Evelyn Reynolds

Donald J. Trump slapped tariffs on trading partners and cut taxes in his first term. But after inflation’s return, a repeat playbook would be riskier.When Donald J. Trump became president in 2017, prices had risen roughly 5 percent over the previous four years. If he were to win the race for the White House in 2024, he would be entering office at a time when they are up 20 percent and counting.That is a critically different economic backdrop for the kind of policies — tariffs and tax cuts — that the Republican contender has put at the center of his campaign.Mr. Trump regularly blames the Biden administration for the recent price surge, but inflation has been a global phenomenon since the onset of the coronavirus pandemic in 2020. Supply chain problems, shifting consumer spending patterns and other quirks related to pandemic lockdowns and their aftermath collided with stimulus-fueled demand to send costs shooting higher.The years of unusually rapid inflation that resulted have changed the nation’s economic picture in important ways. Businesses are more accustomed to adjusting prices and consumers are more used to those changes than they were before the pandemic, when costs had been quiescent for decades. Beyond that, the Federal Reserve has lifted interest rates to 5.3 percent in a bid to slow demand and wrestle the situation under control.That combination — jittery inflation expectations and higher interest rates — could make many of the ideas Mr. Trump talks about on the campaign trail either riskier or more costly than before, especially at a moment when the economy is running at full speed and unemployment is very low.Mr. Trump is suggesting tax cuts that could speed up the economy and add to the deficit, potentially boosting inflation and adding to the national debt at a time when it costs a lot for the government to borrow. He has talked about mass deportations at a moment when economists warn that losing a lot of would-be workers could cause labor shortages and push up prices. He promises to ramp up tariffs across the board — and drastically on China — in a move that might sharply increase import prices.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

With signs building that the labor market is at least slowing if not something worse, the June nonfarm payrolls report takes on added significance.
The report, to be released Friday at 8:30 a.m. ET, is expected to show growth of 200,000, down from the 272,000 reported for May.
While there are scant data signs that a recession is at hand, the trend in unemployment is generating some attention.

Job seekers attends the JobNewsUSA.com South Florida Job Fair held at the Amerant Bank Arena on June 26, 2024 in Sunrise, Florida. 
Joe Raedle | Getty Images

With signs building that the labor market is at least slowing if not something worse, the June nonfarm payrolls report takes on added significance.
Payroll gains so far in 2024 have totaled 1.24 million, down about 50,000 a month below the same period a year ago. Economists surveyed by Dow Jones expect the report, to be released Friday at 8:30 a.m. ET, to show growth of 200,000, down from the 272,000 reported for May.

In historical terms, the pace of job gains is still solid. But there are signs bubbling underneath that conditions could be getting softer and possibly pointing at broader economic weakness down the road.
“This is a report that’s coming at a point where there’s a little more uncertainty about the economic landscape than there has been in a few months,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “Specifically, I’m thinking more about the unemployment rate, which has been slowly trending up.”
The jobless level in May did nudge higher to 4%, the first time it hit that threshold since January 2022, up from 3.7% a year ago. The forecast is for the rate to hold there.
Under normal circumstances, a 4% unemployment rate would be cause for celebration, not concern. However, what is catching the eye of some economists is where the rate is now compared with where it’s been over the past year.
The May rate was 0.5 percentage point above its 12-month low of 3.5% in July 2023, potentially triggering a recession indicator called the Sahm Rule. The rule has shown consistently that whenever the unemployment rate on a three-month average eclipses its 12-month low by half a percentage point, the economy is in recession.

While there are scant data signs that a recession is at hand, the trend in unemployment is generating some attention.
“If the unemployment rate does what it’s been doing for the last bit of time here where it’s very slowly rising, I don’t think that means we’re at a very high risk of triggering a Sahm Rule or any sort of unemployment rate-based measure of entering recession,” Bunker said. “That being said, the probability of that happening has risen, even if it’s not the most likely outcome right now.”
The economy has slowed in the first half of 2024. First-quarter growth as measured by gross domestic product rose at a 1.4% annualized pace, while the Atlanta Federal Reserve is tracking just 1.5% growth in the second quarter.
There are also lingering inflation concerns that could keep the Fed on the sidelines for a while longer in terms of lowering interest rates.
In addition to the headline payroll and unemployment numbers, market participants and economists will be watching several other key metrics.
One other area of concern has been the divergence between the nonfarm payrolls count, as taken from establishments participating in the Bureau of Labor Statistics’ survey, against the household count of people reporting that they’re holding jobs.
While the establishment survey has shown payrolls increasing by about 2.8 million over the past 12 months, the household count, which is used to calculate the unemployment rate, is up by just 376,000. Economists generally consider the establishment survey to be more reliable and less volatile as it encompasses a larger sample size, but the disparity has garnered some attention.
In addition, hours worked and average hourly earnings will get some attention as gauges of inflation.
The forecast is for a monthly paycheck gain of 0.3% and a 12-month increase of 3.9%. If the outlook holds, it will mark the first time that the annual increase is below 4% since June 2021. More

