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Al Jazeera
a day ago
- Business
- Al Jazeera
Republicans say price report is a boon; Democrats say bust. Who's right?
Does the latest United States consumer price index (CPI) report show that Americans are paying more or less for goods? You might be seeing mixed messaging based on the politicians you listen to or what your social media algorithms surface. Some say the numbers show President Donald Trump's success. Others say the opposite. Every month, the federal Bureau of Labour Statistics publishes the consumer price index, which measures price changes for goods and services, including food, apparel, gasoline and housing. The report is used to assess economic stability and inform policy decisions. Republican Senator Rick Scott of Florida celebrated the July report on the day of its release. 'Another month of inflation coming in lighter than expected. That's GREAT NEWS for Florida families, and another reminder to trust in Pres. Trump!' Scott posted on August 12 on X, alongside a short Fox Business clip about energy and gas price decreases. US Representative Kathy Castor, a Democrat from Florida, had a different take. 'Trump is raising your grocery bill to line the wallets of his billionaire friends. Nothing great about this for American families across the country,' Castor wrote in an August 12 X post that included a link to a CBS News story that said in its headline that the index rose in July by 2.7 percent on an annual basis. Economists told PolitiFact this muddled framing isn't new, and people from different political tribes use varying metrics to reinforce their views. They said the full picture on the economy's health and trajectory needs more time to come into focus. Overall, the report's numbers are 'another dose of modest bad news,' said Douglas Holtz-Eakin, president of the centre-right policy institute American Action Forum. 'It's not dramatic yet, it's not a crisis, but it's not positive.' Trump's tariffs, widely watched to see how they affect consumer prices and inflation, are still new and some just went into effect in August. 'Since at least 2021, the CPI reports have become a partisan battleground with both sides cherry picking the data to best support their argument,' said Jason Furman, an economist and professor at Harvard University's John F Kennedy School of Government who previously served as an economic adviser to former President Barack Obama. 'And there is so much data in the CPI report that there is always some way to slice and dice it to support just about any view.' The CPI report and its meaning For July, CPI increased 0.2 percent compared with the previous month and 2.7 percent from a year ago. That's slightly cooler than the 2.8 percent rise economists had forecast, thanks to declines in gasoline and energy prices. Gary Burtless, senior fellow at the Brookings Institution, said the 2.7 percent 12-month rise in consumer prices for all items is a 'bit lower than it was at the start of 2025,' to Trump's advantage. But the number is also a bit higher than it was from March to July, he said, an advantage for Trump's critics. A separate measure, core inflation – which excludes food and energy because they are considered volatile measures prone to large, rapid fluctuations – increased 0.3 percent for July and 3.1 percent from a year ago. This is the first time annual core inflation, which officials use to monitor underlying, longer-term inflation trends, has risen above 3 percent in several months. This outpaces Federal Reserve projections before the 2024 election, which projected 2.2 percent median core inflation for 2025. 'Economists tend to focus on the core because it is less erratic than food and energy prices,' said Dean Baker, cofounder of the liberal Center for Economic and Policy Research. 'Food and energy prices are very important, but big changes in either direction tend to be reversed. Therefore, it is often more useful if we are looking for future trends to look at the core index.' Despite the uptick, the report was mild enough for investors, as US stocks closed near a record high on August 12. The stock market appears, for now, to be focusing on the likelihood that the Federal Reserve will cut interest rates in September, given concerns about a cooling labour market. Central bank officials, to Trump's disapproval, have held rates steady in 2025 as they wait to see tariffs' effects on the economy. The July data comes amid a Bureau of Labor Statistics shake-up. After the agency's downward revision of May and June employment data, Trump fired bureau Commissioner Erika McEntarfer, accusing her of political bias. Trump nominated E J Antoni, an economist at the conservative Heritage Foundation who has criticised the bureau, as the agency's new commissioner. The long and winding road of Trump's tariffs As the Trump administration highlights the collection of nearly $130bn from the new tariffs so far, many economists expect that businesses will begin passing on the additional costs to US customers. Goldman Sachs estimated in an analysis shared with Bloomberg that US companies have so far absorbed the bulk of tariff costs – about two-thirds of the levies – while consumers absorbed about 22 percent of the costs through June. But Goldman Sachs said it expects the consumer share of the costs to soar to 67 percent by October if the tariffs follow previous patterns of how import levies affected prices. Trump wrote in an August 12 Truth Social post that Goldman Sachs CEO David Solomon should replace its economist. 'It has been proven, that even at this late stage, Tariffs have not caused Inflation, or any other problems for America, other than massive amounts of CASH pouring into our Treasury's coffers,' Trump wrote. Some US companies have avoided passing along higher prices by stockpiling goods ahead of the tariffs' implementation. Others have absorbed costs to avoid losing customers or are holding off in hopes that courts nix the tariffs. 'That's just businesses making business decisions,' said Holtz-Eakin, from the American Action Forum. 'But there will be a point if the tariffs stay in place at the current levels, where that just won't be feasible any more.' Many studies of past tariffs have found that they harm the economy and raise consumer prices. For now, however, experts agreed that the US economy is in a wait-and-see moment. Burtless, from Brookings, believes that the effects of tariffs on consumer prices are modest so far, and that price increases across different categories of goods and services appear 'inconsistent with the idea that tariffs are the main driver of overall inflation'. 'That may turn out to be the case in the future,' he said, 'but not yet.' Holtz-Eakin also warned about putting too much stock in a single report. 'Never believe one month's data,' he said. 'That's a rule of life if you're doing policy work.'
