Latest news with #recession
The Independent
4 hours ago
- Business
- The Independent
Half of Americans say they are already cutting back because of tariffs — and that includes summer vacation plans
Americans are planning to spend less money this summer due to the impact of Donald Trump's trade tariffs, according to surveys, polling, and media reports. In a survey by the personal finance company WalletHub, 45 per cent of respondents said that tariffs were affecting their travel plans, while nearly two in three said they planned to spend less money this summer than they did last year. A survey of 1,516 U.S. consumers by the accounting giant KPMG in April found that 50 per cent were cutting back spending due to tariffs and more than 70 per cent expect a recession within the next 12 months. The next month, 56 per cent of respondents told pollsters commissioned by Bloomberg News that their household finances would be better off without Trump's tariffs, with 69 per cent saying they expected higher prices. "The tariffs are making high prices even more unreasonably high, to the point where... what you're charging is not even close to what this is worth," Raina Becker, a freelance copy editor in New York state, told NBC News. Mei Wu, a 31-year-old content creator in Los Angeles, likewise told the outlet that she had recently given up on buying a coveted new dress after it more than doubled in price due to tariffs. Meanwhile, Philadelphia father-of-two Brad Russell, 40, told Bloomberg that his family would be taking more modest vacations this summer because they expected costs to rise, taking weekend car trips to nearby attractions rather than week-long spells at major resorts such as Disney World. Since retaking power this January, Trump has used emergency powers to impose steep new taxes on a wide range of imported goods, including a 30 to 50 per cent tariff on goods from China and a blanket 10 per cent tariff on all imports from anywhere. Courts are still untangling whether or not he actually had the legal authority to do so, with one federal judge recently ruling that the president cannot "unilaterally impose... tariffs to reorder the global economy". As of April, Trump's tariffs did not appear to have increased inflation. Nevertheless, many consumers and businesses are evidently worried that worse is yet to come. Big retailers including Walmart, Target, Macy's, Shein, Ford, Volkswagen, Best Buy, and Nintendo have signaled that they will probably raise prices in the coming months. "[Price hikes] are happening right now, and they'll become more obvious," Walmart's chief financial officer John David Rainey told Bloomberg last month. U.S. airlines have also reduced their flight schedules because they anticipate lower demand from both domestic and international travelers. Trump and his allies have argued that tariffs will incentivize companies to source more of their products within the USA, which he claims will kickstart a manufacturing renaissance. But many experts and business leaders have said it would be difficult or impossible to manufacture most modern consumer products without using any imported components or foreign labor. "All I'm saying is that a young lady — a 10-year-old-girl, 9-year-old girl, 15-year-old-girl — doesn't need 37 dolls," he told reporters aboard Air Force One last month. "She could be very happy with two or three or four or five."
Forbes
a day ago
- Business
- Forbes
Is A Bond Crisis Imminent?
Jaime Dimon, JPMorgan Chase CEO, warned of a coming crisis in the bond market due to the growing US ... More national debt when he spoke at the Reagan National Economic Forum last week. (Photo by) You are going to see a crack in the bond market. – Jaime Dimon When Jaime Dimon, JPMorgan Chase CEO, spoke at the Reagan National Economic Forum last week, he warned of a coming crisis in the bond market due to the growing US national debt. He said, 'I don't know if it's going to be a crisis in six months or six years, and I'm hoping that we change both the trajectory of the debt and the ability of market makers to make markets.' This analysis aims to look at how close the bond market might be to his predicted crisis. Notably, 10-year US Treasury yields reached their nadir when the betting odds of a recession were at their highest. As one should expect, yields have risen as the odds of a recession have declined. Directionally, the move in yields makes complete sense, though one can argue that yields have increased more than is warranted. It seems clear that at least the 10-year US Treasury yield isn't acting in an extreme fashion. Yields & Recession Odds Without exception, the fiscal position of large countries, including the United States, as measured by government debt relative to GDP, deteriorated due to the impact of spending during the pandemic. Most countries had already been increasing their debt relative to economic activity, but the pandemic accelerated this trend. US General Government Debt-To-GDP According to Strategas, once US debt servicing costs, as a percentage of tax revenues, rise above 14%, there tends to be some fiscal strain and fiscal austerity results. The US passed that interest cost level in July 2023 and is now at around 18%. The debate about the US tax bill in the Senate will be interesting to watch as it might reflect some of these concerns. US Government Debt There is no magic level of debt-to-GDP that signals disaster since countries with a more resilient economy can service more debt. Generally, the deterioration in government fiscal health is a global issue. In addition, with yields rising following the