Latest news with #YaleBudgetLab
a day ago
- Business
Consumer confidence brightens as Trump rolls back tariffs
Consumer confidence improved more than expected in May, ending a monthslong stretch of worsening consumer attitudes as President Donald Trump's tariffs set off company warnings about price increases even after the president eased his policy. The reading of brightened consumer sentiment snapped five consecutive months of decline, which had brought the Conference Board gauge to its lowest level since the COVID-19 pandemic. The rebound in consumer confidence took hold across all age and income demographics, the Conference Board said. A trade agreement between the U.S. and China earlier this month slashed tit-for-tat tariffs between the world's two largest economies and triggered a surge in the stock market. Within days, Wall Street firms softened their forecasts of a recession. The U.S.-China accord marked the latest softening of Trump's levies, coming weeks after the White House paused far-reaching "reciprocal tariffs" on dozens of countries. Trump also eased sector-specific tariffs targeting autos, and rolled back duties on some goods from Mexico and Canada. An array of tariffs remain in place, however, including an across-the-board 10% levy that applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum. Consumers face the highest overall average effective tariff rate since 1934, the Yale Budget Lab found this month. A growing set of major retailers have warned of possible tariff-driven price hikes, including Nike, Target, Walmart and Best Buy. Walmart CEO Doug McMillan last week said tariffs risk prices increases for a wide range of goods that includes food, toys and electronics. "The merchandise that we import comes from all over the world," McMillon said. "All of the tariffs create cost pressure for us." Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shopper sentiment sours. In theory, a slowdown of spending could hammer some businesses, prompting layoffs that in turn further shrink consumer appetite. Despite ongoing market swings, key measures of the economy remain fairly strong. The unemployment rate stands at a historically low level and job growth remains robust, though it has slowed from previous highs. In recent months, inflation has cooled, reaching its lowest level since 2021.
Forbes
a day ago
- Business
- Forbes
Trump's Tariff Chaos Is Hitting Small Businesses Hard
$SPX Nears 6,000, but Trump's Tariff Chaos Is Hitting Small Businesses Hard It must be Tuesday because President Trump has changed his mind about tariffs, again. Seriously, this tariff whipsawing is getting old. It is a lesson to investors, though: Timing the stock market based on a mercurial leader is conducive to making many bad choices. The president announced on Sunday that his 50% tariffs on European goods have been delayed until early July. Many rationalize that President Trump is using impeccably elastic timing to string partners off their game. They say it's all part of his 'Art of the Deal.' Yeah, it's not that. The S&P 500 is now nearing 6,000, about the same level it was when President Trump was sworn into office. In the interim, the president's "Liberation Day" set uncertain tax rates that sent stock markets tumbling. All of the gains since then are the direct result of those import taxes being walked back. Meanwhile, President Trump has won no concessions from trading partners since early April. If anything, foreign trade negotiators have learned that the president can be pushed around to determine American interests. Self-imposed deadlines have been repeatedly broken. Research from the nonpartisan Yale Budget Lab predicts that President Trump's tariffs could end up costing average American households $2,600. That's twice in the tens of trillions of years of back-breaking inflation, and the promise from President Trump of a new beginning. However, the higher tariffs are hitting small businesses even harder. Many mom-and-pop shops don't have deep pockets. However, reportedly in April, that earlier tariff wave Apple (AAPL) began flying in jumbo jets full of iPhones. That inventory is now being sold tariff-free. Small businesses are suffering. Many don't have huge inventories, nor can they afford tariffs that could add thousands in unexpected costs. Small companies employ 46% of American workers, according to the Bureau of Labor Statistics. Layoffs are coming. A survey in April from the U.S. Chamber of Commerce found that small business owners are the most concerned about revenues since the organization began tracking data in 2021. We will know more when the May jobs report is released next week. Expect a material slowdown in employment, lower interest rates, and a lot of rationalizing about why the economy is being deliberately slowed to save it.
