Inflation keeps falling despite tariff clamor
The personal consumption expenditures (PCE) price index fell to a 2.1-percent annual increase in April, down from 2.3 percent in March and 2.6 percent in April, the Commerce Department reported Friday.
Removing the more volatile categories of food and energy, PCE prices fell to a 2.5-percent increase.
'The impact of tariffs is once again missing from the inflation report,' Scott Helfstein, head of investment strategy at financial company Global X, said in a commentary.
'Each month we keep trying to assess whether tariffs are going to drive inflation higher, but the pauses keep pushing the prospect of higher prices further out,' he wrote.
White House trade policy went through another major turnaround this week.
Trump's wide-ranging emergency tariff powers, encompassing his national security tariffs and novel 'reciprocal' tariffs, were struck down by a court on Wednesday before immediately being reinstated by a higher court on Thursday.
Cooling PCE inflation follows a similar pattern in the consumer price index (CPI), another pricing benchmark.
After ticking up through the fall, the CPI has fallen throughout the first quarter of this year, dropping down to a 2.3-percent annual increase from 3 percent in January.
U.S. consumers and businesses are showing themselves to be highly attuned to all the policy changes, which are coming fast and furious from the White House.
After Trump's trade war tanked consumer and business sentiment earlier this year, importers executed a massive pull-forward in orders, leading to a 0.3-percent contraction in first-quarter gross domestic product (GDP).
Consumers followed suit, increasing spending on automobiles by a whopping 57 percent in March ahead of expected tariffs.
Now, just as businesses are holding off on making investments and capital expenditures, consumers are holding off on making purchases amid continued policy fluctuations.
The April PCE report showed spending increasing by just 0.2 percent last month while the personal saving rate increased to 4.9 from 4.3 percent in March.
'There is clear evidence that consumers are battening down the hatches, with data showing the highest savings rate since May 2024. However, robust disposable income growth bodes well for future spending,' Olu Sonola, head of U.S. economic research at Fitch Ratings, commented.
Sustained hesitance from consumers in response to policy ambiguity could work against the many inflationary prognostications now swirling about the economy, driving down price pressures even as tariffs threaten to raise them.
The minutes of the latest Federal Reserve meeting painted a stagflationary picture of the economy, with bankers voicing concerns about higher prices, lower output levels, and increased unemployment.
'Tariffs were expected to boost inflation markedly this year,' the minutes say – an increase that has yet to materialize.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hill
23 minutes ago
- The Hill
AT&T reached a $177M settlement over data breaches: Will you get a payment?
(NEXSTAR) — Earlier this year, AT&T agreed to a $177 million settlement after a pair of massive data breaches had targeted customers. If you were among those impacted, we now know how you can file a claim. In March of last year, AT&T confirmed that a dataset found on the 'dark web' contained personal information for about 7.6 million current AT&T account holders and 65.4 million former account holders. That breach began in 2019, CNET reported. Then, in July, the company said the data of nearly all customers was downloaded to a third-party platform in a 2022 security breach. Two lawsuits were brought against AT&T. According to court documents, a federal judge in Texas has given preliminary approval for two settlement funds: one for $149 million, the other $28 million. Trump admin may reclassify marijuana: Would that make it legal in the US? 'While we deny the allegations in these lawsuits that we were responsible for these criminal acts, we have agreed to this settlement to avoid the expense and uncertainty of protracted litigation,' AT&T told Nexstar via email. 'We remain committed to protecting our customers' data and ensuring their continued trust in us.' A recently established settlement site has offered new details about who qualifies and how you'll get your payment. Do I qualify for the AT&T settlement? This varies based on the settlement class, according to the case website. Included in the first settlement class related to the March 2024 data breach are 'all living persons in the United States whose data elements' — names, addresses, telephone numbers, email addresses, dates of birth, account passcodes, billing account numbers, and Social Security numbers — were in the breach. 