Latest news with #FWDBonds
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.'
Yahoo
24-02-2025
- Business
- Yahoo
If Trump wants to fix the inflation crisis, he has a funny way of showing it
Inflation appeared nearly defeated just a few months ago, but price hikes started accelerating again, led in particular by rising egg prices and fuel costs. A nation that has grown weary of inflation has turned its hopes to President Donald Trump to help fix its affordability crisis. But Trump, who had campaigned on bringing prices down on Day One of his presidency, has instead focused his economic policy thus far on tariffs – also known as higher taxes. Tariffs are paid by American importers, who typically pass those costs onto retailers, who, in turn, jack up the prices that consumers end up paying. Fearful that Trump's tariffs will only exacerbate inflation, Americans are already beginning to sour on Trump's economic plan. 'The public's fears have soared in just the last two weeks showing the blizzard of changes coming from the president's desk have spilled over the line between pro-growth into the realm of pro-inflation,' said Chris Rupkey, chief economist at FWDBonds, in a note to investors Sunday. 'Once inflation expectations start moving higher it is only a matter of time before actual inflation takes off.' The University of Michigan's latest survey, released Friday, showed that US consumer sentiment declined in February for the second consecutive month, falling by a steep 10% from January. The survey found that Americans are losing confidence in the economy, driven primarily by worries over Trump's tariffs potentially boosting inflation. A new CNN poll released last Thursday similarly showed pessimism on the rise because of prices: Nearly two-thirds of US adults nationwide, 62%, said they feel Trump isn't doing enough to address inflation. Last week, investors grew fearful that the weakening consumer sentiment could lead to a pullback in Americans' shopping habits. The stock market had its worst week of Trump's presidency – the Dow lost 1,200 points over the course of Thursday and Friday – though it was poised to rebound somewhat Monday. Walmart warned last week that consumers' negativity about the economy would weigh on sales this coming year. That's a potential problem for the economy: Consumer spending makes up more than two-thirds of America's gross domestic product. Trump can't shoulder much if any of the blame for inflation. Not just yet, anyway. The most recent consumer inflation report showed prices rose 0.5% last month compared to December — the fastest monthly increase since August 2023. Trump was president for just 11 ½ of the 31 days covered in the report. But inflation is becoming Trump's problem, and consumers' fears for a reignited inflation crisis threaten to bring the honeymoon period for Trump's second term to an abrupt end. And if consumers rein in their spending, that could lead the economy – currently nowhere close to a recession – into some problems. 'If the consumer balks at the higher prices coming their way, the economy could collapse in a hurry,' Rupkey said. 'Bet on it.' That could be particularly true if Trump follows through with his massive tariffs threats that could begin early next month. Trump has already imposed a 10% across-the-board tariff on Chinese goods coming into the United States. Tariffs are aimed at raising revenue, bringing foreign countries to the negotiating table, narrowing the trade gap and restoring American manufacturing. Apple, facing expensive Chinese tariffs, made a substantial commitment Monday morning to invest $500 billion in US facilities over the next four years that could help it bypass some of those burdens. But not every company can make those kinds of commitments – particularly if they have expensive legacy operations in former free trade zones, or if they make products overseas that can't easily be made in the United States. Early next month, the Trump administration is set to impose delayed tariffs on Canada and Mexico, ending the policy of free trade that he continued during his first term, when he signed the US-Mexico-Canada Agreement that he championed. The 25% across-the-board tariffs (and 10% on Canadian energy), if they go into effect, threaten to raise the prices on cars, lumber, fuel, produce and many other goods. And both Canada and Mexico have threatened to retaliate against America with tariffs of their own, potentially hurting US industry. Meanwhile, expanded steel and aluminum tariffs are set to go into effect in a few weeks. And the Trump administration has floated reciprocal tariffs on autos, lumber, pharmaceuticals, microchips and potentially some other products, matching dollar-for-dollar what other countries charge the United States. That new policy remains under review and could go into effect as soon as April 2, Trump has promised. If Trump makes good on his most severe tariff threats – across-the-board tariffs on all manner of goods, the policy threatens to widen America's rich-poor divide, said Michael Pearce, deputy chief US economist at Oxford Economics. Because the tariffs would be placed on goods indiscriminately, it would boost the cost of food, shelter, clothing and other necessities that would make it harder for the people who can afford it least to change their purchasing behavior. 