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CNBC
10 hours ago
- Business
- CNBC
The latest CPI report showed some softening in inflation. What investors are saying
Wall Street got a favorable inflation report on Wednesday, giving equities a boost. The consumer price index rose 0.1% in May , slightly less than the 0.2% increase economists polled by Dow Jones anticipated. So-called core CPI, which strips out volatile food and energy prices, increased by 0.1% — also less than expected. Stocks reacted positively, with S & P 500 futures erasing an earlier decline to trade about 0.2% higher. Some investors noted continued uncertainty around the Federal Reserve's interest rate outlook, despite the latest price report. Here's how some investors, economists and strategists reacted to the news: Chris Rupkey, chief economist at FWDBonds: "Net, net, the inflation shock wave from more costly imported goods has yet to arrive on American shores. Today's consumer inflation report is a real head-scratcher for economists as they ponder why the trade war hasn't set off another inflation outbreak yet with core goods prices sitting on store shelves seeing no change in May." Alexandra Wilson-Elizondo, global co-CIO of multi-asset Solutions at Goldman Sachs Asset Management: "Inflation in May was lower than anticipated, suggesting the tariffs aren't having a large immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand. While we might see some price increases on goods later, service prices are expected to remain stable, suggesting any rise in inflation is likely to be temporary." Ian Lyngen, head of U.S. rates at BMO Capital Markets: "CPI surprised on the downside across the board. … The yield curve is bull steepening as the slower trajectory of inflation has firmed rate cut expectations for later this year. On the margin, it is also supportive of next week's [Federal Reserve Summary of Economic Projections] signaling 50 bp of cuts in 2025." Ryan Weldon, investor director and portfolio manager at IFM Investments: "The softer services inflation lends itself to a slowing economy in the face of continued tariff anxiety and will support the Fed to come out of their wait-and-hold approach sooner. However, the Fed will still want to see several months of consistent inflation and jobs data and have more clarity on the Trump administration's tariff policy before resuming cuts." Chris Zaccarelli, chief investment officer at Northlight Asset Management: "With lower-than-expected numbers across the board (with the exception of headline YoY, which stayed constant), and a trade deal with China that was agreed to in London, the narrative around tariff-induced inflation should subside. However, CPI remains above 2% and even though the tariff rates are going to be less than originally feared, after they are implemented they will further increase the cost of goods." Skyler Weinand, chief investment officer at Regan Capital: "Wednesday's weaker-than-expected CPI opens the door to a Fed rate cut in September, since it's clear that the inflation data continues to move in the right direction even as we deal with tariff uncertainty. While employment is strong and the economic effects from tariffs are yet to be determined, the Fed would like to start easing again in the not too distant future to get in front of a possible recession in 2026" Peter Boockvar, chief investment officer at Bleakley Financial Group: "Bottom line, a sigh of relief on the lower than expected inflation stats just as we search for where tariffs will work its way through the supply chain and end customer."
Yahoo
30-05-2025
- Business
- Yahoo
Americans pulled back on their spending in April amid tariff rollout
American consumers reined in their spending and socked away their money in April following a tariff-fueled buying binge the month before, according to new data released Friday that also showed inflation cooled off again. Friday's report from the Commerce Department showed that consumer spending rose 0.2% last month, a weaker-than-anticipated reading but a notable retreat from March, when spending soared 0.7% as Americans front-loaded purchases — notably new cars — ahead of potential price increases from President Donald Trump's tariffs. In April, consumers saw a nice 0.8% boost to their incomes, a jump likely attributed to larger Social Security payments as well as continued resilience in the labor market; however, a lot of those funds were plunked into piggy banks: The personal saving rate leapt to 4.9% from 4.3%, according to Friday's report. 'Just as you'd expect, consumers stayed away from the purchase of durable goods like clothing and cars and instead spent mostly on life's necessities like housing, health care, and food services,' Chris Rupkey, chief economist at FwdBonds, wrote in commentary issued Friday. 