Latest news with #PantheonEconomics
The Hill
3 days ago
- Business
- The Hill
Stocks slump as Wall Street braces for inflation spike
Stocks closed with losses Monday as Wall Street braces for the first federal inflation report released after President Trump ousted the head of the agency responsible for producing it. The Dow Jones Industrial Average closed with a loss of 201 points, falling 0.5 percent Monday. The S&P 500 index and Nasdaq composite each fell 0.3 percent. The dip comes one day before the Bureau of Labor Statistics (BLS) is set to release the latest reading of the consumer price index (CPI), which is expected to show inflation rising in July. Economists expect prices to have risen by 0.2 percent in July — 0.3 percent without food and energy included — to hit a core annual inflation rate of 3 percent, according to consensus estimates. 'The data, due tomorrow, probably will show that goods prices rose at an above-trend pace, albeit no faster than in June. Meanwhile, services prices likely increased moderately overall, boosted by a rebound in airline fares, partly offset by a fall in hospital services prices,' wrote Samuel Tombs and Oliver Allen of Pantheon Economics in a research note. After winning the 2024 election with the promise to bring prices down, Trump is facing increasing backlash from voters and concerns from fellow Republicans as his tariffs keep up pressure on inflation. Wall Street will pay close attention to the report and Trump's reaction to it after the president's explosive response to the July jobs report. The federal jobs report for July showed the U.S. gaining just 73,000 jobs last month and included stunning revisions to the initially reported employment gains for May and June. The net result showed the U.S. gaining barely more than 100,000 jobs over the past three months, roughly a third of what economists say is necessary to prevent unemployment from rising. Trump responded by accusing the BLS — a nonpartisan agency of statisticians — of manipulating the jobs data to benefit Democrats, but he provided no evidence to support his claim. The president also fired former BLS Commissioner Erika McEntarfer, sparking an outcry from her Democratic and Republican predecessors, along with scores of economists. Despite Trump's claims to the contrary, revisions to employment and inflation data are normal aspects of how the BLS maintains the most accurate data on the economy. The White House has also failed to show any evidence of political manipulation of data at the BLS, and economists say it would be nearly impossible to skew the jobs report in that manner. 'These numbers are put together by teams of literally hundreds of people following detailed procedures that are in manuals. There's no conceivable way that the head of the BLS could have manipulated this number,' said former Treasury Secretary Larry Summers. Any doubts about the credibility of U.S. jobs or inflation data could pose serious consequences for the country's reputation and financial dominance. 'This is much more dangerous than the pressure on the Fed,' Cato Institute research fellow Jai Kedia told The Hill. 'The labor and inflation statistics are the bedrock of every other federal institution that's trying to work on the economy.'
Politico
10-07-2025
- Business
- Politico
Trump steps up attacks on Powell with tariff inflation muted
Businesses accelerated their imports prior to Trump's tariffs taking effect, which may have helped keep prices steady as they worked through existing inventories. The June Logistics Managers Index — which tracks freight activity and pricing — found that inventories expanded last month 'as importers scrambled to take advantage of the pause in the most punitive tariffs.' Trump's latest round of tariff threats may have little effect on overall costs, however. Samuel Tombs of Pantheon Economics said the sky-high 'reciprocal' levies that could hit Japanese and South Korean imports on Aug. 1 won't have a material impact on the overall tariff rate or inflation, given that the exports from both countries are largely covered by exemptions and sector-specific levies. What's more, there's some indication that certain exporters from overseas might be absorbing some of the costs by reducing prices for American importers. Economists at Goldman Sachs estimate that exporters have eaten a fifth of the costs so far — with Chinese exporters accounting for the lion's share — based on how product-level import prices have moved following the implementation of new import taxes. (Miran noted in his report that prices on imported goods began fading in 2023.) Still, the remaining costs are considerable. The U.S. has taken in almost $100 billion in tariff revenue this year — Bessent recently said the total could climb to as high as $300 billion by year-end — but evidence suggests those costs have largely been borne by companies. In the same report, the Goldman team estimated that tariffs have been responsible for less than a one-tenth of a percentage point increase in consumer prices this year — though the effects could still intensify. While businesses from Best Buy to Costco have raised prices due to import duties, many others are holding fire. 'Most businesses have not fully passed along the cost of the tariffs,' Neil Bradley, the chief policy officer and head of strategic advocacy at the U.S. Chamber of Commerce, said during a panel on Wednesday. 'Part of that's a hope that the tariffs go down. Part of it is a concern about market share that they might have. Part of it might be uncertainty about the macroeconomy.' As long as that remains the case, high-level economic data will continue to provide Trump with arguments to go after Powell over borrowing costs — or make lowering interest rates a litmus test for anyone who might want to take his place.
