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Yahoo
03-08-2025
- Business
- Yahoo
'Tariffs are starting to bite': Latest inflation, jobs data sparks Wall Street concern over US economy
Stocks have continued to notch record highs this year as investors bet on a resilient economy and minimal fallout from tariff-driven inflation. But last week, both assumptions came under pressure. It was a packed week for economic data, offering a more nuanced and, in some cases, sobering look at the state of the US economy. The week kicked off with signs of strain in the labor market: The hiring rate fell to a seven-month low, and the quits rate, a key measure of worker confidence, dropped to just 2%. On Wednesday, GDP data showed the economy rebounded at a 3% annualized pace in the second quarter, recovering from a surprise Q1 contraction driven by a pre-tariff surge in imports. But economists cautioned that the headline growth masked underlying softness. Sales to private domestic purchasers, a key proxy for consumer and business demand, rose just 1.2%, the weakest pace since 2022. Greg Daco, chief economist at EY-Parthenon, called the rebound an "economic mirage," adding that policy uncertainty, rising inflation pressures from tariffs, and tighter immigration constraints are starting to weigh more visibly on economic activity. Then, after the Fed held interest rates steady, Thursday's release of its preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, showed price increases accelerated in June as inflation remained above the Fed's 2% target. Consumer spending also showed signs of strain as real personal spending rose just 0.1% in June following a revised 0.2% drop in May. The week culminated in a disappointing July jobs report, which offered the clearest sign yet that the labor market may be cracking. The US added just 73,000 jobs, far short of the 104,000 forecast. Even more striking were sharp downward revisions to May and June, which erased a combined 258,000 jobs, the largest two-month downgrade since May 2020. Taken in totality, last week's data painted a picture of mounting economic pressure, with growing signs that households are beginning to feel the strain as the second half of the year gets underway. "Tariffs are starting to bite," EY's Daco told Yahoo Finance. "They're leading to higher inflationary pressures, which are curtailing consumer spending and prompting businesses to adopt more of a wait-and-see approach." Michael Pearce, deputy chief US economist at Oxford Economics, said the overall trend is becoming clearer: "The signs are that consumer spending is losing momentum." He added that "as real income growth wanes, we expect an increasing drag on consumer spending, particularly on discretionary purchases and goods most exposed to tariff-driven price increases." While auto sales had been front-loaded earlier this year ahead of tariff implementation, Pearce pointed to renewed declines in tariff-sensitive categories like furniture. He noted that any short-term lift from early buying is now "mostly in the rear-view mirror," and warned that consumers have yet to fully absorb the impact of tariff-driven shocks to income and purchasing power. Adding to the pressure, trade tensions escalated as President Trump raised tariff rates on several US trading partners, including a surprise 39% levy on imports from Switzerland. "There's a repeated refrain that tariffs are not having an impact, and that assessment misses the mark," Wells Fargo economists, led by Jay Bryson, said in the latest installment of Yahoo Finance's Chartbook series. "Consumer spending is not as sturdy as it was initially reported in the first quarter," the team added. "With two months of data on hand for the second quarter, it is becoming increasingly clear that households are reducing their discretionary outlays." The strain is also beginning to show in corporate earnings. "When you take a look at companies like Whirlpool, like P&G, they are being impacted by tariffs," Michael Kantrowitz, chief investment strategist at Piper Sandler, told Yahoo Finance's Opening Bid. "There seems to be a sort of bifurcation when it comes to how tariffs are impacting bottom lines. Those that are focused on products for consumers ... And then you've got other companies, like Big Tech, that is sort of immune to the tariff situation." But even Big Tech is starting to feel the squeeze. Apple (AAPL) CEO Tim Cook warned this week that the company expects a $1.1 billion tariff hit this quarter. Elsewhere, a slew of consumer-facing companies, including Shake Shack (SHAK), Canada Goose (GOOS), and snack maker Kellanova (K), have struggled this earnings season as price-sensitive shoppers pull back. With contributing reporting from Yahoo Finance's Josh Schafer. Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at
Yahoo
03-08-2025
- Business
- Yahoo
'Tariffs are starting to bite': Latest inflation, jobs data sparks Wall Street concern over US economy