'Particularly unfair': AriZona founder considers raising price of iconic 99-cent iced tea In the second settlement class are AT&T account owners and line or end users whose data elements were involved in the 2022 breach. In this case, these data elements include telephone numbers of current and former customers, and 'the telephone numbers with which those customers interacted, counts of those interactions, aggregate call durations for a day or month, and for a small subset of individuals, one or more cell site identification numbers associated with the interactions.' If you're unsure whether you fall into either or both categories, try checking your email. Kroll Settlement Administration, the settlement administrator, said it is sending email notices to qualifying customers from the address attsettlement@ Be sure to check your junk folder. How do I make a claim? You'll need to submit a claim online by November 18, or by mail that is postmarked by the same date. Online, you'll be asked to input your class member ID from the emailed notice, as well as your email, AT&T account number, or your full name. Then you'll be guided through the form. Farmers' Almanac predicts 'wild weather' in winter outlook. Is it accurate, though? While you, as a current or former customer, may be included in the settlements, you'll also need to prove that you suffered damages because of the breaches. How much will I get? Citing court documents, USA Today and CNET report that the highest payments for those impacted by the first breach are $5,000. For the second breach, the top payment is $2,500. Remaining funds would then be distributed to others who were impacted. Qualifying for those large payments will depend on the impact you experienced from the breaches. According to the settlement site, if you experienced losses in 2019 or later because of the first data breach, you'll need to provide supporting documentation that shows 'the losses are fairly traceable' to the incident to receive up to $5,000 in a 'loss cash payment.' 'Tariff rebates' proposed: How would they work? There are alternative options for the first breach. If your Social Security number was included in the breach, you can make a claim for a Tier 1 payment. If any of your data elements were included, but not your Social Security number, you can make a claim for a Tier 2 payment. Tier 1 cash payments will be five times the amount of Tier 2 payments, according to the administrators. To receive the top payment of $2,500 in the second breach, you would again have to prove that any losses you experienced on or after April 14, 2024, are 'fairly traceable' to the 2022 incident. If you were an AT&T account owner at the time, you can also submit claims on behalf of other users on your plan. Without documentation, you can apply for a Tier 3 payment. The payout will depend on the funds remaining after other costs and service awards have been paid, and the number of valid claims submitted. Trump promised lower grocery prices 'on Day One.' Here's what happened If you were impacted by both breaches, you may qualify for payments in both settlements. However, if you're applying for the largest payouts, you'll need documentation unique to each incident, administrators explain. When will payments be made? The deadline to opt out or object to the settlements, according to court documents, will be October 17, 2025. The deadline to file a claim is set for November 18, 2025. A final approval hearing in the case has been set for December 3, 2025. It will still take some time after that date for settlement payments to be disbursed, but a spokesperson for AT&T told Nexstar that payments are expected to be issued early next year.
Fast Company
23 minutes ago
- Fast Company
Why Nvidia and AMD's China pay-to-play deal with Trump could backfire
Welcome to AI Decoded, Fast Company 's weekly newsletter that breaks down the most important news in the world of AI. You can sign up to receive this newsletter every week via email here. Why Nvidia's and AMD's China deal with Trump could backfire The companies making the most money from the AI boom are the ones selling the processors, such as Nvidia and AMD. On Monday those two chip giants cut a deal with the Trump administration that will allow them to sell their products into the China market. For Nvidia—the dominant provider of AI chips powering the generative AI boom—the agreement means that it can once again sell its H20 chip to Chinese developers. It's the latest chapter in a long saga. The Biden administration blocked the sale of Nvidia's most powerful AI chips to China in 2022, but deemed the sale of the less powerful H20 chip an acceptable national security risk. The Trump administration continued blocking sales of Nvidia's H200 and Blackwell chips. But in April, it went a step further by effectively blocking the sale of the H20 chips, too. The new deal shows that Nvidia CEO Jensen Huang's charm offensive in Washington, D.C., convinced the Trump administration that the U.S.'s technological, economic, and national security goals are best served when the world's AI models and apps are built to run on chips made by U.S.