Latest news with #Zandi
Yahoo
4 days ago
- Business
- Yahoo
Jobs data from May could show a mostly stable economy, but economists say Trump tariffs will soon bite
Signs are growing that President Donald Trump's unprecedented tariffs strategy is starting to take a bigger bite out of the U.S. economy. Still, the latest jobs data from the Bureau of Labor Statistics is likely to show some economic stability persisted into May. Forecasts were for 120,000 new payrolls added in the last month; most economists consider anything above 100,000 a healthy figure — though it would still represent the fewest monthly jobs created since February and fall below the recent 12-month average of about 150,000. Even if the job numbers beat forecasts, other data are already pointing to signs of a softening economy. On Wednesday, private payroll processor ADP reported the weakest monthly jobs total since March 2023. While economists say ADP's data often align with the official BLS data, the trend is clear, with ADP reporting fewer jobs added in five of the past seven months. A separate report from the Institute for Supply Management showed that activity at U.S. service firms unexpectedly contracted last month for the first time in nearly a year, while hiring decelerated. On Thursday, the Department of Labor reported weekly jobless claims came in higher than expected, reaching their highest level since October — while continuing unemployment claims remained elevated, an indication that it is taking longer for out-of-work people to find a job. 'We're throttling back — and the damage from the trade war is still coming,' Mark Zandi, chief economist at Moody's Analytics, told NBC News. Zandi said forthcoming inflation readings are likely to reflect firms raising prices due to Trump's import taxes. Indeed, a Federal Reserve survey released Wednesday indicated 'widespread reports' of companies 'expecting costs and prices to rise at a faster rate going forward,' with higher tariffs 'putting upward pressure on costs and prices.' Separately, a Congressional Budget Office study now estimates inflation will increase by an average of 0.4 percentage points in 2025 and 2026 as a result of Trump's tariffs. As prices begin to rise, consumer dollars won't go as far, Zandi said. That will likely lead to a feedback loop of reduced economic activity and reduced hiring. 'The job market already feels fragile,' he added. As demand softens 'more palpably,' Zandi said, 'we'll start to see layoffs' — with BLS jobs data likely falling consistently below 100,000 in the coming months. Already, firms are showing signs of holding back on investment and bringing on new workers. Earlier in the week, the BLS reported that the hiring rate remains stuck at levels last seen in 2014, when the U.S. economy was still emerging from the Great Recession. Trump has claimed that thanks to his tariffs, the U.S. economy is 'booming.' Yet he continues to pressure the Federal Reserve to lower interest rates, which would make it easier for businesses and consumers to borrow money. In a post on Truth Social Wednesday, he pointed to the weak ADP payrolls numbers as evidence that the economy needs support. Analysts say that despite the gathering signs of economic deterioration, the bar remains high for the Federal Reserve to lower rates. Instead, the central bank will likely continue to err on the side of keeping interest rates elevated to ensure the pace of price growth remains under control, said Andrew Husby, senior U.S. economist at BNP Paribas financial group. For consumers, that means relief is still not in sight. 'It's going to take something obviously cracking in a sustained way' for the Fed to reduce borrowing costs, Husby said. This article was originally published on
NBC News
4 days ago
- Business
- NBC News
Jobs data from May could show a mostly stable economy, but economists say Trump tariffs will soon bite
Signs are growing that President Donald Trump's unprecedented tariffs strategy is starting to take a bigger bite out of the U.S. economy. Still, the latest jobs data from the Bureau of Labor Statistics is likely to show some economic stability persisted into May. Forecasts were for 120,000 new payrolls added in the last month; most economists consider anything above 100,000 a healthy figure — though it would still represent the fewest monthly jobs created since February and fall below the recent 12-month average of about 150,000. Even if the job numbers beat forecasts, other data are already pointing to signs of a softening economy. On Wednesday, private payroll processor ADP reported the weakest monthly jobs total since March 2023. While economists say ADP's data often align with the official BLS data, the trend is clear, with ADP reporting fewer jobs added in five of the past seven months. A separate report from the Institute for Supply Management showed that activity at U.S. service firms unexpectedly contracted last month for the first time in nearly a year, while hiring decelerated. On Thursday, the Department of Labor reported weekly jobless claims came in higher than expected, reaching their highest level since October — while continuing unemployment claims remained elevated, an indication that it is taking longer for out-of-work people to find a job. 