Stocks have continued to notch record highs this year as investors bet on a resilient economy and minimal fallout from tariff-driven inflation. But last week, both assumptions came under pressure. It was a packed week for economic data, offering a more nuanced and, in some cases, sobering look at the state of the US economy. The week kicked off with signs of strain in the labor market: The hiring rate fell to a seven-month low, and the quits rate, a key measure of worker confidence, dropped to just 2%. On Wednesday, GDP data showed the economy rebounded at a 3% annualized pace in the second quarter, recovering from a surprise Q1 contraction driven by a pre-tariff surge in imports. But economists cautioned that the headline growth masked underlying softness. Sales to private domestic purchasers, a key proxy for consumer and business demand, rose just 1.2%, the weakest pace since 2022. Greg Daco, chief economist at EY-Parthenon, called the rebound an "economic mirage," adding that policy uncertainty, rising inflation pressures from tariffs, and tighter immigration constraints are starting to weigh more visibly on economic activity. Then, after the Fed held interest rates steady, Thursday's release of its preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, showed price increases accelerated in June as inflation remained above the Fed's 2% target. Consumer spending also showed signs of strain as real personal spending rose just 0.1% in June following a revised 0.2% drop in May. The week culminated in a disappointing July jobs report, which offered the clearest sign yet that the labor market may be cracking. The US added just 73,000 jobs, far short of the 104,000 forecast. Even more striking were sharp downward revisions to May and June, which erased a combined 258,000 jobs, the largest two-month downgrade since May 2020. Taken in totality, last week's data painted a picture of mounting economic pressure, with growing signs that households are beginning to feel the strain as the second half of the year gets underway. "Tariffs are starting to bite," EY's Daco told Yahoo Finance. "They're leading to higher inflationary pressures, which are curtailing consumer spending and prompting businesses to adopt more of a wait-and-see approach." Michael Pearce, deputy chief US economist at Oxford Economics, said the overall trend is becoming clearer: "The signs are that consumer spending is losing momentum." He added that "as real income growth wanes, we expect an increasing drag on consumer spending, particularly on discretionary purchases and goods most exposed to tariff-driven price increases." While auto sales had been front-loaded earlier this year ahead of tariff implementation, Pearce pointed to renewed declines in tariff-sensitive categories like furniture. He noted that any short-term lift from early buying is now "mostly in the rear-view mirror," and warned that consumers have yet to fully absorb the impact of tariff-driven shocks to income and purchasing power. Adding to the pressure, trade tensions escalated as President Trump raised tariff rates on several US trading partners, including a surprise 39% levy on imports from Switzerland. "There's a repeated refrain that tariffs are not having an impact, and that assessment misses the mark," Wells Fargo economists, led by Jay Bryson, said in the latest installment of Yahoo Finance's Chartbook series. "Consumer spending is not as sturdy as it was initially reported in the first quarter," the team added. "With two months of data on hand for the second quarter, it is becoming increasingly clear that households are reducing their discretionary outlays." The strain is also beginning to show in corporate earnings. "When you take a look at companies like Whirlpool, like P&G, they are being impacted by tariffs," Michael Kantrowitz, chief investment strategist at Piper Sandler, told Yahoo Finance's Opening Bid. "There seems to be a sort of bifurcation when it comes to how tariffs are impacting bottom lines. Those that are focused on products for consumers ... And then you've got other companies, like Big Tech, that is sort of immune to the tariff situation." But even Big Tech is starting to feel the squeeze. Apple (AAPL) CEO Tim Cook warned this week that the company expects a $1.1 billion tariff hit this quarter. Elsewhere, a slew of consumer-facing companies, including Shake Shack (SHAK), Canada Goose (GOOS), and snack maker Kellanova (K), have struggled this earnings season as price-sensitive shoppers pull back. With contributing reporting from Yahoo Finance's Josh Schafer. Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at 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
CBS News
01-08-2025
- Business
- CBS News
Trump unveils higher tariffs on dozens of countries
President Trump on Thursday formally announced higher tariffs against more than 60 U.S. trading partners starting next week — just hours before the administration's self-imposed midnight deadline. The president signed an executive order listing out tariff rates for imports from dozens of countries, including a handful that have cut trade deals with the administration and dozens that haven't reached a deal yet. The duties range as high as 41% for Syria and 40% for Laos and Myanmar, while almost no country's imports will face tariffs below 10%. The new tariffs apply to imports that are "entered for consumption, or withdrawn from warehouse for consumption," in seven days, the order said. Mr. Trump had vowed to impose higher tariffs starting just after midnight on Friday, Aug. 1. A White House official told CBS News the extra seven days were intended to give Customs and Border Protection enough time to implement the new tariff rates. "[F]or most economies and