mistake."
With Powell's term as Fed chief coming to an end next year, Trump hinted at his choice of successor: "I'm going to put somebody that wants to cut rates."
The president's remarks came after government data showed the personal consumption expenditures (PCE) price index climbing 2.3 percent last month from a year ago in May.
This was in line with analyst expectations and a slight acceleration from April's 2.2 percent increase, but still a relatively mild uptick.
Excluding the volatile food and energy sectors, the PCE price index was up 2.7 percent, rising from April's 2.6 percent uptick, the Commerce Department's report showed.
But consumer spending declined, after Trump's fresh tariffs in April dragged on consumer sentiment. PCE dropped by 0.1 percent from the preceding month, reversing an earlier rise.
While Trump has imposed sweeping tariffs on most U.S. trading partners since returning to the White House in January -- alongside higher rates on imports of steel, aluminum and autos -- these have had a muted effect so far on inflation.
This is in part because he held off or postponed some of his harshest salvos, while businesses are still running through inventory they stockpiled in anticipation of the levies.
But central bank officials have not rushed to slash interest rates, saying they can afford to wait and learn more about the impact of Trump's recent duties. They expect to learn more about the tariffs' effects over the summer.
"The experience of the limited range of tariffs introduced in 2018 suggests that pass-through to consumer prices is intense three-to-six months after their implementation," warned economists Samuel Tombs and Oliver Allen of Pantheon Macroeconomics in a note.
They flagged weakness in consumer spending, in part due to a pullback in autos after buyers rushed to get ahead of levies.
And spending on services was tepid even after excluding volatile components, they said.
"There has also been a clear weakening in discretionary services spending, notably in travel and hospitality," said Michael Pearce, deputy chief US economist at Oxford Economics, in a note.
This reflects "the chilling effect of the plunge in consumer sentiment," he added.
Between April and May, the PCE price index was up 0.1 percent, the Commerce Department report showed.
As a July deadline approaches for higher tariff rates to kick in on dozens of economies, all eyes are also on whether countries can reach lasting trade deals with Washington to ease the effects of tariffs.
For now, despite the slowing in economic growth, Pearce said risks that inflation could increase will keep the Fed on hold with interest rates "until much later in the year."
© 2025 AFP
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Kyodo News
2 hours ago
- Kyodo News
Japan tariff negotiator in Washington holds talks twice with Lutnick
KYODO NEWS - 1 hour ago - 12:39 | All, Japan, World Japan's top tariff negotiator, Ryosei Akazawa, spoke with U.S. Commerce Secretary Howard Lutnick by phone twice on Saturday, an official said, as they try to iron out some of the most difficult issues in pursuit of a deal that will be beneficial to both countries. Akazawa, who has extended his stay in Washington, spoke to Lutnick for about 15 minutes in the morning and about 20 minutes in the evening, the Japanese government said, adding Tokyo will continue to work "strenuously" with Washington toward an agreement. Akazawa's calls with Lutnick came a day after they held a meeting that lasted about an hour, with sharp differences apparently remaining over U.S. President Donald Trump's hefty tariffs on foreign-made cars and auto parts. In the ongoing negotiations, Japan has placed top priority on mitigating the impact of the Trump administration's increase in April of the tariff on imported automobiles to 27.5 percent from 2.5 percent. Trump and his trade team have shown no signs of scrapping or lowering such sector-based tariffs, including on steel and aluminum, that the president has imposed on national security grounds. Akazawa arrived in Washington on Thursday for his seventh round of ministerial meetings on tariffs with U.S. Cabinet members. Akazawa, Japan's minister for economic revitalization, was initially due to leave for Tokyo on Saturday, but he extended his visit to explore a separate meeting with U.S. Treasury Secretary Scott Bessent. The official said it remains unclear how long Akazawa will stay in the U.S. capital. Related coverage: Japan wrestling with U.S. tariff talks as July deadline looms Trump could extend 90-day tariff pause in July, White House says Japan reiterates that higher U.S. auto tariffs are unacceptable
Japan Today
3 hours ago
- Japan Today
Elon Musk renews his criticism of Trump's big bill as Senate Republicans scramble to pass it