Gulf Today
5 days ago
- Business
- Gulf Today
The hidden moral cost of America's tariff crisis
In the spring of 2025, as American families struggle with unprecedented consumer costs, we find ourselves at a point of "moral reckoning." The latest data from the Yale Budget Lab reveals that tariff policies have driven consumer prices up by 2.9% in the short term. In comparison, the Penn Wharton Budget Model projects a staggering 6% reduction in long-term GDP and a 5% decline in wages. But these numbers, stark as they are, tell only part of the story. The actual narrative is one of moral choice and democratic values. Eddie Glaude describes this way in his book 'Democracy in Black': Our economic policies must be viewed through the lens of ethical significance — not just market efficiency. When we examine the tariff regime's impact on American communities, we see economic data points and a fundamental challenge to our democratic principles of equity and justice. Far too often, the burden of such policies falls disproportionately on those who are least able to bear it. Black Enterprise reports that Black-owned businesses face a dual challenge: economic survival and preserving their role as community anchors. The average American household is preparing to shoulder an additional $3,800 annual costs. Still, this figure masks a more profound inequity — BIPOC communities and working-class families spend a higher percentage of their income on consumer goods, meaning they bear a disproportionate share of the tariff burden. The state of our economic solvency is particularly crucial because it intersects with a concept known as the 'value gap." The value gap is a premise that white(ness) lives are valued more than others, which Gluade argues remains embedded in our economic and legislative policies. Trump's enacted tariffs' disparate impact on ethnic and uniquely diverse-owned businesses isn't merely coincidental; it reflects more profound structural inequities in our financial system. Small businesses, particularly those in marginalized communities, face existential threats. According to Small Business Majority, 53% of small companies are concerned about tariffs' negative impacts. These aren't just statistics — they represent community pillars, generational wealth builders, and engines of local economic mobility. Adherence to a moral imperative requires us to move beyond purely economic calculations. It invites deeply reflective and prophetic questioning of ourselves and our systems. We must ask: What kind of society do we wish to be? How do our trade policies reflect our values? The answer lies not in protectionist rhetoric but in "democratic practices" — policies that strengthen communities rather than fracture them. Many economists forecast that 72% of small businesses anticipate higher prices; we are not just seeing market dynamics at work. The country is witnessing the erosion of community resilience, the narrowing of economic opportunity, and the weakening of social bonds that sustain democratic life. Finding sound solutions requires reimagining our economic policies through a moral lens and prioritizing equity and community well-being. Hence, developing trade policies that: * Recognize the interconnected nature of economic justice and democratic health * Account for disparate impacts on marginalized communities * Support rather than undermine local economic ecosystems * Prioritise long-term community stability over short-term political gains The potential impact of the proposed tariff on US communities and consumers could not result in economic consequences. Such tariffs bring to bear a moral crisis that demands a response grounded in principled and practical solutions. Pathways forward are possible with increased economic adjustments; they fundamentally rethink how we value community, equity, and democratic participation in financial decisions. A democracy's economy ought to be more than just market efficiency. It should be morally courageous and committed to shared prosperity. Fierce debate over Trump-era tariffs transcends mere spreadsheets and GDP calculations. It is not an argument about trade deficits or quarterly economic indicators — it's a mirror reflecting our national identity and core values. When leaders indiscriminately slap tariffs on steel from Canada or solar panels from China, we're not just adjusting numbers on a balance sheet but making profound statements about how we view our place in the global community. Unfortunately, protectionist policies often hit hardest in unexpected places: the main street's mom & pop shops, rural American manufacturers who can't afford higher material costs, the local farmer watching crops rot because their usual markets have vanished, or the single parent facing steeper prices at the grocery store. Instead of retreating behind economic walls, policies that match the complexity of our times are essential — policies that protect American workers while staying true to our traditions of innovation, fair play, and economic opportunity for all. We are left to choose between continuing in a direction that exacerbates economic inequality and community fragmentation or embracing a vision of monetary policy as a moral practice that strengthens our democratic fabric while ensuring no community bears an unjust burden in our pursuit of economic security.
NBC News
5 days ago
- Business
- NBC News
House Republican tax bill favors the rich — how much they stand to gain, and why
There's a stark contrast between the effects on high earners and those on low-income households in a sprawling legislative package House Republicans passed Thursday. The bulk of the financial benefits in the legislation — called the 'One Big Beautiful Bill Act' — would flow to the wealthiest Americans, courtesy of tax-cutting measures such as those for business owners, investors and homeowners in high-tax areas, experts said. However, low earners would be worse off, they said. That's largely because Republicans partially offset those tax cuts — estimated to cost about $4 trillion or more — with reductions to social safety net programs such as Medicaid and the Supplemental Nutrition Assistance Program, or SNAP, formerly known as food stamps. The tax and spending package now heads to the Senate, where it may face further changes. 