'We're throttling back — and the damage from the trade war is still coming,' Mark Zandi, chief economist at Moody's Analytics, told NBC News. Zandi said forthcoming inflation readings are likely to reflect firms raising prices due to Trump's import taxes. Indeed, a Federal Reserve survey released Wednesday indicated 'widespread reports' of companies 'expecting costs and prices to rise at a faster rate going forward,' with higher tariffs 'putting upward pressure on costs and prices.' Separately, a Congressional Budget Office study now estimates inflation will increase by an average of 0.4 percentage points in 2025 and 2026 as a result of Trump's tariffs. As prices begin to rise, consumer dollars won't go as far, Zandi said. That will likely lead to a feedback loop of reduced economic activity and reduced hiring. 'The job market already feels fragile,' he added. As demand softens 'more palpably,' Zandi said, 'we'll start to see layoffs' — with BLS jobs data likely falling consistently below 100,000 in the coming months. Already, firms are showing signs of holding back on investment and bringing on new workers. Earlier in the week, the BLS reported that the hiring rate remains stuck at levels last seen in 2014, when the U.S. economy was still emerging from the Great Recession. Trump has claimed that thanks to his tariffs, the U.S. economy is 'booming.' Yet he continues to pressure the Federal Reserve to lower interest rates, which would make it easier for businesses and consumers to borrow money. In a post on Truth Social Wednesday, he pointed to the weak ADP payrolls numbers as evidence that the economy needs support. Analysts say that despite the gathering signs of economic deterioration, the bar remains high for the Federal Reserve to lower rates. Instead, the central bank will likely continue to err on the side of keeping interest rates elevated to ensure the pace of price growth remains under control, said Andrew Husby, senior U.S. economist at BNP Paribas financial group. For consumers, that means relief is still not in sight.
Yahoo
20-05-2025
- Business
- Yahoo
Moody's cuts America's pristine credit rating, citing rising debt
By Davide Barbuscia and Pushkala Aripaka (Reuters) -Moody's downgraded the U.S. sovereign credit rating on Friday due to concerns about the nation's growing, $36 trillion debt pile, in a move that could complicate President Donald Trump's efforts to cut taxes and send ripples through global markets. Moody's first gave the United States its pristine "Aaa" rating in 1919 and is the last of the three major credit agencies to downgrade it. Friday's cut by one notch to "Aa1" follows a change in 2023 in the agency's outlook on the sovereign due to wider fiscal deficits and higher interest payments. "Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," Moody's said on Friday, as it changed its outlook on the U.S. to "stable" from "negative." The announcement drew criticism from people close to Trump. Stephen Moore, former senior economic advisor to Trump and an economist at Heritage Foundation, called the move "outrageous". "If a US backed government bond isn't triple A-asset then what is?" he told Reuters. White House communications director Steven Cheung reacted to the downgrade via a social media post, singling out Moody's economist, Mark Zandi, for criticism. He called Zandi a political opponent of Trump. Zandi declined to comment. Zandi is the chief economist at Moody's Analytics, which is a separate entity from the credit ratings agency Moody's. Since his return to the White House on January 20, Trump has said he would balance the budget while his Treasury Secretary, Scott Bessent, has repeatedly said the current administration aims to lower U.S. government funding costs. But the administration's attempts to raise revenue and cut spending have so far failed to persuade investors. Trump's attempts to cut spending through Elon Musk's Department of Government Efficiency have fallen far short of its initial goals. And attempts to raise revenue through tariffs have sparked concerns about a trade war and global slowdown, roiling markets. Left unchecked, such worries could trigger a bond market rout and hinder the administration's ability to pursue its agenda. The downgrade, which came after market close, sent yields on Treasury bonds higher, and analysts said it could give investors a pause when markets re-open for regular trading on Monday. "It basically adds to the evidence that the United States has too much debt," said Darrell Duffie, a Stanford finance professor who was formerly on Moody's board. "Congress is just going to have to discipline itself, either get more revenues or spend less." FOCUS ON DEFICITS Trump is pushing lawmakers in the Republican-controlled Congress to pass