Trump Loses Patience With SALT Demands
On the early edition of Balance of Power, Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz discuss President Donald Trump's meeting with House Republicans Tuesday morning as tax legislation has hit a snag on Capitol Hill. On today's show, Republican Congressman Bryan Steil of Wisconsin, Stonecourt Capital Partner Rick Davis, Center for the Study of the Presidency & Congress Senior Democracy Fellow Jeanne Sheehan Zaino, Bloomberg's Ed Ludlow and Jackie Davalos. (Source: Bloomberg)
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Inflation data threatened by government hiring freeze as tariffs loom
WASHINGTON -- The Labor Department has cut back on the inflation data it collects because of the Trump administration's government hiring freeze, raising concerns among economists about the quality of the inflation figures just as they are being closely watched for the impact of tariffs. The department's Bureau of Labor Statistics, which produces the monthly consumer price index, the most closely watched inflation measure, said Wednesday that it is 'reducing sample in areas across the country' and stopped collecting price data entirely in April in Lincoln, Nebraska, and Provo, Utah. It also said it has stopped collecting data this month in Buffalo, New York. In an email that the BLS sent to economists, viewed by The Associated Press, the agency said that it 'temporarily reduced the number of outlets and quotes it attempted to collect due to a staffing shortage' in April. The reduced data collection 'will be kept in place until the hiring freeze is lifted.' President Donald Trump froze federal hiring on his first day in office and extended the freeze in April until late July, suggesting future inflation reports will also involve less data collection. The cutbacks have intensified worries among economists that government spending cuts could degrade the federal government's ability to compile key economic data on employment, prices, and the broader economy. The BLS also said last month that it will no longer collect wholesale prices in about 350 categories for its Producer Price Index, a measure of price changes before they reach the consumer. The cutbacks are also occurring at a time of heightened uncertainty about the economy and the impact of Trump's sweeping tariffs on hiring, growth and inflation. 'The PPI is cutting hundreds of indexes from production, and the CPI is now being constructed with less data,' Omair Sharif, chief economist at the consulting firm Inflation Insights, said in an email. 'That alone is worrying given that we're heading into the teeth of the tariff impact on prices.' Earlier this year, the Trump administration disbanded several advisory committees that worked with BLS and other statistical agencies on fine-tuning its data-gathering. The BLS said that the cutbacks 'have minimal impact' on the overall inflation data, but 'they may increase the volatility' of the reported prices of specific items. Alan Detmeister, an economist at UBS, an investment bank, said the cutbacks likely had little impact on April's inflation figures. But "if these types of cuts continue, they will degrade the reliability and efficacy of these statistical agencies,' he said.
Yahoo
24 minutes ago
- Yahoo
US economic activity declines as tariffs pressure prices, Fed says
By Ann Saphir (Reuters) -U.S. economic activity has declined and higher tariff rates have put upward pressure on costs and prices in the weeks since Federal Reserve policymakers last met to set interest rates, the U.S. central bank said on Wednesday in its latest snapshot of the nation's economy. "On balance, the outlook remains slightly pessimistic and uncertain, unchanged relative to the previous report," according to the document, known as the "Beige Book" and which is based on surveys, interviews and observations collected from the commercial and community contacts of each of the Fed's 12 regional banks through May 23. "There were widespread reports of contacts expecting costs and prices to rise at a faster rate going forward." The Fed has kept its policy rate in the current 4.25%-4.50% range since December and is widely expected to leave it there for another few months while its policymakers gauge the impact of U.S. President Donald Trump's trade and other policies on inflation and the labor market. Analysts and Fed policymakers alike say they anticipate both the inflation and the labor market data to deteriorate, and the Beige Book suggests it is already happening, if still unevenly. In January, all 12 Fed districts reported economic growth; the latest report showed just three did, while half reported economic declines. Contacts generally expected so-far moderate price increases to accelerate, with a few describing the expected cost increases as "strong, significant, or substantial." "A number of businesses reported they were no longer stocking goods whose higher prices were becoming infeasible," the New York Fed reported, adding that one florist said it was "adjusting flower varieties based on rapidly changing costs by source country." The New York Fed was one of the regions where economic activity declined modestly. Tariffs remained a rising concern, along with uncertainty, impacting in particular prices but also expectations for growth. "In some cases, firms explicitly included a separate tariff line for items or contingencies in