most of our trading partners, the cost of doing trade tomorrow will be higher than it is today," Greg Daco, chief economist at management consulting firm EY-Parthenon, said prior to the release of Thursday's list. Mr. Trump set the latest deadline for trade agreements in April after announcing — and later suspending for 90 days — what he described as "Liberation Day" tariffs on more than 90 countries. A July 9 deadline for deals came and went, with the White House again stalling for time. But Mr. Trump had since vowed not to extend the deadline beyond Aug. 1 for most nations. Almost 70 trading partners are included on Thursday's list, and goods from countries that weren't listed will face 10% tariffs — the same baseline that Mr. Trump imposed in April. For some countries, Thursday's tariff list features lower rates than the ones that were threatened on Liberation Day. But other countries' tariffs were adjusted up slightly. For example, Madagascar was threatened with 47% tariffs in April and just 15% tariffs on Thursday, but Switzerland's rate jumped from 31% to 39%. For the handful of trading partners that have reached agreements with Mr. Trump in recent weeks — including Japan, South Korea and the European Union — the new tariff list reflects the terms of those trade deals. A senior administration official told reporters Thursday the new tariff list separates U.S. trading partners into three buckets. If the United States has a trade surplus with a country — meaning the U.S. exports more goods to the country than it imports — that nation's goods will face a 10% tariff rate. If the U.S. has a small trade deficit, imports from that country will generally face 15% tariffs. And countries that the U.S. has larger deficits with face higher tariffs, typically based on either the "Liberation Day" rate, a rate hashed out in a trade deal with the U.S. or a rate floated by Mr. Trump in a letter. Tariffs on the United States' three largest trading partners — Mexico, Canada and China — are treated separately. Duties on Canadian goods will jump from 25% to 35% starting Friday, the White House announced Thursday, following through on a threat from earlier this month. Mr. Trump is also threatening tariff hikes for Mexico and China, but the U.S.' southern neighbor got a 90-day extension on Thursday, and an Aug. 12 deadline to strike a deal with China is expected to be extended for three months, as well. In announcing the hike in Canadian tariffs, White House said Canada hadn't done enough to "arrest, seize, detain or otherwise intercept ... traffickers, criminals at large, and illicit drugs." In a statement released early Friday, Canadian Prime Minister Mark Carney said he was "disappointed" by Mr. Trump's actions. "Canada accounts for only 1% of U.S. fentanyl imports and has been working intensively to further reduce these volumes," he said. Carney added that some industries - including lumber, steel, aluminum and automobiles - are "heavily impacted by U.S. duties and tariffs. For such sectors, the Canadian government will act to protect Canadian jobs, invest in our industrial competitiveness, buy Canadian, and diversity our export markets." In Beijing, China Foreign Ministry spokesperson Guo Jiakun said Friday that, "China's opposition to the abuse of tariffs is consistent and clear. Tariff and trade wars have no winners. Protectionism is in no one's interests." Amid concerns that the White House's trade agenda was fueling economic uncertainty for businesses and consumers, Trump administration officials this spring pledged to nail down "90 deals in 90 days." By that measure, his administration has come up far short of its goals. The White House has announced broad bilateral agreements with a handful of nations as well as the 27-member European Union, but those deals have lacked the extensively documented details typical of most trade deals, experts note. "It's important to note that we don't even have any deals as deals are commonly understood, except maybe the U.K. agreement, which is still being discussed," Alex Jacquez, chief of policy and advocacy at Groundwork Collaborative, a left-leaning advocacy group, told CBS MoneyWatch. The countries that have yet to strike deals with the U.S., including major trading partners such as Canada and Mexico, account for 56% of American imports, according to Goldman Sachs. Shortly after the new tariff list was released, Mr. Trump told NBC News in an interview it's "too late" for countries that still haven't struck a trade agreement to avoid the new import duties — but he's still willing to negotiate after the higher tariffs take effect. He said he believes his trade strategy was going "very well, very smooth," pointing to the revenue brought in by tariffs and the fact that inflation has not spiked. "President Trump's trade deals have unlocked unprecedented market access for American exports to economies that in total are worth over $32 trillion with 1.2 billion people," White House spokesperson Kush Desai said in a statement. "As these historic trade deals and the Administration's pro-growth domestic agenda of deregulation and The One Big Beautiful Bill's tax cuts take effect, American businesses and families alike have the certainty that the best is yet to come." Mr. Trump re-entered office in January promising to rewrite the rules of international