pandemic, other countries also face the higher interest costs previously discussed for the US. Government Debt-To-GDP Are global yields reflecting growing concerns about government fiscal health? Despite the talk about rising bond yields in the US, the 2- and 10-year Treasury yields have declined year-to-date. One area where a consistent theme of higher interest rates is evident is in the long-term maturities. Japan is particularly notable given the combination of a massive debt load and a 30-year bond yield that has risen the most year-to-date. Government Bonds: Year-To-Date Yield Change The term premium refers to the additional yield demanded by investors for holding longer-term bonds. This premium can include compensation for interest rate risk, inflation uncertainty, credit risk, and other factors. However, at times, the 30-year Treasury yield has been below the 2-year yield. Generally, when this happens, investors seek interest rate risk because they expect short-term interest rates to decline. U.S. Treasury Yields The simplest definition of the term premium is to subtract the yield on the shorter-term bond from the yield on the longer-maturity bond. In this case, the 30-year US Treasury minus the 2-year. Notably, the term premium tends to be at its lowest or even negative before an economic recession. There are more complex versions of the term premium that seek to identify the components driving changes in the term premium. Still, they are highly susceptible to assumptions and provide different answers, so their reliability is suspect. US Term Premium: 30-Year Minus 2-Year Yield One measure of long-term expected inflation is the 5-year breakeven inflation rate five years in the future. The calculation isn't essential, but it is used to measure long-term inflation expectations by removing short-term inflation trends. Investors in long-term bonds should be concerned about long-term inflation rather than short-term inflation. While the US term premium has risen since mid-2023, these long-term inflation expectations haven't risen appreciably. US Expected Inflation Returning to a global focus, the term premium between 30-year and 2-year bonds has risen across all the large developed countries analyzed. The rise in the US term premium year-to-date does not stand out from the others. Historically, the median US term premium since 1999 has been 78 basis points (0.78%) compared to the current 103 basis points. The term premium has been as high as 399 basis points. Japan is notable, with a current term premium of 223 basis points and a historical median of 163 basis points. Furthermore, the reading was 269 basis points, so the most current reading is closest to the maximum of any countries considered here. Japan is experiencing a surge in inflation, with consumer prices rising at a 3.6% year-over-year rate after being zero or negative for much of the period since 1999. Since many factors impact term premiums, it is impossible to know exactly how much concern about fiscal health is being priced into the increase. Circumstantial evidence suggests that bond investors may be growing weary of funding the growing pile of debt without additional compensation. Global Term Premium Year-To-Date Change Although Mr. Dimon primarily spoke about US debt levels and a potential bond crisis here, the decline in the government's fiscal health is a global issue. In a perverse sense, the US likely benefits from the situation, as it has the extraordinary privilege of a high per capita GDP, control of the global reserve currency, and the ability to issue debt only in US currency. Since the US can handle significantly more debt levels than most other countries, our bond market should be relatively more insulated from crisis. Like any privilege, it can be misused to the point of being revoked, so one must not be blind to the US debt pile. The current fiscal trajectory in the US is unsustainable, and the debt service burden has grown large enough to squeeze out other spending. The most pleasant way to address the problem is to expand the economy and thereby increase the tax base while maintaining spending at a lower rate; however, it is unclear whether policymakers will choose this path. Though likely apocryphal, optimists will point to Winston Churchill purportedly saying, 'Americans can always be trusted to do the right thing, once all other possibilities have been exhausted.' History is littered with countries choosing to devalue their currency through inflation to repay debts with a cheaper currency, so it is little wonder that term premiums have risen globally. Government bond investors are demanding higher yields on long-term bonds from most countries, which may lead to a shift in the willingness of markets to fund large deficits.
News.com.au
2 days ago
- Business
- News.com.au
Economist claims recession is ‘not the vibe' in the US
Economist and author James Rickards discusses the lowering of interest rates, claiming they are a sign of recession. This comes amid fears the US could be in economic decline. 'I don't think that's the vibe, that's my own analysis, and there are a lot of indicators that point to that, and cutting rates doesn't matter,' Mr Rickards told Sky News host Ed Boyd. 'Low interest rates are associated with recession and depression – the idea that we'll cut the interest rates and stimulate the economy is nonsense. 'When your economy is going well, and your real growth is, say, 3 or 4 per cent and a little bit of inflation on top of that … that means people are borrowing, they're lending, they're spending, they're investing, businesses are expanding.'