their price quotes and contracts," said the San Francisco Fed, where economic activity was reported to have slowed. "One contact observed that price increases that had been implemented in anticipation of certain tariffs were not rolled back once those tariffs were removed." The Cleveland Fed reported consumer spending had flattened out, with contacts saying it was hard to forecast demand because of trade policy uncertainty. "Many auto dealers reported an increase in purchases ahead of planned tariffs, and one dealership expected tariff-related sticker shock to hit customer demand starting in early June," the Cleveland Fed wrote. "Retailers reported a general pullback in consumer discretionary spending, although one retailer benefited from customers who traded down from larger discretionary purchases to more modest ones." To the Boston Fed, the outlook was characterized "by a mix of cautious optimism and blunt pessimism," with optimists focused on "the possibility that resolution of uncertainty could unlock economic activity moving forward; the more pessimistic contacts, in contrast, emphasized the potential negative impacts on demand from tariffs and other federal policies." Meanwhile most districts reported employment as "flat," but impacts appeared to vary by industry, and location. As Richmond Fed reported, "a Maryland construction company planned on increasing employment due to available work and a fast-casual restaurant decided to move ahead with adding locations, thus increasing employment. Conversely, a different fast-casual restaurant located in the DC-region paused all hiring due to local economic uncertainty." NATIONAL DATA The Beige Book offers a counterpoint to the national hard economic data, which Fed policymakers say show a solid labor market and continued improvement in inflation. The Personal Consumption Expenditures Price Index rose just 2.1% in April from a year earlier, the lowest reading in four years and just a hair above the Fed's 2% inflation target. Economists expect data due on Friday to show U.S. employers added 130,000 jobs last month, down from 177,000 in April but still above the 100,000 or so thought to be adequate for a healthy labor market. But Fed officials say they are putting a premium on more timely data, including the day-to-day experiences of businesses and households like those captured in the Beige Book. Other survey-based data show that deterioration as well, including an Institute for Supply Management report earlier on Wednesday that showed the service sector contracted in May for the first time in a year, and businesses paid more for inputs. The specter of slowing growth and accelerating inflation poses a particular dilemma for the Fed, which can only fight one of those problems at a time. 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
Politico
24 minutes ago
- Politico
DOJ sues Texas over giving undocumented residents in-state tuition
The Trump administration is suing to overturn Texas law that allows residents without legal status to pay in-state tuition rates at public universities. The Department of Justice filed the complaint Wednesday in the U.S. District Court for the Northern District of Texas. It's the latest move in President Donald Trump's bids to reshape both higher education and immigration in advancement of an aggressive 'America First' agenda. 'Under federal law, schools cannot provide benefits to illegal aliens that they do not provide to U.S. citizens,' Attorney General Pam Bondi said in a statement. 'The Justice Department will relentlessly fight to vindicate federal law and ensure that U.S. citizens are not treated like second-class citizens anywhere in the country.' Former Gov. Rick Perry, a Republican who served as Trump's energy secretary during the president's first term, made Texas the first state in the nation to grant in-state tuition eligibility for certain undocumented students when he signed the Texas Dream Act in 2001. More than 20 states followed suit, according to the Higher Ed Immigration Portal. The Texas law has survived multiple attempts to repeal it in the decades since. 'In direct conflict with federal law, Texas law specifically allows an alien who is not lawfully present in the United States to qualify for in-state tuition based on residence within the state, while explicitly denying resident tuition rates to U.S. citizens that do not qualify as Texas residents,' the DOJ wrote in its complaint. Gov. Greg Abbott's office and the Texas Higher Education Coordinating Board did not immediately respond to a request for comment from POLITICO. Some Republicans nationwide have begun to target in-state tuition rates for undocumented students. Florida Republicans earlier this year repealed a measure that granted in-state tuition to undocumented students who attended Florida high schools. This isn't the first time Trump has looked to crack down on non-U.S. citizens in American colleges. Last week, Secretary of State Marco Rubio announced a push to 'aggressively revoke' visas for Chinese international students, specifically for 'those with connections to the Chinese Communist Party or studying in critical fields.' The details behind the measure remain unclear, but Trump's allies spent years preparing the policy. The White House has also sought to cut off Harvard's ability to enroll foreign students, who comprise roughly 27 percent of the university's student body.