-based companies (like Nvidia). Or maybe the Trump Administration just wanted a piece of the action all along. The administration exploited its jurisdiction over export policy to extract a percentage of Nvidia and AMD's Chinese sales payable to the U.S. Treasury. 'I said, 'Listen, I want 20% if I'm going to approve this for you, for the country,'' Trump said during a press conference on August 12, describing his negotiation with Nvidia's Huang. He added that Nvidia negotiated the percentage down to 15%. That cut could amount to as much as $3 billion this year, given the high demand for the H20 chips. Trump's demand for 15% is something new in U.S. trade policy. 'The 15% take indeed sets a precedent,' Columbia Business School professor Lori Yue tells Fast Company. 'It may encourage other companies to adopt similar strategies, viewing profit-sharing as a work-around to government bans.' This could lead to a pay‑to‑play arrangement where only the richest corporations can afford to pay the government for permission to sell into a foreign market. Indeed, Treasury Secretary Scott Bessent hinted during a TV interview that the approach could spread to other products in other industries. The administration's tax will very likely translate into higher chip prices for Nvidia and AMD's Chinese customers, such as Tencent. The Chinese government has recently blasted Nvidia's H20 chips over security concerns, and the new 15% tax is likely to rankle Beijing even more. The Chinese government would like to see AI developers building their models and apps on top of AI chips from China-based Huawei. The Trump aAdministration may be driving some of Nvidia's Chinese customers to do just that, even if it requires rebuilding their infrastructure and tech stacks. Musk's Grok chatbot is making noise but falling behind Grok, xAI's chatbot, has had a rough week. The model that powers the Grok chatbot on X is Grok 4, which was announced July 9. At the time, xAI said the new model was the most intelligent one in the world. And the model did achieve state-of-the-art performance on several benchmark tests, including the superhard Humanity's Last Exam, on which it scored 25.4%, three points higher than Google's Gemini 2.5 Pro. As of August 11, the Grok chatbot is available free to all X users, even those on the free tier. In one sense, it marked an immediate improvement. The social platform's permissive environment has made it a clearinghouse for all kinds of misinformation and unsupported claims. Now far more people are using Grok to quickly fact-check those statements. But on August 7 OpenAI released its new GPT-5 model, which outperforms the Grok 4 models on many independent benchmarks. GPT‑5 shows state-of-the-art reasoning, math and coding skills, visual understanding, creative writing, and health-related question performance. However, GPT‑5 scored poorly on SimpleBench, ranking 5th behind Grok 4 and others in humanlike reasoning and social intelligence. While the benchmark results were circulating—and a GPT-5 backlash was growing—xAI CEO Elon Musk threatened to sue Apple for giving OpenAI's ChatGPT app the top ranking among free apps in the App Store (the Grok app ranks fifth). Must presented no evidence, appearing to simply be lashing out. And to make matters worse, Grok's problems with inappropriate content resurfaced this week. After being taken offline for spewing antisemitic rhetoric in July, the chatbot was again briefly taken offline Monday—this time for reasons not divulged by X. The chatbot had an opinion, however, telling one user that it had been taken offline after angrily stating that the U.S. and Israel's war on Gaza was a 'genocide.' One user demonstrated that after Grok had been turned on again, it no longer stated that Gaza should be classified as a genocide. During the 2024 presidential campaign, Donald Trump won the support of some tech billionaires, such as Marc Andreessen and Elon Musk, by promising to use a light-touch approach to regulating tech companies, including AI companies. Now Public Citizen is out with a report detailing the extent to which the administration has dialed back oversight and enforcement actions on the tech industry. In just six months with Trump in the Oval Office, the U.S. government has withdrawn or halted 47 of 143 federal enforcement actions against tech companies, the report states. At the start of Trump's second term, 104 technology companies faced 143 federal investigations and enforcement actions. The administration has withdrawn 38 actions and halted 9 others against 45 companies. Beneficiaries include eBay, Meta, Microsoft, PayPal, SpaceX, and Tesla. The report suggests that political spending generated returns through dropped prosecutions and policy changes. Tech corporations, executives, and investors spent $1.2 billion during the 2024 election cycle, including $863 million in donations to super PACs, $222 million in payments to Trump businesses, $76 million in lobbying efforts, and $25 million in inauguration donations, Public Citizen reports.