News.com.au
2 days ago
- Business
- News.com.au
US Federal Reserve Chair under fire amid recession fears
Economist and author James Rickards discusses the Chair of the Federal Reserve of the United States, Jerome Powell, claiming there is a possibility the US will be in recession. 'His term ends in early 2026, so we may be in and out of a recession between now and then, I expect we will be if it doesn't get worse, if it doesn't turn into a monetary crisis,' Mr Rickards told Sky News host Ed Boyd. 'What's the rush … get through a bad patch, get through a recession, and then name a replacement probably next year when things will probably be better.'
Yahoo
2 days ago
- Business
- Yahoo
Forget tariffs, here's why CEOs worry about a looming recession
Forget tariffs, here's why CEOs worry about a looming recession originally appeared on TheStreet. Tariffs are on the tip of many Americans' tongues, thanks to the multifaceted trade war in which U.S. President Donald Trump has used foreign taxes as a key negotiating tactic against foreign economic rivals. While Trump says he loves everything about tariffs, including the word itself, the rest of the world's business leaders don't share his affinity. Global stock markets certainly hate the trade war. Every time a new tariff is announced, foreign and domestic markets fall. Every time Trump announces a deal has been reached, markets rise, even if no concrete deals are ever moreso than investors, Trump's tariffs place business leaders in a most awkward position. Businesses love predictability. Knowing what to expect and when to expect it allows them to plan for the future and forecast expectations. However, Trump's on-again, off-again tariffs have had the opposite effect, casting doubt on what businesses will have to pay their suppliers quarterly, monthly, or even weekly. This environment has, understandably, had an adverse effect on CEO confidence, as reflected in the latest survey data from The Conference Board. Every quarter, The Conference Board releases its Measure of CEO Confidence in collaboration wth The Business Council. Over 130 CEOs participated in the Q2 survey between May 5 and May 19, and the results are concerning. A reading below 50 indicates a negative outlook. The confidence index fell by 26 points to 34, the lowest level recorded since Q4 2022. 'All components of the Measure weakened into pessimism territory,' said Conference Board's Senior Economist of Global Indicators Stephanie Guichard.'Expectations for the future also plummeted, with more than half of CEOs now expecting conditions to worsen over the next six months, both for the economy overall and in their own industries.' The overwhelming majority of CEOs (83%) said they expect a recession in the next 12 to 18 months, nearly matching the rate reached in late 2022 and early 2023. While tariffs and trade issues were near the top of the list of concerns, geopolitical concerns were the number one concern. Geopolitical instability surpassed cybersecurity, 'which dominated CEOs' concerns over the past two years,' but dropped to fourth this year. However, the forecast from the top 1% isn't all doom and gloom. Most CEOs anticipate no change in the size of their workforce over the next 12 months. So while they expect hiring to be stagnant, they aren't anticipating any layoffs. The share of CEOs expecting to expand their workforce fell slightly to 28% from 32% in Q1. The share of CEOs planning to reduce their workforce rose 1% to 28%. 'Still, consistent with more pessimism about the outlook in their own industries, the share of CEOs expecting to revise down investment plans doubled in Q2 to 26%, while the share expecting to upgrade investment plans dropped 14 ppts to 19%,' said Business Council Vice Chairman Roger W. Ferguson. Part of the reason employers are confident in the labor market is that they currently aren't having trouble finding qualified candidates. Since there's less competition, the share of CEOs planning to raise wages by 3% or more over the next year dropped to 5% from 71% in Q1. While the future is murky for many CEOs, the present is almost equally disorienting. The percentage of CEOs who say that economic conditions are worse now than they were six months ago jumped 11% to 82% in Q2. Only 2% of respondents felt economic conditions were better. This change in sentiment is also reflected in the 69% of CEOs who said conditions in their own industries were worse than six months ago, a dramatic increase from 22% in Q1. Only 7% said conditions improved in their industries, and there was also a significant drop from 37% in tariffs, here's why CEOs worry about a looming recession first appeared on TheStreet on May 31, 2025 This story was originally reported by TheStreet on May 31, 2025, where it first appeared. 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