'This is a trade war report where the consumer is clearly gun-shy.' The latest data also showed inflation moving closer to the Federal Reserve's target of 2%. However, it also indicated that tariff-related price pressures may be already hitting consumers. The Personal Consumption Expenditures price index was 2.1% for the 12 months ended in April, a slowdown from the 2.3% annual gain in March. On a monthly basis, prices rose 0.1%, a slight acceleration after holding steady in March. The biggest price gains last month were seen in durable goods, which rose 0.5%. Economists were expecting the PCE price index to rise 0.2% from March and to ease to an annual rate of 2.2%. Spending was expected to slow to 0.4%, according to FactSet. Inflation is now back at its lowest rate in years, matching a 2.1% gain in September 2024 that was, at the time, a three-and-a-half-year low. Excluding the volatile food and energy categories, the core PCE price index rose 0.1% from March and slowed to an annual rate of 2.5%, the lowest rate since March 2021. Inflation is sitting just a hair's breadth above the Fed's 2% target; however, there likely will be no victory laps nor corks popped from the Fed: Inflation may have been on a cooling course, but the Trump administration's tariffs — the bulk of which are in a temporary holding pattern — threaten to reverse that progress. While the tariffs themselves remain in flux — especially following a US Court of International Trade ruling this week that blocked a large swath of them and a subsequent appeals court ruling that put them back into play — economists weren't expecting the early wave of import duties to have an immediate effect on prices nor on the April inflation data. 'We're looking at very backwards-looking data; we're looking into April, and it's hard to say (to what extent) the total effects of the tariffs have come through,' Dan North, senior economist at Allianz Trade US, said in an interview with CNN. 'I think there's a reasonable case to be made that each report is not going to be quite so rosy as this.' And, with spending and incomes holding up for now, the Fed has the luxury of being able to continue to not have to rush through any interest rate cuts just yet, he said. 'The Fed would really like to see that core and the headline (inflation rates) going down a bit more, because if they cut rates, they might reignite that inflation flame that hasn't gone out already,' he said. There have been significant shifts in tariff policy, and some of the most aggressive duties were curtailed or paused; businesses front-loaded purchases, building up their pre-tariff inventory; and some costs from the initial waves of new tariffs might have been absorbed by retailers and manufacturers. The latest data lands at a time when uncertainty is swelling about the extent to which Trump's sweeping policies — including efforts to tack steep tariffs on most imported goods — could upend global order and the US economy. But that massive uncertainty caused by Trump's policies could negatively ripple through the economy by affecting how consumers and businesses spend. 'Uncertainty is an actual driving force in the economy, and on the business side, they're shaking their heads saying, 'we don't know what to do; our customers are cutting their orders,'' North said. 'Given that atmosphere and this continuous changing in the tariff situation, I see hiring really slowing down in the next couple of months.' A batch of labor market data is due out next week, with the most critical piece being the May jobs report on Friday morning. Economists are still building their forecasts, but early estimates show they expect monthly job gains to slow sharply to around 125,000 from 177,000 in April and for the unemployment rate to tick up to 4.3%. While economists have warned that the better-than-expected data seen in recent months is the calm before the storm, the economy is holding its own for now — despite the ongoing volatility and recession fears. 'I think it's going to be a lot of 'See, I told you,'' coming from the Trump administration, North said. 'They'll likely say that everything is going right, inflation is right, income is right, spending is right, and then the trade deficit in goods is cut in half.' However, it remains to be seen how long this resilience lasts and to what extent the volatility weighs on the economy. Stocks fell Friday after President Donald Trump said China has 'totally violated' its trade agreement with the United States, sending another jolt to markets after a whiplash week of tariff developments. Separate data released Friday by the Census Bureau showed that the United States' trade deficit with its trading partners dropped by 46% last month. Trade deficits capture the difference between a country's exports minus imports. Last month, American exports grew by $6.3 billion, while imports declined by a whopping $68.4 billion. The stunning decline in imports could mean retailers have less of an inventory buffer, leaving them less able to avoid paying future tariffs — and that could lead to price increases for US consumers. CNN's Elisabeth Buchwald and John Towfighi contributed to this report. Sign in to access your portfolio
Yahoo
19-05-2025
- Business
- Yahoo
Trump's tariffs are dragging down an already stalled housing market