The National
5 days ago
- Business
- The National
Fed's dilemma grows as key inflation metric heats up
A key US inflation measure increased in July as the costs of President Donald Trump's tariffs continue to be felt in the economy, further underscoring the Federal Reserve 's dilemma at a time of pressure from the White House to cut interest rates. A report from the Bureau of Labour Statistics showed that the consumer price index rose 2.7 per cent last month on an annual basis, less than expected. However, core inflation, which does not include food and energy, rose 3.1 per cent year on year, higher than the 2.9 per cent reading in June and at its fastest annual rate since February. Prices for imported items such as household furnishings, apparel and recreational goods all rose last month, while medical care services and airfare prices were also above recent trends. 'We've definitely seen some heating up driven by tariffs, but it's a very messy picture,' said Michael Pearce, deputy chief US economist at Oxford Economics. Wall Street, however, reacted positively to Tuesday's report which probably was not hot enough to prevent the Fed from resuming rates cuts in September. The S&P 500 and Nasdaq Composite hit intraday highs, while the Dow Jones Industrial Average rose more than 1 per cent. Traders still widely expect the Fed will reduce the federal funds rate – which it has held steady this year – by 25 basis points when it meets next month. Driving expectations of that cut have been concerns about the health of the US labour market. Government data this month showed that the unemployment rate rose to 4.2 per cent in July while the economy added only 73,000 jobs. Sharp downward revisions were also made to previous monthly gains. 'Suddenly, you've got this picture of a labour market which looks like it has suddenly lost a lot of momentum,' Mr Pearce said. Signs of a weakening labour market also come as inflation is not just above the Fed's long-term target, but is trending in the wrong direction. Unlike other central banks, the Federal Reserve has a dual mandate of price stability and maximum employment. A large majority of Fed officials this year have taken a wait-and-see approach towards cutting rates this year as they assess the effects of Mr Trump's tariffs on the economy. Federal Reserve chairman Jerome Powell has warned that the Fed could find itself in a position in which those two goals are in conflict because of the effects of those tariffs. Addressing reporters after holding rates last month, Mr Powell outlined his reason for keeping them elevated, adding that the economy is still in the 'early days' of feeling the tariffs' effects. 'When we have risks to both goals, and one of them is farther away from goal than the other, and that's inflation, that means policy should be tight, because tight policy is what brings inflation down,' he said. But the July jobs report is testing that resolve. A handful of Fed officials – including governors Michelle Bowman and Christopher Waller, two Trump appointments who dissented from last month's decision – have suggested since that rate cuts should come sooner to protect the labour market. Derek Tang, an economist at LHMeyer/Monetary Policy Analytics in Washington, said the jobs report was a wake-up call for people who were counting on the resilience of the US economy, which is now showing signs of stress. 'Of course, that might be affected by immigration but just the fact that demand is cooling really unsettles a lot of people,' he said. 'The second reason why I think the market is talking about September is simply the political environment, or how much longer can the Fed be immune from Trump pressure.' Mr Trump seized on Tuesday's inflation report to continue his pressure campaign against Mr Powell to cut rates and again attacked overrun renovation costs at the Fed's headquarters. Mr Trump claims the costs of the project have swollen to $3 billion, which Mr Powell has said is untrue. 'I am … considering allowing a major lawsuit against Powell to proceed because of the horrible, and grossly incompetent, job he has done in managing the construction of the Fed Buildings,' Mr Trump wrote on the Truth Social media platform. Adding further pressure on Mr Powell will probably be the confirmation of Stephen Miran, a Trump ally and Fed critic, to temporarily fill the seat vacated by former Fed governor Adriana Kugler. Her term is set to expire January 31, 2026. By installing Mr Miran at the Federal Reserve even in a temporary capacity, it would add a third prominent voice to lower interest rates. The rate-setting Federal Open Market Committee consists of Mr Powell, six other members on the board of governors, the New York Fed president and four of the 11 regional presidents who serve on a rotating basis. It is unclear if Mr Miran will be confirmed by the US Senate in time for the Fed's meeting next month. Mr Miran told CNBC on Tuesday that he believes inflation 'has been well behaved, particularly since the President took office'. He also said the central bank's independence is of 'paramount importance' but declined to elaborate further, citing his confirmation process. The Federal Reserve has indicated it expects to cut interest rates by a cumulative 50 basis points this year, according to projections from the Fed's June meeting.