Atlantic
24 minutes ago
- Atlantic
The Damage to Economic Data May Already Be Done
If you have been closely following the ongoing Bureau of Labor Statistics story—in which Donald Trump fired then-Commissioner Erika McEntarfer after being displeased by the bureau's July jobs report and selected the Heritage Foundation economist E. J. Antoni to succeed her—you will have heard an unusual consensus about the airtight political independence of the agency and the people who work there. Among BLS employees, including former Commissioner William Beach, whom Trump appointed in his first term, a fierce loyalty to the data is bone deep. Antoni does not appear to share that spirit of independence, nor does he seem to have a great deal of talent for economics or statistics, according to economists from across the political spectrum. Even so, his power to avoid future reports that embarrass Trump appears to be limited. In an interview recorded on August 4, before his nomination, Antoni proposed eliminating the monthly release of employment data, but the administration has already insisted that that won't happen. BLS data may not be completely tamper-proof, but they're pretty close. The sharpest economic minds in this country, both inside and outside the bureau, pay meticulous attention to the deepest layers of the data, many strata below the headline-unemployment rate and change-in-payroll employment. Deceiving them all would be very hard to do. Unfortunately, that might not matter. Antoni doesn't have to manipulate any data to undermine the reliability of the government's economic statistics. That damage might already have been done. I was a career press official at the Department of Labor who prepared a series of labor secretaries for their TV appearances early on the first Friday morning of every month. The release of the jobs report—'Jobs Day'—is a marquee event in this little corner of the federal government, when the press and the financial world's attention is fixed on the plaza of the Frances Perkins Building, in Washington. I lasted only one Jobs Day into the tenure of Trump's labor secretary, Lori Chavez-DeRemer, before taking DOGE's buyout deal. I decided to leave the government in large part out of fear of precisely the kind of demands for oaths of political loyalty that were being threatened then and are now being implicitly exacted on every career civil servant at the BLS. Brian Klaas: Will Trump get his Potemkin statistics? Most labor secretaries, understanding the power of jobs data to create or destroy value in the financial markets, have taken a sober and restrained approach to these press appearances. Then there's Chavez-DeRemer. One of her prime talking points has been that 'native-born workers have accounted for all job gains since Inauguration Day.' Every single one. Not a single Russian surgeon or Canadian blackjack dealer got a job after January 20 of this year. In fact, the BLS makes no such assertion. The claim is absurd on its face—the kind of political catnip that a Cabinet secretary in the Trump administration is expected to put forward without shame, as a kind of homage to the boss. The existence of an independent BLS commissioner is predicated on the idea that someone needs to talk about the labor market who is never tempted to say such things. It's a public service, primarily for investors. Might a member of the Cabinet say something iffy as a result of her political loyalties? That's not ideal, but here's someone else you can listen to who doesn't have that problem. Until now, this arrangement allowed the president's representative to attempt to convince the public of the effectiveness of his priorities while reinforcing the objective, nonpartisan genesis of the underlying data. If the BLS commissioner is now every bit the political animal that the labor secretary is, then what is the purpose of the BLS commissioner? I am not a statistician; perhaps Antoni can mandate methodological deviations that bias the numbers in Trump's preferred direction. But I don't think he needs to. Confidence in the bureau is already badly weakened. This is about more than just our trust as consumers of the jobs report, because we are also its producers. To create its reports, the BLS needs businesses and citizens to take the time to respond to surveys about changes to their payroll and about who is going to work or looking for a job in their household. Even before Trump won the election last November, the trend in survey responsiveness was declining, posing an existential threat to the robustness of the data. The appointment of a transparent partisan to the head of the BLS is unlikely to improve matters. Why should we take the time to report our economic circumstances to the government if we believe the government isn't interested in the truth? If fewer Americans think that contributing to the creation of these reports is a valuable use of their time, the civil servants at the BLS will struggle to produce reliable numbers, regardless of what policies Antoni puts into place. The damage to our understanding of the economy would be far more consequential than a month of bad jobs numbers.