US homebuilders pulled back on projects in April amid whipsaw tariff announcements and growing fears of economic stress, new data on Friday revealed. Single-family home starts dropped 12% in April compared to one year ago, on a seasonally adjusted basis, according to data from the US Census Bureau and the Department of Housing and Urban Development. Housing starts measure the number of new residential construction projects that have broken ground and construction that has started. Single-family permits issued for new construction, a key indicator of future home construction, also fell 5.1% from March and were down 6.2% compared to April of last year. The drop in new home construction comes at a time when home affordability is near generational lows amid persistently elevated mortgage rates and a shortage of homes for sale. A prolonged stall in home construction could magnify home shortages and affordability issues, economists warn. 'Political uncertainty in Washington is making homebuilders cautious and they are sensing that the public sees this is not the best time to be in the market for a new home unless you're desperate,' Chris Rupkey, chief economist at financial markets research company FWDBonds, wrote in a note to investors Friday. 'Trade tariff uncertainty is disrupting the housing market… The only certainty is that this is not the time to build or buy a new home.' Housing starts are often seen as a key indicator of the overall health and direction of the US economy. When single-family housing starts plunge, as they did in April, it could be a worrying sign. However, recent moves by the Trump administration to ease tariffs could reinvigorate homebuilding, said Danushka Nanayakkara-Skillington, the National Association of Homebuilders' (NAHB) assistant vice president for forecasting and analysis. 'Recent developments on the tariff front concerning the United Kingdom and China along with major tax legislation advancing in Congress should provide a boost to housing demand and positive momentum for the economy,' Nanayakkara-Skillington said in a statement on Friday. Builders who spoke to CNN attributed the slowdown in home building to two factors: increased material costs due to tariffs and faltering demand for new homes as home shoppers grew more hesitant amid April's stock market gyrations and tariff-induced recession fears. The full and final tariff rates imposed on all US imports are still unclear. In April, President Donald Trump announced tariffs on roughly 60 trading partners of up to 50%. While those tariffs are currently on pause, a baseline 10% tariff on most imports is still in place as the US works to negotiate new trade agreements. So far, one deal has been reached with the United Kingdom. Last month, trade with China, one of America's largest trading partners, slowed to a crawl after Trump imposed a 145% tariff on Chinese imports. That rate was temporarily lowered to 30% last Monday. Raw material costs have already gone up due to tariffs. Approximately 7%, or $14 billion worth, of all goods used in the construction of new multifamily and single-family homes in the US were imported in 2024, the NAHB estimated. About 60% of builders reported in April that their suppliers had already increased or planned to increase prices of materials due to tariffs, according to a survey done by the NAHB. Not all homebuilders will be able to pass off increased raw material costs to home sellers, though, Ivy Zelman, a housing analyst and executive vice president of research firm Zelman & Associates, told CNN last month. Some smaller homebuilders may have to absorb some of the extra tariff-induced costs, which could mean even fewer homes built in the future, she said. Tariffs have also affected home shoppers. In the weeks after Trump's April 2 tariff announcement, Roddy MacDonald, a manager at Stonegate Builders, a homebuilder that operates in Minnesota's Twin Cities, said he noticed a difference in the tone of prospective homebuyers. 'The biggest objection we've seen is people feeling uncomfortable with the uncertainty in the economy,' MacDonald said. 'The desire to buy is definitely there, but I think people with a little bit of discretionary income are holding tight, and we're seeing people that are pulling the plug on conversations (about homebuying).' One relatively bright spot in April was multifamily construction, which includes apartment buildings and condos. Starts for buildings with five or more units were up more than 28% between April 2024 and April 2025, and permits were up 2%. However, multifamily projects are often planned further in advance, with raw materials purchased well before construction. That likely means the full impact of tariffs has yet to hit the sector. For Emily Hubbard, the co-founder of Sage Investment Group, a Washington state-based company that focuses on converting underused hotels into affordable apartment buildings, it was mostly business as usual in April. That's because her company locked in prices for raw building materials for this year with Home Depot in late 2024 in anticipation of elevated tariffs. 'Prior to Trump's election, we had been sourcing a lot of our materials directly from manufacturers overseas,' Hubbard said. 'When he got elected, we immediately started making moves to adjust how we managed our supply chain.' When tariffs hit last month, Sage Investment Group had one incoming flooring shipment from overseas. The company paid $40,000 extra for it. Still, Hubbard estimates the move to lock in pricing before tariffs went into effect will ultimately save her company $3.5 million in additional tariff fees. 'We're grateful for what that means for our projects,' Hubbard said. 'We're going to be able to deliver 2,000 units of housing this year because of it.'