FILE - Elon Musk attends a news conference with President Donald Trump in the Oval Office of the White House, May 30, 2025, in Washington. (AP Photo/Evan Vucci, File) By ALI SWENSON Elon Musk on Saturday doubled down on his distaste for President Donald Trump's sprawling tax and spending cuts bill, arguing the legislation that Republican senators are scrambling to pass would kill jobs and bog down burgeoning industries. 'The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country,' Musk wrote on X on Saturday ahead of a procedural Senate vote to open debate on the nearly 1,000-page bill. 'It gives handouts to industries of the past while severely damaging industries of the future.' The Tesla and SpaceX CEO, whose birthday is also Saturday, later posted that the bill would be 'political suicide for the Republican Party.' The criticisms reopen a recent fiery conflict between the former head of the Department of Government Efficiency and the administration he recently left. They also represent yet another headache for Republican Senate leaders who have spent the weekend working overtime to get the legislation through their chamber so it can pass by Trump's Fourth of July deadline. Musk has previously made his opinions about Trump's 'big, beautiful bill' clear. Days after he left the federal government last month with a laudatory celebration in the Oval Office, he blasted the bill as 'pork-filled' and a 'disgusting abomination." 'Shame on those who voted for it: you know you did wrong. You know it,' he wrote on X earlier this month. In another post, the wealthy GOP donor who had recently forecasted that he'd step back from political donations threatened to fire lawmakers who 'betrayed the American people.' When Trump clapped back to say he was disappointed with Musk, back-and-forth fighting erupted and quickly escalated. Musk suggested without evidence that Trump, who spent the first part of the year as one of his closest allies, was mentioned in files related to sex abuser Jeffrey Epstein. Musk ultimately tried to make nice with the administration, saying he regretted some of his posts that 'went too far.' Trump responded in kind in an interview with The New York Post, saying, 'Things like that happen. I don't blame him for anything.' It's unclear how Musk's latest broadsides will influence the fragile peace he and the president had enjoyed in recent weeks. The White House didn't immediately respond to a request for comment. Musk has spent recent weeks focused on his businesses, and his political influence has waned since he left the administration. Still, the wealthy businessman poured hundreds of millions of dollars into Trump's campaign in 2024, demonstrating the impact his money can have if he's passionate enough about an issue or candidate to restart his political spending. Though he was silent on Musk, Trump laid on pressure and lashed out strongly at Republican holdouts in the Senate as lawmakers spent hours taking a procedural vote during a rare Saturday evening session. He accused Sen. Thom Tillis of North Carolina of seeking publicity with his no vote and threatened to campaign against the senator's reelection. The legislation narrowly cleared its test vote in the Senate late Saturday evening, allowing senators to begin debate. © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Yomiuri Shimbun
4 hours ago
- Yomiuri Shimbun
Trump Says He Will Move Aggressively to Undo Nationwide Blocks on His Agenda
An emboldened Trump administration plans to aggressively challenge blocks on the president's top priorities, from immigration to education, following a major Supreme Court ruling that limits the power of federal judges to issue nationwide injunctions. Government attorneys will press judges to pare back the dozens of sweeping rulings thwarting the president's agenda 'as soon as possible,' said a White House official who spoke on the condition of anonymity to describe internal deliberations. Priorities for the administration include injunctions related to the Education Department and the U.S. DOGE Service, as well as an order halting the dismantling of the U.S. Agency for International Development (USAID), the official said, detailing efforts to implement plans President Donald Trump announced Friday. 'Thanks to this decision, we can now promptly file to proceed with numerous policies that have been wrongly enjoined on a nationwide basis,' Trump said at a news conference, during which he thanked by name members of the conservative high court majority he helped build. Trump on Friday cast the narrowing of judicial power as a consequential, needed correction in his battle with a court system that has restrained his authority. Scholars and plaintiffs in the lawsuits over Trump's orders agreed that the high court ruling could profoundly reshape legal battles over executive power that have defined Trump's second term – even as other legal experts said the effects would be more muted. Some predicted it would embolden Trump to push his expansive view of presidential power. 'The Supreme Court has fundamentally reset the relationship between the federal courts and the executive branch,' Notre Dame Law School professor Samuel Bray, who has studied nationwide injunctions, said in a statement. 