'It skews pretty heavily toward the wealthy' The Congressional Budget Office, a nonpartisan federal scorekeeper, estimates income for the bottom 10% of households would fall by 2% in 2027 and by 4% in 2033 as a result of the bill's changes. By contrast, those in the top 10% would get an income boost from the legislation: 4% in 2027 and 2% in 2033, CBO found. A Yale Budget Lab analysis found a similar dynamic. The bottom 20% of households — who make less than $14,000 a year — would see their annual incomes fall about $800 in 2027, on average, Yale estimates. The top 20% — who earn over $128,000 a year — would see theirs grow by $9,700, on average, in 2027. The top 1% would gain $63,000. The Yale and CBO analyses don't account for last-minute changes to the House legislation, including stricter work requirements for Medicaid. 'It skews pretty heavily toward the wealthy,' said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration. The legislation compounds the regressive nature of the Trump administration's recent tariff policies, economists said. 'If you incorporated the [Trump administration's] hike in tariffs, this would be even more skewed against lower- and working-class families,' Tedeschi said. Most tax cuts in the bill go to top-earning households There are several ways the House bill skews toward the wealthiest Americans, experts said. Among them are more valuable tax breaks tied to business income, state and local taxes and the estate tax, experts said. These tax breaks disproportionately flow to high earners, experts said. For example, the bottom 80% of earners would see no benefit from the House proposal to raise the SALT cap to $40,000 from the current $10,000, according to the Tax Foundation. The bill also preserves a lower top tax rate, at 37%, set by the 2017 Tax Cuts and Jobs Act, which would have expired at the end of the year. It kept a tax break intact that allows investors to shield their capital gains from tax by funneling money into 'opportunity zones.' Trump's 2017 tax law created that tax break, with the aim of incentivizing investment in lower-income areas designated by state governors. Taxpayers with capital gains are 'highly concentrated' among the wealthy, according to the Tax Policy Center. All told, 60% of the bill's tax cuts would go to the top 20% of households and more than a third would go to those making $460,000 or more, according to the Tax Policy Center. 'The variation among income groups is striking,' the analysis said. Why many low earners are worse off That said, more than 8 in 10 households overall would get a tax cut in 2026 if the bill is enacted, the Tax Policy Center found. Lower earners stand to benefit from provisions including a higher standard deduction and temporarily enhanced child tax credit, and tax breaks tied to tip income and car loan interest, for example, experts said. However, some of those benefits may not be as valuable as they seem at first glance, experts said. For example, roughly one-third of tipped workers don't pay federal income tax, Tedeschi said. They wouldn't benefit from the proposed tax break on tips — it's structured as a tax deduction, which doesn't benefit households without tax liability, he said. Meanwhile, lower-income households, which rely more on federal safety net programs, would see cuts to Medicaid, SNAP, and benefits linked to student loans and Affordable Care Act premiums, said Kent Smetters, an economist and faculty director at the Penn Wharton Budget Model. The House bill would, for example, impose work requirements for Medicaid and SNAP beneficiaries. Total federal spending on those programs would fall by about $700 billion and $267 billion, respectively, through 2034, according to the Congressional Budget Office analysis. That said, 'if you are low income and don't get SNAP, Medicaid or ACA premium support, you will be slightly better off,' Smetters said. Some high earners would pay more in tax In a sense, it may not be surprising most tax benefits accrue to the wealthy. The U.S. has among the most progressive tax systems in the developed world, Smetters said. The top 10% of households pay about 70% of all federal taxes, he said. Such households would get about 65% of the total value of the legislation, according to a Penn Wharton analysis published Monday. A subset of high earners — 17% of the top 1% of households, who earn at least $1.1 million a year — would pay more in tax, according to the Tax Policy Center. 'In part this is due to limits on the ability of some pass-through businesses to fully deduct their state and local taxes and a limit on all deductions for top-bracket households,' wrote Howard Gleckman, senior fellow at the Tax Policy Center.
5 days ago
- Business
Stocks slide as Trump threatens tariffs on Apple and European Union
Stocks tumbled in early trading on Friday after President Donald Trump threatened new tariffs targeting tech giant Apple and the European Union. The Dow Jones Industrial Average dropped 458 points, or 1.1%, while the S&P 500 declined 1.2%. The tech-heavy Nasdaq dropped 1.6%. Shares of Apple fell nearly 3% at the open of trading. European stocks also declined on Friday, as the STOXX Europe 600 index fell nearly 2%. In a social media post, Trump urged Apple to manufacture iPhones in the U.S., criticizing the company for plans to shift some production to India in an effort to avoid tariffs slapped on China. If Apple fails to shift iPhone manufacturing to the U.S., Trump said, the company would face a 25% tariff. Minutes later, Trump issued a social media post slamming the European Union over a trade posture that he described as "very difficult to deal with." In response,Trump said he is "recommending" a 50% tariff on goods from the European Union to begin on June 1. The market dip erased some gains made in recent weeks as Trump rolled back levies. Trump last month exempted phones, computers and chips from so-called "reciprocal tariffs" imposed on China-made goods, which at that time amounted to a 125% levy. The move also excluded such products from a 10% across-the-board tariff imposed on nearly all imports. Last week, Trump temporarily slashed the reciprocal tariffs on China from 125% to 10% as the U.S. and China hold trade negotiations. China still faces 20% tariffs over its role in the fentanyl trade, bringing total levies on Chinese goods to 30%. The U.S.-China agreement marked the latest softening of Trump's levies, coming weeks after the White House paused far-reaching "reciprocal tariffs" on dozens of countries. Trump also eased sector-specific tariffs targeting autos, and rolled back duties on some goods from Mexico and Canada. An array of tariffs remain in place, however, including an across-the-board 10% levy that applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum. Consumers face the highest overall average effective tariff rate since 1934, the Yale Budget Lab found earlier this month.