News24
04-08-2025
- Business
- News24
Trump says he'll name new economics data official this week
Donald Trump fired the US labour statistics chief, accusing her of manipulating jobs data to downplay his economic record. He promised to appoint an 'exceptional replacement' within days, calling recent job numbers 'rigged' and 'a scam.' Critics warned the move sets a dangerous precedent, while experts blamed data issues on budget cuts, not manipulation. US President Donald Trump said on Monday that he would pick an 'exceptional replacement' to his labour statistics chief - after ordering her dismissal as a new report showed weakness in the US jobs market. In a post on his Truth Social platform, Trump reiterated - without immediately providing evidence - that an employment report released last Friday 'was rigged.' He alleged that the official had manipulated data to diminish his administration's economic accomplishments. 'We'll be announcing a new (labour) statistician sometime over the next three to four days,' Trump earlier told reporters. He added Monday: 'I will pick an exceptional replacement.' US job growth missed expectations in July, figures from the Bureau of Labour Statistics showed on Friday, and sharp revisions to hiring figures in recent months brought them to the weakest levels since the Covid-19 pandemic. Shortly afterwards, Trump ordered the removal of Erika McEntarfer, the department's commissioner of labour statistics. Trump told reporters Sunday: We had no confidence. I mean, the numbers were ridiculous. Trump added that the same official, just before the 2024 election, 'came out with these phenomenal numbers on (Joe) Biden's economy.' He claimed those job numbers were 'a scam.' The United States added 73 000 jobs last month, while the unemployment rate rose to 4.2%, the Department of Labour reported. Hiring numbers for May were revised down from 144 000 to 19 000. The figure for June was shifted from 147 000 to 14 000. This was notably lower than job creation levels in recent years. During the pandemic, the economy lost jobs. The employment data points to challenges in the labour market as companies took a cautious approach in hiring and investment while grappling with Trump's sweeping - and rapidly changing - tariffs this year. White House economic advisor Kevin Hassett defended McEntarfer's firing in an NBC News interview on Saturday. Asked if the president was prepared to fire anyone who reports data he disagrees with, Hassett said: Absolutely not. The president wants his own people there so that when we see the numbers, they are more transparent and more reliable. Trump's decision was criticised as setting a 'dangerous precedent' by William Beach, who previously held McEntarfer's post at the Bureau of Labour Statistics. The National Association for Business Economics condemned her dismissal, saying large revisions in job numbers 'reflect not manipulation, but rather the dwindling resources afforded to statistical agencies.' McEntarfer, a labour economist, had been in the commissioner role for just over a year after being confirmed by the US Senate in January 2024.