Owners of some rental buildings are starting to struggle because of rising interest rates and waning demand in some once booming Sun Belt cities.It might seem like a great time to own apartment buildings.For many landlords, it is. Rents have soared in recent years because of housing shortages across much of the country and a bout of severe inflation.But a growing number of rental properties, especially in the South and the Southwest, are in financial distress. Only some have stopped making payments on their mortgages, but analysts worry that as many as 20 percent of all loans on apartment properties could be at risk of default.Although rents surged during the pandemic, the rise has stalled in recent months. In many parts of the country, rents are starting to fall. Interest rates, ratcheted higher by the Federal Reserve to combat inflation, have made mortgages much more expensive for building owners. And while homes remain scarce in many places, developers may have built too many higher-end apartments in cities that are no longer attracting as many renters as they were in 2021 and 2022, like Houston and Tampa, Fla.These problems haven’t yet turned into a crisis, because most owners of apartment buildings, known in the real estate industry as multifamily properties, haven’t fallen behind on loan payments.Only 1.7 percent of multifamily loans are at least 30 days delinquent, compared with roughly 7 percent of office loans and around 6 percent of hotel and retail loans, according to the Commercial Real Estate Finance Council, an industry association whose members include lenders and investors.But many industry groups, rating agencies and research firms are worried that many more apartment loans could become distressed. Multifamily loans make up a majority of loans newly added to watch lists compiled by industry experts.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Private companies added 150,000 jobs in June, below the upwardly revised 157,000 in May and the Dow Jones consensus estimate for 160,000.
Leisure and hospitality added 63,000 jobs, easily the biggest gain among the categories that payrolls processing firm ADP measures.
The pace of wage gains also moved lower for those who stayed in their jobs, down to 4.9% on a year-over-year basis for the smallest increase since August 2021.

Private payroll growth edged lower in June, according to a report Wednesday from ADP that indicates a potential slowdown in the U.S. labor market.
Companies added 150,000 jobs for the month, below the upwardly revised 157,000 in May and the Dow Jones consensus estimate for 160,000. The total was the lowest monthly gain since January.

Without the surge in leisure and hospitality hiring, the total would have been considerably lower. The sector added 63,000 jobs, easily the biggest gain among the categories that payrolls processing firm ADP measures.
Other sectors showing gains included construction (27,000), professional and business services (25,000), other services (16,000), and trade, transportation and utilities (15,000).
On the downside, natural resources and mining showed a decline of 8,000, manufacturing lost 5,000, and information was off 3,000.
“Job growth has been solid, but not broad-based,” ADP’s chief economist, Nela Richardson, said. “Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.”
The pace of wage gains also moved lower for those who stayed in their jobs, down to 4.9% on a year-over-year basis for the smallest rise since August 2021. Job switchers saw a 7.7% increase, a number that also has been trending lower.

The bulk of job creation came from companies that employ 50-499 workers, a group that added 88,000 on the month. Small businesses contributed just 5,000. Geographically, 80,000 jobs came from the South, or more than half the total.
ADP’s report serves as a precursor to the more closely watched nonfarm payrolls count that the Labor Department will release Friday. That report is expected to show an addition of 200,000 jobs, following May’s 272,000.
The two reports often differ, sometimes substantially, with ADP consistently undershooting the Bureau of Labor Statistics count. For May, the BLS reported that private payrolls rose by 229,000, or 72,000 more than ADP’s estimate.

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The gulf between higher- and lower-income consumers has been widening for years, but it is expected to show up especially clearly in travel this season.The travel industry is in the midst of another hot summer as Americans hit the road and make for the airport to take advantage of slightly cheaper flights and gas. But the 2024 vacation outlook isn’t all sunny: Like the rest of the American consumer experience this year, it is sharply divided.Many richer consumers — always the lifeblood of the travel industry — are feeling good this year as a strong stock market and rising home values boost their wealth. While they have felt the bite of rapid inflation over the last few years, they are likely to have more wiggle room in their budgets and more options to ease the pain by trading down from name brands to generic, or Whole Foods to Walmart.Poorer families have had less room to maneuver to avoid the brunt of high prices. Although the job market is strong, with low unemployment and wages that have risen especially rapidly at the bottom of the income scale in recent years, some signs of economic strain have been surfacing among lower-income Americans. Credit card delinquencies have risen, many lower earners report feeling less confident in their own household finances, and companies that serve lower-income groups report that they are under stress.The gulf between higher- and lower-income consumers has been widening for years, but it is expected to show up especially clearly in travel this summer. Surveys show that richer households are more optimistic about their ability to take trips, and services that they are more likely to use — like full-service hotels — are flourishing. Budget hotel chains, by contrast, are expected to report a pullback.“If you go to upscale, you’re actually seeing growth there,” said Adam Sacks, the president of tourism economics at Oxford Economics. “A lot of that has to do with the different financial situations of different income groups.”Bookings, survey responses and spending trends so far suggest that the travel industry will see muted but healthy growth this summer and in 2024 as a whole. That growth is expected even after several years of breakneck vacationing as people took “revenge” for the trips they missed during the pandemic.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