'Since the Obama administration, almost every major presidential initiative has been frozen by federal district courts issuing 'universal injunctions.'' Nationwide injunctions put a freeze on an action until a court can make a decision on its legality. They have became a go-to tool for critics of presidential actions in recent times, sometimes delaying for years the implementation of an executive order the court ultimately approves. Experts said the Supreme Court's ruling could make it more difficult and cumbersome to challenge executive actions. It could result in courts issuing a patchwork of rulings on presidential orders in different parts of the country. In the short term, the ruling is a setback for liberals who have gone to court to thwart Trump. But the decision could also ultimately constrain conservatives seeking broad rulings to rein in a future Democratic president. Trump undertook a flurry of executive actions in the opening month of his term that ranged from dismantling government agencies to seeking the end of birthright citizenship. There have been more than 300 lawsuits seeking to block his executive actions. Federal district judges have issued roughly 50 rulings to date, temporarily holding up the administration's moves to cut foreign aid, conduct mass layoffs and fire probationary employees, terminate legal representation for young migrants, ban birthright citizenship, and more nationwide. Some of those rulings have been stayed by higher courts. The Supreme Court found Friday that federal district courts must limit their injunctions to the parties bringing the case, which could be individuals, organizations or states. They had previously been able to issue injunctions that applied to people not directly involved in cases. The ruling came as part of a case challenging Trump's ban on birthright citizenship. The court did not rule on the constitutionality of that executive order. The justices left it to lower courts to determine whether a nationwide injunction might be a proper form of relief for states in some cases, like the ban on birthright citizenship, where the harm could be widespread. The court also did not forestall plaintiffs from seeking nationwide relief through class-action lawsuits. Smita Ghosh, a senior appellate counsel with the Constitutional Accountability Center, a progressive public interest law firm, said the ruling could be a blow to plaintiffs seeking to stymie Trump's executive orders. The CAC has filed a friend-of-the-court brief on behalf of plaintiffs challenging the birthright citizenship ban. 'This approach will make it more difficult and more time-consuming to challenge unconstitutional executive practices, limiting courts' abilities to constrain unlawful presidential action at a time when many believe that they need it most,' Ghosh said. Many groups will pivot to filing class-action lawsuits to sidestep the ruling, she predicted, as some plaintiffs in the birthright citizenship lawsuit sought to do Friday. Such lawsuits allow individuals or groups to sue on behalf of a larger class of individuals who have suffered a similar harm from a government policy. It's likely courts will see more and more class- or mass-action lawsuits from cities, counties and states that realize they can no longer rely on litigation brought by others to advocate for their interests, said Jonathan Miller, chief program officer for the Public Rights Project, which is challenging several Trump policies. 'I think this decision will be perceived by this administration as a green light to more aggressively pursue its agenda, be bolder when it comes to compliance with injunction and its willingness to test the limits of the judiciary,' Miller said. Not everyone expected the ruling to have broad impacts. Skye Perryman, president and CEO of Democracy Forward, which has filed numerous challenges against Trump's agenda, called it a 'limited ruling' and said the court left open a number of routes for challenges against executive actions that could result in broad blocks on Trump's policies. Ed Whelan, a conservative attorney, was likewise skeptical. He wrote in a newsletter that 'the ruling is probably going to accomplish much less than many people celebrating it realize,' in part because plaintiffs would instead pursue more class-action lawsuits that would ultimately produce similar results as nationwide injunctions. The administration on Friday trumpeted the decision at the White House as a victory in its broader fight against the judiciary. Officials frequently deride judges who rule against the administration as activists and obstructionists. Dozens of judges appointed by presidents of both parties have temporarily paused many of Trump's efforts, and data shows threats against the judiciary have risen since he took office. 'Americans are getting what they voted for, no longer will we have rogue judges striking down President Trump's policies across the entire nation,' Attorney General Pam Bondi said, standing beside Trump at the news conference. She added, 'These lawless injunctions … turned district courts into the imperial judiciary.' Both Democratic and Republican presidents have complained about the blocks, said Jesse Panuccio, a partner at the Boies Schiller Flexner law firm and a Justice Department official in the first Trump administration. 'I think the ruling is seismic for how the federal district courts have been doing business in the last 20 years or so because the universal injunction has become a fairly standard and – in my view – unlawful remedy in cases,' Panuccio said.