CNN
19-05-2025
- Business
- CNN
Trump's tariffs are dragging down an already stalled housing market
US homebuilders pulled back on projects in April amid whipsaw tariff announcements and growing fears of economic stress, new data on Friday revealed. Single-family home starts dropped 12% in April compared to one year ago, on a seasonally adjusted basis, according to data from the US Census Bureau and the Department of Housing and Urban Development. Housing starts measure the number of new residential construction projects that have broken ground and construction that has started. Single-family permits issued for new construction, a key indicator of future home construction, also fell 5.1% from March and were down 6.2% compared to April of last year. The drop in new home construction comes at a time when home affordability is near generational lows amid persistently elevated mortgage rates and a shortage of homes for sale. A prolonged stall in home construction could magnify home shortages and affordability issues, economists warn. 'Political uncertainty in Washington is making homebuilders cautious and they are sensing that the public sees this is not the best time to be in the market for a new home unless you're desperate,' Chris Rupkey, chief economist at financial markets research company FWDBonds, wrote in a note to investors Friday. 'Trade tariff uncertainty is disrupting the housing market… The only certainty is that this is not the time to build or buy a new home.' Housing starts are often seen as a key indicator of the overall health and direction of the US economy. When single-family housing starts plunge, as they did in April, it could be a worrying sign. However, recent moves by the Trump administration to ease tariffs could reinvigorate homebuilding, said Danushka Nanayakkara-Skillington, the National Association of Homebuilders' (NAHB) assistant vice president for forecasting and analysis. 'Recent developments on the tariff front concerning the United Kingdom and China along with major tax legislation advancing in Congress should provide a boost to housing demand and positive momentum for the economy,' Nanayakkara-Skillington said in a statement on Friday. Builders who spoke to CNN attributed the slowdown in home building to two factors: increased material costs due to tariffs and faltering demand for new homes as home shoppers grew more hesitant amid April's stock market gyrations and tariff-induced recession fears. The full and final tariff rates imposed on all US imports are still unclear. In April, President Donald Trump announced tariffs on roughly 60 trading partners of up to 50%. While those tariffs are currently on pause, a baseline 10% tariff on most imports is still in place as the US works to negotiate new trade agreements. So far, one deal has been reached with the United Kingdom. Last month, trade with China, one of America's largest trading partners, slowed to a crawl after Trump imposed a 145% tariff on Chinese imports. That rate was temporarily lowered to 30% last Monday. Raw material costs have already gone up due to tariffs. Approximately 7%, or $14 billion worth, of all goods used in the construction of new multifamily and single-family homes in the US were imported in 2024, the NAHB estimated. About 60% of builders reported in April that their suppliers had already increased or planned to increase prices of materials due to tariffs, according to a survey done by the NAHB. Not all homebuilders will be able to pass off increased raw material costs to home sellers, though, Ivy Zelman, a housing analyst and executive vice president of research firm Zelman & Associates, told CNN last month. Some smaller homebuilders may have to absorb some of the extra tariff-induced costs, which could mean even fewer homes built in the future, she said. Tariffs have also affected home shoppers. In the weeks after Trump's April 2 tariff announcement, Roddy MacDonald, a manager at Stonegate Builders, a homebuilder that operates in Minnesota's Twin Cities, said he noticed a difference in the tone of prospective homebuyers. 'The biggest objection we've seen is people feeling uncomfortable with the uncertainty in the economy,' MacDonald said. 'The desire to buy is definitely there, but I think people with a little bit of discretionary income are holding tight, and we're seeing people that are pulling the plug on conversations (about homebuying).' One relatively bright spot in April was multifamily construction, which includes apartment buildings and condos. Starts for buildings with five or more units were up more than 28% between April 2024 and April 2025, and permits were up 2%. However, multifamily projects are often planned further in advance, with raw materials purchased well before construction. That likely means the full impact of tariffs has yet to hit the sector. For Emily Hubbard, the co-founder of Sage Investment Group, a Washington state-based company that focuses on converting underused hotels into affordable apartment buildings, it was mostly business as usual in April. That's because her company locked in prices for raw building materials for this year with Home Depot in late 2024 in anticipation of elevated tariffs. 'Prior to Trump's election, we had been sourcing a lot of our materials directly from manufacturers overseas,' Hubbard said. 'When he got elected, we immediately started making moves to adjust how we managed our supply chain.' When tariffs hit last month, Sage Investment Group had one incoming flooring shipment from overseas. The company paid $40,000 extra for it. Still, Hubbard estimates the move to lock in pricing before tariffs went into effect will ultimately save her company $3.5 million in additional tariff fees. 'We're grateful for what that means for our projects,' Hubbard said. 'We're going to be able to deliver 2,000 units of housing this year because of it.'