High interest rates, economic uncertainty and a cyberattack appear to have dampened sales in the three months through June.Much of the auto industry, with the notable exception of Tesla, reported modest sales growth in the three months through June as high interest rates, high vehicle prices and uncertainty about the economy weighed on consumers.Sales in late June were also slowed by disruptions at car dealers stemming from a cyberattack on a company that supplies software and data services to dealerships.Cox Automotive, a market research firm, estimated on Tuesday that 4.1 million new cars and trucks were sold in the second quarter in the United States, up a little from the period in 2023. That’s a marked slowdown from the year’s first three months, when sales grew 5 percent. In the first six months of 2024, 7.9 million new vehicles were sold, an increase of 3 percent from the first half of last year, Cox said.Slow growth is likely to continue through the end of the year, said Jonathan Smoke, Cox’s chief economist. “The market is roiled by uncertainty,” he said. “We probably can’t quite keep the pace of sales of the first half, but we aren’t expecting a collapse in sales.”Cox has forecast that 15.9 million new cars and trucks will be sold in the United States this year. That would be an increase from the 15.5 million sold last year, but still well below the 17 million vehicles sold annually before the pandemic.General Motors said on Tuesday that it sold nearly 700,000 cars and light trucks in the United States in the second quarter, an increase of less than 1 percent from the period last year. The company said it was its best performance since the fourth quarter of 2020.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Fed Chair Jerome Powell expressed satisfaction with the progress on inflation but said he wants to see more before being confident enough to start cutting interest rates.
“We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing or loosening policy,” he said.
While Powell said he sees progress on inflation, he’s wary of moving too soon and threatening the downward path of price increases.

U.S. Federal Reserve Bank Chair Jerome Powell announces that interest rates will remain unchanged during a news conference at the Federal Reserves’ William McChesney Martin building on June 12, 2024 in Washington, DC. 
Kevin Dietsch | Getty Images

Federal Reserve Chair Jerome Powell expressed satisfaction Tuesday with the progress on inflation over the past year but said he wants to see more before being confident enough to start cutting interest rates.
“We’ve made quite a bit of progress and in bringing inflation back down to our target,” Powell said at a central banking forum in Sintra, Portugal.

“The last [inflation] reading and the one before it to a lesser extent, suggest that we are getting back on the disinflationary path. We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing or loosening policy,” he added.
Powell spoke at a forum that also included European Central Bank President Christine Lagarde and Brazil central bank Governor Roberto Campos Neto. The forum was presented by the ECB and the discussion was moderated by CNBC’s Sara Eisen.
The comments come with markets closely watching moves from the Fed and its global counterparts as inflation shows signs of easing and some central banks, including the ECB, have slowly started rolling back interest rates.
The Commerce Department’s personal consumption expenditures price index, which the Fed focuses on as its main inflation gauge, rose at a 2.6% 12-month pace in May. That level has come down steadily after being around 4% a year ago, though policymakers do not expect it to reach the Fed’s 2% goal until 2026.
While Powell said he sees progress on inflation, he’s wary of moving too soon and threatening the downward path of price increases, which hit their highest pace since the early 1980s two years ago.

“We’re well aware that if we go too soon, that we can undo the good work we’ve done,” he said. “If we do it too late, we could unnecessarily undermine the recovery and the expansion.”
Risks of moving too late as opposed to too soon have come into better balance this year as inflation has ebbed and the economy and labor market have stayed strong, Powell added. By contrast, the Fed spent much of the past year worried that cutting rates too soon and allowing inflation to resume its upward trek posed the greater risk.
Earlier this year, markets had expected at least six Fed rate cuts of a quarter percentage point each. Market pricing has since adjusted to anticipate two reductions, one in September and another before the end of the year. However, members of the rate-setting Federal Open Market Committee at their June meeting penciled in just one.
Asked if he thought the Fed might cut in September, Powell responded, “I’m not going to be landing on any specific dates here today.”
He also was asked about whether he was concerned about the political climate and specifically should Donald Trump, a fierce Powell critic, win the November presidential election.
“I am not focused on that at all, and that’s not just a talking point. I really think that we just keep doing our jobs,” he said.

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