a bill extending the 2017 tax cuts that were his signature first-term legislative achievement, a move that nonpartisan analysts say will add trillions to the federal government's debt. The downgrade came as the tax bill failed to clear a key procedural hurdle on Friday, as hardline Republicans demanding deeper spending cuts blocked the measure in a rare political setback for the Republican president in Congress. Moody's said the fiscal proposals under considerations were unlikely to lead to a sustained, multi-year reduction in deficits, and it estimated the federal debt burden would rise to about 134% of GDP by 2035, compared with 98% in 2024. "Moody's downgrade of the United States' credit rating should be a wake-up call to Trump and Congressional Republicans to end their reckless pursuit of their deficit-busting tax giveaway," Senate Democratic Leader Chuck Schumer said in a statement on Friday. "Sadly, I am not holding my breath." The cut follows a downgrade by rival Fitch, which in August 2023 also cut the U.S. sovereign rating by one notch, citing expected fiscal deterioration and repeated down-to-the-wire debt ceiling negotiations that threaten the government's ability to pay its bills. Fitch was the second major rating agency to strip the United States of its top triple-A rating, after Standard & Poor's did so after the 2011 debt ceiling crisis. "They have got to come up with a credible budget agreement that puts the deficit on a downward trajectory," said Brian Bethune, an economics professor at Boston College, referring to Republican lawmakers. MARKET FRAGILITY Investors use credit ratings to assess the risk profile of companies and governments when they raise financing in debt capital markets. Generally, the lower a borrower's rating, the higher its financing costs. "The downgrade of the US credit rating by Moody's is a continuation of a long trend of fiscal irresponsibility that will eventually lead to higher borrowing costs for the public and private sector in the United States," said Spencer Hakimian, chief executive at Tolou Capital Management, a hedge fund. Long-dated Treasury yields - which rise when bond prices decline - could go higher on the back of the downgrade, said Hakimian, barring news on the economic front that could increase safe-haven demand for Treasuries. The downgrade follows heightened uncertainty in U.S. financial markets as Trump's decision to impose tariffs on key trade partners has over the past few weeks sparked investor fears of higher price pressures and a sharp economic slowdown. "This news comes at a time when the markets are very vulnerable and so we are likely to see a reaction," said Jay Hatfield, CEO at Infrastructure Capital Advisors. 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
Kuwait Times
19-05-2025
- Business
- Kuwait Times
US Treasury chief rejects Moody's downgrade amid tax-cut debate
Downgrade could complicate Trump's efforts to cut taxes, send ripples through markets WASHINGTON: Treasury Secretary Scott Bessent on Sunday dismissed Moody's downgrade of the US sovereign credit rating, as the Republican-controlled Congress tried to push ahead on President Donald Trump's sweeping tax-cut bill. Bessent, in a pair of television interviews, said the bill's provisions extending the 2017 tax cuts passed under Trump's first term would spur economic growth that would outpace what the nation owed, even as nonpartisan analysts warn the measure it would add trillions to the federal government's $36.2 trillion in debt. Moody's downgraded the US sovereign credit rating on Friday due to concerns about the nation's growing debt pile, in a move that could complicate President Donald Trump's efforts to cut taxes and send ripples through global markets. 'I don't put much credence in the Moody's' downgrade, Bessent told CNN's 'State of the Union' program. The House of Representatives Budget Committee on Friday rejected the bill, with a handful of Republican hardliners saying they were concerned it did not sufficiently cut spending. House Speaker Mike Johnson separately said on Sunday the chamber is still 'on track' to pass the bill. The committee was set to try again in a rare Sunday night hearing (0200 GMT Monday). 'We've had lots of conversations. We'll have more today,' Johnson said on 'Fox News with Shannon Bream' when asked about hard-line Republicans Chip Roy and Ralph Norman demanding more spending cuts. Congressional Republicans in 2017 also argued that the tax cuts would pay for themselves by stimulating economic growth. But the nonpartisan Congressional Budget Office estimates the changes increased the federal deficit by just under $1.9 trillion over a decade, even when including positive economic effects. Moody's first gave the United States its pristine 'Aaa' rating in 1919 and is the last of the three major credit agencies to downgrade it. Friday's cut by one notch to 'Aa1' follows a change in 2023 in the agency's outlook on the sovereign due to wider fiscal deficits and higher interest payments. 'Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,' Moody's said on Friday, as it changed its outlook on the US to 'stable' from 'negative.' The announcement drew criticism from people close to Trump. Stephen Moore, former senior economic advisor to Trump and an economist at Heritage Foundation, called the move 'outrageous'. 