CNN
19-05-2025
- Business
- CNN
Trump's tariffs are dragging down an already stalled housing market
US homebuilders pulled back on projects in April amid whipsaw tariff announcements and growing fears of economic stress, new data on Friday revealed. Single-family home starts dropped 12% in April compared to one year ago, on a seasonally adjusted basis, according to data from the US Census Bureau and the Department of Housing and Urban Development. Housing starts measure the number of new residential construction projects that have broken ground and construction that has started. Single-family permits issued for new construction, a key indicator of future home construction, also fell 5.1% from March and were down 6.2% compared to April of last year. The drop in new home construction comes at a time when home affordability is near generational lows amid persistently elevated mortgage rates and a shortage of homes for sale. A prolonged stall in home construction could magnify home shortages and affordability issues, economists warn. 'Political uncertainty in Washington is making homebuilders cautious and they are sensing that the public sees this is not the best time to be in the market for a new home unless you're desperate,' Chris Rupkey, chief economist at financial markets research company FWDBonds, wrote in a note to investors Friday. 'Trade tariff uncertainty is disrupting the housing market… The only certainty is that this is not the time to build or buy a new home.' Housing starts are often seen as a key indicator of the overall health and direction of the US economy. When single-family housing starts plunge, as they did in April, it could be a worrying sign. However, recent moves by the Trump administration to ease tariffs could reinvigorate homebuilding, said Danushka Nanayakkara-Skillington, the National Association of Homebuilders' (NAHB) assistant vice president for forecasting and analysis. 'Recent developments on the tariff front concerning the United Kingdom and China along with major tax legislation advancing in Congress should provide a boost to housing demand and positive momentum for the economy,' Nanayakkara-Skillington said in a statement on Friday. Builders who spoke to CNN attributed the slowdown in home building to two factors: increased material costs due to tariffs and faltering demand for new homes as home shoppers grew more hesitant amid April's stock market gyrations and tariff-induced recession fears. The full and final tariff rates imposed on all US imports are still unclear. In April, President Donald Trump announced tariffs on roughly 60 trading partners of up to 50%. While those tariffs are currently on pause, a baseline 10% tariff on most imports is still in place as the US works to negotiate new trade agreements. So far, one deal has been reached with the United Kingdom. Last month, trade with China, one of America's largest trading partners, slowed to a crawl after Trump imposed a 145% tariff on Chinese imports. That rate was temporarily lowered to 30% last Monday. Raw material costs have already gone up due to tariffs. Approximately 7%, or $14 billion worth, of all goods used in the construction of new multifamily and single-family homes in the US were imported in 2024, the NAHB estimated. About 60% of builders reported in April that their suppliers had already increased or planned to increase prices of materials due to tariffs, according to a survey done by the NAHB. Not all homebuilders will be able to pass off increased raw material costs to home sellers, though, Ivy Zelman, a housing analyst and executive vice president of research firm Zelman & Associates, told CNN last month. Some smaller homebuilders may have to absorb some of the extra tariff-induced costs, which could mean even fewer homes built in the future, she said. Tariffs have also affected home shoppers. In the weeks after Trump's April 2 tariff announcement, Roddy MacDonald, a manager at Stonegate Builders, a homebuilder that operates in Minnesota's Twin Cities, said he noticed a difference in the tone of prospective homebuyers. 'The biggest objection we've seen is people feeling uncomfortable with the uncertainty in the economy,' MacDonald said. 'The desire to buy is definitely there, but I think people with a little bit of discretionary income are holding tight, and we're seeing people that are pulling the plug on conversations (about homebuying).' One relatively bright spot in April was multifamily construction, which includes apartment buildings and condos. Starts for buildings with five or more units were up more than 28% between April 2024 and April 2025, and permits were up 2%. However, multifamily projects are often planned further in advance, with raw materials purchased well before construction. That likely means the full impact of tariffs has yet to hit the sector. For Emily Hubbard, the co-founder of Sage Investment Group, a Washington state-based company that focuses on converting underused hotels into affordable apartment buildings, it was mostly business as usual in April. That's because her company locked in prices for raw building materials for this year with Home Depot in late 2024 in anticipation of elevated tariffs. 'Prior to Trump's election, we had been sourcing a lot of our materials directly from manufacturers overseas,' Hubbard said. 'When he got elected, we immediately started making moves to adjust how we managed our supply chain.' When tariffs hit last month, Sage Investment Group had one incoming flooring shipment from overseas. The company paid $40,000 extra for it. Still, Hubbard estimates the move to lock in pricing before tariffs went into effect will ultimately save her company $3.5 million in additional tariff fees. 'We're grateful for what that means for our projects,' Hubbard said. 'We're going to be able to deliver 2,000 units of housing this year because of it.'
