Latest news with #HouseReconciliationBill
Yahoo
6 days ago
- Business
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US economic growth forecast cut sharply due to higher tariffs
The outlook for economic growth in the U.S. was slashed due to higher tariffs in a new report released by the Organisation for Economic Co-operation and Development (OECD) on Tuesday. The OECD's forecast cut U.S. economic growth to 1.6% in 2025 and 1.5% in 2026, well below the 2.8% growth in gross domestic product (GDP) that was recorded last year. The group attributed the slower growth forecast to the "substantial increase in the effective tariff rate on imports and retaliation from some trading partners, high economic policy uncertainty, a significant slowdown in net immigration, and a sizeable reduction in the federal workforce." It also projected that annual headline inflation will rise to 3.9% by the end of 2025 because of higher import prices stemming from tariff increases, before easing next year amid moderate GDP growth and higher levels of unemployment. Trump Admin Seeks Countries' Best Offers Ahead Of Tariff Deadline "Risks to the growth projection are skewed to the downside, including a more substantial slowing of economic activity in the face of policy uncertainty, greater-than-expected upward pressure on prices from tariff increases, and large financial market corrections," the OECD wrote. Read On The Fox Business App "There has been a significant shift in U.S. trade policy since February through a wide range of announcements regarding new tariffs and other trade restrictions, some of which have been reversed, delayed or modified, together with retaliation by some trading partners," the report said. China Accuses Us Of Undermining Trade Agreement In the forecast, President Donald Trump's tariffs that were in effect in mid-May would remain in place through the rest of 2025 and into 2026. The OECD noted the effective tariff rate on Chinese imports is up about 30%, while the tariff rate on other trading partners is up about 10%, on average. "This represents an unprecedented increase in the average effective tariff rate, raising it from about 2.5% to above 15%, the highest since World War II," the OECD wrote. "While the new tariffs may increase incentives to produce in the United States, higher import prices will reduce real incomes for consumers and raise the price of imported intermediate goods. Tariffs and policy uncertainty disrupt value chains and negatively affect investment." House Reconciliation Bill Would Increase Budget Deficits By $2.3 Trillion Over A Decade: Cbo The forecast said that the Federal Reserve will be able to ease monetary policy and lower interest rates once inflation abates, as long as inflation expectations are well-anchored. It also noted that the federal government will need to rein in budget deficits, which are expected to grow larger in the years ahead, writing that a "significant fiscal adjustment will be required over several years." Deficits are expected to rise from about 7.5% of U.S. GDP in 2024 to over 8% in 2026, with the public debt-to-GDP ratio topping 100% by the end of 2026. "New tariff revenues and spending cuts resulting from the shrinking of the federal workforce will be deficit-reducing," though the OECD noted that "these effects will be more than offset by a slowing in revenue growth from weaker economic activity, as well as the expected enactment of a fiscal package for fiscal year 2026." That package would extend the expiring provisions of the 2017 Tax Cuts and Jobs Act, as well as cutting other personal and corporate taxes, boosting spending on defense and border security, while making spending cuts to Medicaid. The OECD said that the package "is responsible for most of the projected 0.6 percentage point of GDP rise in the deficit in 2026."Original article source: US economic growth forecast cut sharply due to higher tariffs Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
7 days ago
- Business
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Jamie Dimon warns US debt and deficits are a growing problem
JPMorgan Chase CEO Jamie Dimon warned in a new interview that the U.S. government's rising debt and budget deficits are a problem that will eventually cause bond market issues, and offered his thoughts on how reforms should move forward. Dimon, in an interview aired on Monday on FOX Business Network's "Mornings with Maria," was asked by host Maria Bartiromo how focused he is on the more than $36 trillion national debt and widening budget deficits. "It's a big deal, you know it is a real problem, but one day… the bond markets are gonna have a tough time," Dimon said. "I don't know if it's six months or six years." "The real focus should be growth, pro-business, proper deregulation, permitting reform, getting rid of blue tape, getting skills in schools, get that growth going – that's the best way," he said. House Reconciliation Bill Would Increase Budget Deficits By $2.3 Trillion Over A Decade: Cbo "Then reform some of these programs that everybody knows can be reformed properly," Dimon said, adding that those reforms can be structured in a way to lower the cost of those programs while mitigating the impact on the poor, elderly or those dealing with illnesses while ensuring those programs are sustainable. Read On The Fox Business App "I think some reform can take place. We're not taking benefits out of poor people or sick people or old people," he said. "You're just putting rules in place that make it more reasonable – you know, less fraud, less waste, less abuse." "I think all of those things need to be done, and then we can conquer that problem," Dimon said of the U.S. government's fiscal challenges. Cbo Says Us Budget Deficits To Widen, National Debt To Surge To 156% Of Gdp The federal government is projected to run roughly $2 trillion budget deficits annually in the next few years, which is historically large considering the deficit was $1 trillion in fiscal year 2019, the last pre-pandemic fiscal year. Deficits have widened in part due to rising spending on Social Security and Medicare amid the aging of America's population. Higher interest expenses on the national debt, which stem from the size and growth of the debt as well as higher interest rates, are the other primary drivers of the deficit. In the last fiscal year, interest expenses were a larger cost than the Department of Defense's discretionary budget as well as Medicare. Moody's Downgraded Us Credit Rating: What Does It Mean? The challenging budget situation the federal government is in led to a U.S. credit rating downgrade by Moody's Ratings last month, which lowered the rating one notch from the highest tier, Aaa, to Aa1. The firm said the downgrade "reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns." "Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," the firm said. "We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration."Original article source: Jamie Dimon warns US debt and deficits are a growing problem