CNN
03-07-2025
- Business
- CNN
The US economy added a stronger-than-expected 147,000 jobs in June and the unemployment rate fell to 4.1%
CNN — The US job market continues to chug along despite heightened uncertainty about the economy and how President Donald Trump's tariffs could shake out. The economy added a stronger-than-expected 147,000 jobs in June, and the unemployment rate ticked down to 4.1% from 4.2%, according to Bureau of Labor Statistics data released Thursday. Last month's gains, which landed above expectations for 117,500 jobs to be added, marked a slight increase from May's total, which was revised up slightly (5,000 jobs) to 144,000. April's job gains were revised higher by 11,000 jobs, for a net gain of 158,000. Those revisions and Thursday's data bring the three-month average job growth to 150,000. However, despite the continuation of fairly solid monthly employment gains, Thursday's jobs report once again showed several potentially concerning signs, including some fissures that may be spreading under the weight of the Trump administration's economy-shifting policies. Less encouraging details emerge Notably, job growth is not widespread, indicating that the biggest opportunities are within a select few industries. The vast majority of the month's gains were in health care (+58,600 jobs), leisure and hospitality (+20,000 jobs), and state and local government (+80,000 jobs*). [*The sharp increase here is likely 'artificial,' economists for Pantheon Economics cautioned. More on that below.] And when stripping out the public sector gains (the +80,000 was offset slightly by a loss of 7,000 jobs federally), US private sector businesses added 74,000 jobs in June, the smallest monthly gain since October 2024. 'The tariff tax hike, restrictive monetary policy and worries about a further intensification of the trade war are weighing heavily on labor demand,' Samuel Tombs, chief US economist at Pantheon Macroeconomics, wrote in an investor note on Thursday. 'Private payrolls excluding healthcare and education rose by just 23,000, well below the 50,000 average pace in the previous 12 months. Fundamentally, then, this is a weak report.' Tombs noted that the mathematical adjustments made by the BLS to smooth out seasonal fluctuations (think: construction employment surging in the spring and retail ramping up hiring in advance of Christmas) may have made the overall numbers look a little more rosy. Education jobs typically fall in the summertime; however, the decrease was not as sharp this year, which the seasonal adjustment factor relayed as a strong gain. The labor force participation rate ticked down, while the unemployment rate for Black workers surged by 0.8 percentage points to 6.8%, its highest rate since January 2022. The household survey, one of two that feed in to the monthly jobs report, often can have volatile monthly swings; however, rising unemployment levels for Black workers has in the past served as an indicator of economic weakness. Workers' wages overall increased at a slower pace than economists expected. Average hourly earnings rose by 8 cents, or 0.2%, to $36.30 last month, bringing the annual rate to 3.7% from 3.9%. The headline unemployment rate moving down to 4.1% also may be a function of a declining labor force, economists cautioned. 'One gets the sense that the cumulative impact of tighter immigration policy is on the margin beginning to impact the size of the labor force and will impose a ceiling on any prospective increase in the unemployment rate as the economy slows,' Joe Brusuelas, chief economist for RSM US, wrote in a note on Thursday. Layoff activity remains muted Stocks were higher Thursday: The Dow rose by 365 points, or 0.8% by mid-morning. The broader S&P 500 rose 0.8% and the tech-heavy Nasdaq gained 0.9%. Trump has introduced a bevy of sweeping policies that have the potential to impact the economy. However, questions around how those actions will shake out — particularly the size and scope of tariffs — have heightened uncertainty and hampered hiring activity, to some extent. For several months running, the labor market has been in a state of low churn: Hiring activity is at near 10-year lows and workers aren't feeling confident enough to quit; however, employers, for the most part, are holding on to the workers they have. Layoff activity hasn't accelerated recently, according to a variety of indicators, including weekly jobless claims data. On Thursday, the latest batch of claims data showed that first-time filings for unemployment insurance — considered a proxy for layoffs — decreased to 233,000 for the week ended June 28 from 237,000 the week before, according to a separate report released by the Department of Labor. While first-time claims aren't steadily on the rise, people appear to be having a harder time finding work when they're unemployed. Continuing claims, which are filed by people who have received jobless benefits for at least one week, have been butting up against three-and-a-half-year highs. During the week that ended June 21 (continuing claims data runs at a lag), those filings were unchanged at 1.964 million, according to the Labor Department report.