'Because low-income consumers spend a disproportionate share of their income on non-discretionary goods, the increased consumer prices due to tariffs will weigh more on them,' Pearce said in a recent report. 'That will reinforce the trend of a bifurcated US consumer, with spending by high-income households continuing to grow at a rapid pace while low-income consumers struggle.' Microchips are in practically everything now, and they have the potential to raise prices on much more than phones and computers – cars, refrigerators, thermostats, and many other household items could become more expensive. Lumber in particular could exacerbate one of the most persistent causes of inflation: the stuck housing market. The United States doesn't have enough housing supply to meet demand, and raising prices on a key structural component for homebuilding could raise building costs. Trump, for his part, has acknowledged that inflation remains a problem. But he has deflected blame to former President Joe Biden. 'Inflation is back,' Trump said last week in an interview with Fox News' Sean Hannity. 'I had nothing to do with it. These people have – have run the country. They spent money like nobody has ever spent.' Economists disagree about why, exactly, inflation surged after Biden became president before coming back down to near-normal levels. But prices have remained stubbornly high as bird flu boosted egg prices at the fastest rate in 10 years last month and a combination of slumping demand and sanctions on Russia and Iran continued to raise fuel prices. Prices were up across the board last month, though – not just in those volatile and hard-to-control categories like food and fuel. The president and his advisers have spelled out a plan to lower prices for Americans, which includes a combination of tax cuts, deregulation of energy and cutting government spending – mostly in the form of Elon Musk's Department of Government Efficiency. However, tax cuts would almost certainly increase US borrowing, because tariffs and cuts to government spending probably cannot replace all the revenue America would lose from cutting taxes. Oil and gas deregulation has been met with skepticism from the energy industry, because fuel demand is in a slump, and drilling for more oil and gas may not be profitable. And returning savings from government cost cutting directly to taxpayers, as Trump has proposed, could itself reignite inflation, because consumers tend to spend money when you hand it to them. Kevin Hassett, an economic adviser to Trump, denied that last week, arguing taxpayers would pad their savings with stimulus checks. So Trump has a plan to combat high prices. But it's a problematic solution that could be undone by tariffs. If it doesn't work, Trump's favorability could erode. It already has.
CNN
24-02-2025
- Business
- CNN
If Trump wants to fix the inflation crisis, he has a funny way of showing it
Inflation appeared nearly defeated just a few months ago, but price hikes started accelerating again, led in particular by rising egg prices and fuel costs. A nation that has grown weary of inflation has turned its hopes to President Donald Trump to help fix its affordability crisis. But Trump, who had campaigned on bringing prices down on Day One of his presidency, has instead focused his economic policy thus far on tariffs – also known as higher taxes. Tariffs are paid by American importers, who typically pass those costs onto retailers, who, in turn, jack up the prices that consumers end up paying. Fearful that Trump's tariffs will only exacerbate inflation, Americans are already beginning to sour on Trump's economic plan. 'The public's fears have soared in just the last two weeks showing the blizzard of changes coming from the president's desk have spilled over the line between pro-growth into the realm of pro-inflation,' said Chris Rupkey, chief economist at FWDBonds, in a note to investors Sunday. 'Once inflation expectations start moving higher it is only a matter of time before actual inflation takes off.' The University of Michigan's latest survey, released Friday, showed that US consumer sentiment declined in February for the second consecutive month, falling by a steep 10% from January. The survey found that Americans are losing confidence in the economy, driven primarily by worries over Trump's tariffs potentially boosting inflation. A new CNN poll released last Thursday similarly showed pessimism on the rise because of prices: Nearly two-thirds of US adults nationwide, 62%, said they feel Trump isn't doing enough to address inflation. Last week, investors grew fearful that the weakening consumer sentiment could lead to a pullback in Americans' shopping habits. The stock market had its worst week of Trump's presidency – the Dow lost 1,200 points over the course of Thursday and Friday – though it was poised to rebound somewhat Monday. Walmart warned last week that consumers' negativity about the economy would weigh on sales this coming year. That's a potential problem for the economy: Consumer spending makes up more than two-thirds of America's gross domestic product. Trump can't shoulder much if any of the blame for inflation. Not just yet, anyway. The most recent consumer inflation report showed prices rose 0.5% last month compared to December — the fastest monthly increase since August 2023. Trump was president for just 11 ½ of the 31 days covered in the report. But inflation is becoming Trump's problem, and consumers' fears for a reignited inflation crisis threaten to bring the honeymoon period for Trump's second term to an abrupt end. And if consumers rein in their spending, that could lead the economy – currently nowhere close to a recession – into some problems. 