Telegraph
02-08-2025
- Business
- Telegraph
Republicans tell Trump to ‘grow up' after he sacks data chief
Republicans have told Donald Trump to 'grow up' after he sacked the US government's top statistician over underwhelming jobs numbers. The president said on Friday he would remove Erika McEntarfer as commissioner of the Bureau of Labour Statistics (BLS) shortly after government figures indicated the economy was performing worse than expected. The move has prompted a rare backlash against Mr Trump from members of his own party. Cynthia Lummis, a Republican senator for Wyoming, told NBC News that deciding to sack Ms McEntarfer before establishing the accuracy of the employment figures was 'kind of impetuous'. 'If the president is firing the statistician because he doesn't like the numbers but they are accurate, then that's a problem,' she continued. 'It's not the statistician's fault if the numbers are accurate and that they're not what the president had hoped for.' Thom Tillis, who represents North Carolina, said: 'If she was just fired because the president or whoever decided to fire the director just did it because they didn't like the numbers, they ought to grow up'. In the past, Mr Trump has taken an uncompromising attitude to critics in his own party, publicly threatening to back primary challenges to replace them with loyalists. Mr Tillis said in June that he would not run for re-election. Rand Paul, a Kentucky senator and former presidential primary contender, raised concerns about the politicisation of government data. 'We have to look somewhere for objective statistics. When the people providing the statistics are fired, it makes it much harder to make judgments that you know, the statistics won't be politicised,' he said. 'I'm going to look into it, but [my] first impression is that you can't really make the numbers different or better by firing the people doing the counting.' Democrats have also condemned the president's move. Chuck Schumer, the party's leader in the Senate, criticised Mr Trump's 'shoot the messenger' response in a speech on Friday. Mr Trump has long been suspicious of the BLS, claiming last year that it inflated the jobs numbers during former president Joe Biden's administration in an attempt to swing the election for the Democrats. He announced via social media on Friday that he was sacking Ms McEntarfer, labelling her a 'Biden political appointee' even though she is a career civil servant and was confirmed by a bipartisan vote in January 2024. Among those who voted to confirm her were former senators JD Vance, now the US vice-president, and Marco Rubio, the secretary of state. Some Republicans have backed the president's move, including Roger Marshall, a Kansas senator, who was one of the 85 senators who confirmed her last year. 'Her cooked-up numbers have misled the American people for too long,' he claimed. The US created just 73,000 new jobs in July, considerably fewer than the predicted 110,000, while the figures for May and June were slashed by 258,000 combined, according to the BLS report released on Friday. Mr Trump hit out at the bureau as stock markets tumbled, branding the figures revision a 'major mistake' and adding: 'Important numbers like this must be fair and accurate, they can't be manipulated for political purposes.' Ms McEntarfer would be replaced with 'someone much more competent and qualified', he said, insisting the economy was 'BOOMING'. For now, BLS deputy commissioner William Wiatrowski is serving as acting commissioner.
Yahoo
02-08-2025
- Business
- Yahoo
Trump removes jobs data official after employment report
President Donald Trump has removed the head of the agency that produces monthly jobs figures for the US after a report showed hiring slowed in July and was much weaker in May and June than previously reported. Trump, in a post on his social media platform, alleged that the figures were manipulated for political reasons and said that Erika McEntarfer, the director of the Bureau of Labour Statistics, who was appointed by former president Joe Biden, should be fired. He provided no evidence for the charge. 'I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,' Trump said on Truth Social. 'She will be replaced with someone much more competent and qualified.' Trump later posted: 'In my opinion, today's Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad.' The charge that the data was faked threatens to undercut the political legitimacy of the US government's economic data, which has long been seen as the 'gold standard' of economic measurement globally. Economists and Wall Street investors have long accepted the data as free from political bias. After Trump's initial post, labour secretary Lori Chavez-DeRemer said on X that Ms McEntarfer was no longer leading the bureau and that William Wiatrowski, the deputy commissioner, would serve as the acting director. 'I support the President's decision to replace Biden's Commissioner and ensure the American People can trust the important and influential data coming from BLS,' Ms Chavez-DeRemer said. Friday's jobs report showed that just 73,000 jobs were added last month and that 258,000 fewer jobs were created in May and June than previously estimated. The report suggested that the economy has sharply weakened during Trump's tenure, a pattern consistent with a slowdown in economic growth during the first half of the year and an increase in inflation during June that appeared to reflect the price pressures created by the president's tariffs. 'What does a bad leader do when they get bad news? Shoot the messenger,' Democratic senate leader Chuck Schumer of New York said in a Friday speech. McEntarfer was nominated by Mr Biden in 2023 and became the commissioner of the Bureau of Labour Statistics in January 2024. Commissioners typically serve four-year terms but since they are political appointees can be fired. The commissioner is the only political appointee of the agency, which has hundreds of career civil servants. The Senate confirmed Ms McEntarfer to her post 86-8, with now vice president JD Vance among the yea votes. Trump challenges jobs data Trump focused much of his ire on the revisions the agency made to previous hiring data. Job gains in May were revised down to just 19,000 from a previously revised 125,000, and for June they were cut to 14,000 from 147,000. In July, only 73,000 positions were added. The unemployment rate ticked up to a still-low 4.2 per cent from 4.1 per cent. 'No one can be that wrong? We need accurate Jobs Numbers,' Trump wrote. 'She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can't be manipulated for political purposes.' Trump has not always been so suspicious of the monthly jobs report and responded enthusiastically after the initial May figures came out on June 6 when it was initially reported that the economy added 139,000 jobs. 'GREAT JOB NUMBERS, STOCK MARKET UP BIG!' Trump posted at the time. That estimate was later revised down to 125,000 jobs, prior to the most-recent revision down to just 19,000. The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figure sent US market indexes about 1.5 per cent lower Friday. By Christopher Rugaber, Associated Press 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