'If a US backed government bond isn't triple A-asset then what is?' he told Reuters. White House communications director Steven Cheung reacted to the downgrade via a social media post, singling out Moody's economist, Mark Zandi, for criticism. He called Zandi a political opponent of Trump. Zandi declined to comment. Zandi is the chief economist at Moody's Analytics, which is a separate entity from the credit ratings agency Moody's. Since his return to the White House on January 20, Trump has said he would balance the budget while his Treasury Secretary, Scott Bessent, has repeatedly said the current administration aims to lower US government funding costs. But the administration's attempts to raise revenue and cut spending have so far failed to persuade investors. Trump's attempts to cut spending through Elon Musk's Department of Government Efficiency have fallen far short of its initial goals. And attempts to raise revenue through tariffs have sparked concerns about a trade war and global slowdown, roiling markets. Left unchecked, such worries could trigger a bond market rout and hinder the administration's ability to pursue its agenda. The downgrade, which came after market close, sent yields on Treasury bonds higher, and analysts said it could give investors a pause when markets re-open for regular trading on Monday. 'It basically adds to the evidence that the United States has too much debt,' said Darrell Duffie, a Stanford finance professor who was formerly on Moody's board. 'Congress is just going to have to discipline itself, either get more revenues or spend less.' — Reuters
Business Recorder
18-05-2025
- Business
- Business Recorder
Moody's cuts America's pristine credit rating, citing rising debt
NEW YORK: Moody's downgraded the US sovereign credit rating on Friday due to concerns about the nation's growing, $36 trillion debt pile, in a move that could complicate President Donald Trump's efforts to cut taxes and send ripples through global markets. Moody's first gave the United States its pristine 'Aaa' rating in 1919 and is the last of the three major credit agencies to downgrade it. Friday's cut by one notch to 'Aa1' follows a change in 2023 in the agency's outlook on the sovereign due to wider fiscal deficits and higher interest payments. 'Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,' Moody's said on Friday, as it changed its outlook on the US to 'stable' from 'negative.' The announcement drew criticism from people close to Trump. Stephen Moore, former senior economic advisor to Trump and an economist at Heritage Foundation, called the move 'outrageous'. 'If a US backed government bond isn't triple A-asset then what is?' he told Reuters. White House communications director Steven Cheung reacted to the downgrade via a social media post, singling out Moody's economist, Mark Zandi, for criticism. He called Zandi a political opponent of Trump. Zandi declined to comment. Zandi is the chief economist at Moody's Analytics, which is a separate entity from the credit ratings agency Moody's. Since his return to the White House on January 20, Trump has said he would balance the budget while his Treasury Secretary, Scott Bessent, has repeatedly said the current administration aims to lower US government funding costs. But the administration's attempts to raise revenue and cut spending have so far failed to persuade investors. Trump's attempts to cut spending through Elon Musk's Department of Government Efficiency have fallen far short of its initial goals. And attempts to raise revenue through tariffs have sparked concerns about a trade war and global slowdown, roiling markets. Left unchecked, such worries could trigger a bond market rout and hinder the administration's ability to pursue its agenda. The downgrade, which came after market close, sent yields on Treasury bonds higher, and analysts said it could give investors a pause when markets re-open for regular trading on Monday. 'It basically adds to the evidence that the United States has too much debt,' said Darrell Duffie, a Stanford finance professor who was formerly on Moody's board. 'Congress is just going to have to discipline itself, either get more revenues or spend less.' Trump is pushing lawmakers in the Republican-controlled Congress to pass a bill extending the 2017 tax cuts that were his signature first-term legislative achievement, a move that nonpartisan analysts say will add trillions to the federal government's debt. The downgrade came as the tax bill failed to clear a key procedural hurdle on Friday, as hardline Republicans demanding deeper spending cuts blocked the measure in a rare political setback for the Republican president in Congress.