'If the consumer balks at the higher prices coming their way, the economy could collapse in a hurry,' Rupkey said. 'Bet on it.' That could be particularly true if Trump follows through with his massive tariffs threats that could begin early next month. Trump has already imposed a 10% across-the-board tariff on Chinese goods coming into the United States. Tariffs are aimed at raising revenue, bringing foreign countries to the negotiating table, narrowing the trade gap and restoring American manufacturing. Apple, facing expensive Chinese tariffs, made a substantial commitment Monday morning to invest $500 billion in US facilities over the next four years that could help it bypass some of those burdens. But not every company can make those kinds of commitments – particularly if they have expensive legacy operations in former free trade zones, or if they make products overseas that can't easily be made in the United States. Early next month, the Trump administration is set to impose delayed tariffs on Canada and Mexico, ending the policy of free trade that he continued during his first term, when he signed the US-Mexico-Canada Agreement that he championed. The 25% across-the-board tariffs (and 10% on Canadian energy), if they go into effect, threaten to raise the prices on cars, lumber, fuel, produce and many other goods. And both Canada and Mexico have threatened to retaliate against America with tariffs of their own, potentially hurting US industry. Meanwhile, expanded steel and aluminum tariffs are set to go into effect in a few weeks. And the Trump administration has floated reciprocal tariffs on autos, lumber, pharmaceuticals, microchips and potentially some other products, matching dollar-for-dollar what other countries charge the United States. That new policy remains under review and could go into effect as soon as April 2, Trump has promised. If Trump makes good on his most severe tariff threats – across-the-board tariffs on all manner of goods, the policy threatens to widen America's rich-poor divide, said Michael Pearce, deputy chief US economist at Oxford Economics. Because the tariffs would be placed on goods indiscriminately, it would boost the cost of food, shelter, clothing and other necessities that would make it harder for the people who can afford it least to change their purchasing behavior. 'Because low-income consumers spend a disproportionate share of their income on non-discretionary goods, the increased consumer prices due to tariffs will weigh more on them,' Pearce said in a recent report. 'That will reinforce the trend of a bifurcated US consumer, with spending by high-income households continuing to grow at a rapid pace while low-income consumers struggle.' Microchips are in practically everything now, and they have the potential to raise prices on much more than phones and computers – cars, refrigerators, thermostats, and many other household items could become more expensive. Lumber in particular could exacerbate one of the most persistent causes of inflation: the stuck housing market. The United States doesn't have enough housing supply to meet demand, and raising prices on a key structural component for homebuilding could raise building costs. Trump, for his part, has acknowledged that inflation remains a problem. But he has deflected blame to former President Joe Biden. 'Inflation is back,' Trump said last week in an interview with Fox News' Sean Hannity. 'I had nothing to do with it. These people have – have run the country. They spent money like nobody has ever spent.' Economists disagree about why, exactly, inflation surged after Biden became president before coming back down to near-normal levels. But prices have remained stubbornly high as bird flu boosted egg prices at the fastest rate in 10 years last month and a combination of slumping demand and sanctions on Russia and Iran continued to raise fuel prices. Prices were up across the board last month, though – not just in those volatile and hard-to-control categories like food and fuel. The president and his advisers have spelled out a plan to lower prices for Americans, which includes a combination of tax cuts, deregulation of energy and cutting government spending – mostly in the form of Elon Musk's Department of Government Efficiency. However, tax cuts would almost certainly increase US borrowing, because tariffs and cuts to government spending probably cannot replace all the revenue America would lose from cutting taxes. Oil and gas deregulation has been met with skepticism from the energy industry, because fuel demand is in a slump, and drilling for more oil and gas may not be profitable. And returning savings from government cost cutting directly to taxpayers, as Trump has proposed, could itself reignite inflation, because consumers tend to spend money when you hand it to them. Kevin Hassett, an economic adviser to Trump, denied that last week, arguing taxpayers would pad their savings with stimulus checks. So Trump has a plan to combat high prices. But it's a problematic solution that could be undone by tariffs. If it doesn't work, Trump's favorability could erode. It already has.