commerce, which he has long maintained disadvantage the U.S. and hurt American workers. In that effort, he has embraced tariffs as a way to reduce trade deficits with other nations, energize domestic manufacturers, generate federal revenue and gain leverage in foreign policy. In practice, the White House has struggled to deliver on that ambitious agenda, Daniel Altman, an economist and founder of investment newsletter High Yield Economics, told CBS MoneyWatch. "There were never enough trade negotiators in all of Washington to conclude all of these details by August 1," he said. "We have some framework agreements that have made the headlines, but as we're finding out a lot of those deals include tariff rates that are pretty much the same as the base rate of 15% that the White House has mooted for the rest of the world." Yet despite the appearance of chaos that has attended some of the rollout of his new tariff regime, Mr. Trump has clearly succeeded in changing the terms of trade with several key economic partners in ways that could favor the U.S. In some cases, that includes winning the elimination or significant reductions in tariffs on American exports going the other way. Under its deal with the EU, for instance, the U.S. will impose a 15% tax on most of the trading bloc's imports, but the EU has agreed not to charge any levy on imports from the U.S. Deals with Japan and South Korea impose the same tariff rate on those countries' exports to the U.S. Other countries that struck trade deals with the U.S. have acceded to higher tariffs in hopes of ensuring good relations with Mr. Trump and avoiding even higher levies. Those include Indonesia and the Philippines, which will each face a 19% tariff on their exports. The U.S. will subject imports from Vietnam to a 20% duty, plus a 40% tariff on goods that are transshipped via other countries. "In any other time frame, one would have said that having the EU, Korea, Japan, Philippines, Indonesia and the United Kingdom covers an awful lot of world trade and U.S. trade," Alan Wolff, senior fellow at the nonpartisan Peterson Institute for International Economics and former deputy director-general of the World Trade Organization, told CBS MoneyWatch. President Trump's tariff agenda is also generating significant revenue. According to the U.S. Treasury, the U.S. in June brought in $27 billion in tariff revenue — more than three times what it collected in the same period a year ago. The White House has repeatedly insisted that tariff costs will be borne by foreign countries and that the levies will help spur investment in U.S. manufacturing. Trade experts note that tariffs are typically paid by importers, which often pass on those costs to consumers in the form of higher prices.
Yahoo
29-06-2025
- Business
- Yahoo
‘Fog in the data': Soaring stock market nears second half of 2025 with lingering uncertainty
Stocks made a swift and historic comeback from the market's April bottom, with the S&P 500 (^GSPC) closing at a record high on Friday. Now, as the first half of 2025 draws to a close, overarching risks are all but removed. From tariff-driven inflation pressures to conflicting economic signals and murky data, what lies ahead is anything but straightforward. Read more: How to protect your money during turmoil, stock market volatility "We are going to see an inflation reacceleration that will be tariff-induced," EY chief economist Greg Daco told Yahoo Finance on Friday. "There's more pressure to come into the economy [and that will lead to] income erosion and a consumer spending slowdown. That is really the picture that we should expect in the second half of this year." The latest reading of the Federal Reserve's preferred inflation gauge reflected some of those concerns, with price increases accelerating in May as inflation remains above the Fed's 2% target amid underlying signs of slowing economic growth. "The broad picture is that we are going to be in an environment where we're going to see increased fog in the data at the same time as there is increased fog from policy uncertainty," Daco said, adding it's a "combo that is not ideal for anybody that is looking to plan for the next few years." That includes the Federal Reserve, as policymakers walk a delicate line when deliberating potential rate cuts. And while some Fed officials have reopened the door to a July cut, Daco believes the bar remains high. "I think we should not expect a July rate cut," he said. "The majority of the FOMC voting members are not on board." Instead, Daco sees September as the more likely pivot point, with economic momentum expected to cool further in the coming months. "We will have seen more demand erosion, we will have seen a labor market that unfortunately has slowed, and income growth as a result has slowed," the economist explained, noting that this slowdown could outweigh the risk of near-term inflation reaccelerating from tariffs. 'The Fed is going to have to decide to, on the side of caution, focus more on the growth slowdown because the inflation effect is likely to be short-lived.' Those economic concerns, however, have yet to weigh heavily on investors. Markets have powered higher, led by strength in tech and financials, as consumer sentiment rebounds and traders digest growing clarity around trade policy. 'The markets are starting to focus on some of the more positive growth aspects,' said Keith Lerner, co-chief investment officer at Truist, pointing to the eventual passage of President Trump's tax bill, deregulation efforts, and the anticipated arrival of rate cuts. "So I think all that means the market does move higher," he added. "But there will certainly be some gut checks along the way." Investors were hit with one of those gut checks late Friday, when President Trump said he was cutting off trade talks with Canada just hours after confirming the US had reached a deal with China. It served as a sharp reminder that with Trump, even the expected remains unpredictable. In a sign of that uncertainty, several high-profile companies, including General Motors (GM), American Airlines (AAL), Mattel (MAT), and many others, withdrew guidance this past earnings season, citing concerns around global trade. While that added to market uncertainty, it also lowered expectations, setting the stage for potential upside surprises in the second half of the year. "When that happens, we have a lower bar that we can absolutely exceed, which is why we usually do very well every earnings season," said Jessica Inskip, director of investor research at "But we can also focus on the knowns, like more IPO activity and the AI narrative coming back to life." Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at
Yahoo
29-06-2025
- Business
- Yahoo
‘Fog in the data': Soaring stock market nears second half of 2025 with lingering uncertainty
Stocks made a swift and historic comeback from the market's April bottom, with the S&P 500 (^GSPC) closing at a record high on Friday. Now, as the first half of 2025 draws to a close, overarching risks are all but removed. From tariff-driven inflation pressures to conflicting economic signals and murky data, what lies ahead is anything but straightforward. Read more: How to protect your money during turmoil, stock market volatility "We are going to see an inflation reacceleration that will be tariff-induced," EY chief economist Greg Daco told Yahoo Finance on Friday. "There's more pressure to come into the economy [and that will lead to] income erosion and a consumer spending slowdown. That is really the picture that we should expect in the second half of this year." The latest reading of the Federal Reserve's preferred inflation gauge reflected some of those concerns, with price increases accelerating in May as inflation remains above the Fed's 2% target amid underlying signs of slowing economic growth. "The broad picture is that we are going to be in an environment where we're going to see increased fog in the data at the same time as there is increased fog from policy uncertainty," Daco said, adding it's a "combo that is not ideal for anybody that is looking to plan for the next few years." That includes the Federal Reserve, as policymakers walk a delicate line when deliberating potential rate cuts. And while some Fed officials have reopened the door to a July cut, Daco believes the bar remains high. "I think we should not expect a July rate cut," he said. "The majority of the FOMC voting members are not on board." Instead, Daco sees September as the more likely pivot point, with economic momentum expected to cool further in the coming months. "We will have seen more demand erosion, we will have seen a labor market that unfortunately has slowed, and income growth as a result has slowed," the economist explained, noting that this slowdown could outweigh the risk of near-term inflation reaccelerating from tariffs. 'The Fed is going to have to decide to, on the side of caution, focus more on the growth slowdown because the inflation effect is likely to be short-lived.' Those economic concerns, however, have yet to weigh heavily on investors. Markets have powered higher, led by strength in tech and financials, as consumer sentiment rebounds and traders digest growing clarity around trade policy. 'The markets are starting to focus on some of the more positive growth aspects,' said Keith Lerner, co-chief investment officer at Truist, pointing to the eventual passage of President Trump's tax bill, deregulation efforts, and the anticipated arrival of rate cuts. "So I think all that means the market does move higher," he added. "But there will certainly be some gut checks along the way." Investors were hit with one of those gut checks late Friday, when President Trump said he was cutting off trade talks with Canada just hours after confirming the US had reached a deal with China. It served as a sharp reminder that with Trump, even the expected remains unpredictable. In a sign of that uncertainty, several high-profile companies, including General Motors (GM), American Airlines (AAL), Mattel (MAT), and many others, withdrew guidance this past earnings season, citing concerns around global trade. While that added to market uncertainty, it also lowered expectations, setting the stage for potential upside surprises in the second half of the year. "When that happens, we have a lower bar that we can absolutely exceed, which is why we usually do very well every earnings season," said Jessica Inskip, director of investor research at "But we can also focus on the knowns, like more IPO activity and the AI narrative coming back to life." Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at Inicia sesión para acceder a tu cartera de valores
