Evelyn Reynolds

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    Inflation fears receded in May as Trump eased some tariff threats, New York Fed survey shows

    The New York Fed’s Survey of Consumer Expectations showed the one-year inflation outlook took a substantial dip in May, down to 3.2% — a 0.4 percentage point decrease from April.
    While the survey showed inflation expectations are still above the Fed’s 2% annual target, they represent progress and a change in a fearful attitude that coincided with Trump’s saber-rattling.

    Fruit and vegetables are seen at a Walmart supermarket in Houston, Texas, on May 15, 2025.
    Ronaldo Schemidt | Afp | Getty Images

    Americans grew less fearful about inflation in May as President Donald Trump backed off the most severe of his tariff proposals, according to a New York Federal Reserve survey Monday.
    The central bank’s Survey of Consumer Expectations showed that the one-year inflation outlook took a substantial dip, down to 3.2% — a 0.4 percentage point decrease from April.

    At the three-year horizon, the outlook fell 0.2 percentage point to 3%, while the five-year forecast edged down to 2.6% from 2.7%.
    While all three are still above the Fed’s 2% annual target, they represent progress and a change in a fearful attitude that coincided with Trump’s saber-rattling on tariffs, culminating with the April 2 “liberation day” announcement.
    Trump initially slapped universal 10% tariffs on all U.S. imports and a menu of so-called reciprocal duties on dozens of nations. However, he soon backed off the latter measures, opting for a 90-day negotiating window that expires in July.
    The New York Fed survey, which is less volatile than others such as the University of Michigan and Conference Board measures, provides some good news for the White House at a time when administration officials are trying to tamp down worries about tariff-induced inflation.
    “By every measure of inflation, it’s down by more than it’s been in more than four years,” National Economic Council Director Kevin Hassett said Monday morning on CNBC’s “Squawk Box.” “While the tariff revenue has been going up, inflation has been coming down, which is contrary to the story that everybody else has been saying, but very consistent with what we’ve been saying.”

    Inflation as measured by the Fed’s preferred personal consumption expenditures price index was at 2.1% in April, matching the lowest it’s been since February 2021. Excluding food and energy, core PCE stood at 2.5%, a gauge Fed officials believe is a better measure of longer-term trends.
    The Fed survey showed expectations dipping across most price groups, though respondents did see food prices rising by 5.5% over the next year, a 0.4 percentage point increase from May and the most since October 2023. Elsewhere, respondents saw gas price increases easing to 2.7%, down 0.8 percentage point. The outlooks for medical care, college education and rent increases also were lower on a monthly basis.
    There also was a positive move in employment, with those expecting to lose their job over the next 12 months dipping to 14.8%, down half a percentage point.
    Other areas showed optimism as well: The probability of missing a minimum debt payment over the next three months fell half a point to 13.4%, its lowest since January. Respondents also had more confidence in stocks, with 36.3% expecting the market to be higher a year from now, up 0.6 percentage point.

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    Trump Aides Urge Court to Spare Tariffs as They Dismiss Worries in Public

    The dueling narratives come as the administration is asking an appeals court to preserve a set of tariffs recently deemed to be illegal.Shortly after a federal trade court declared many of President Trump’s tariffs to be illegal, Howard Lutnick, the commerce secretary, took to television to brush aside the setback.“It cost us a week, maybe,” Mr. Lutnick said this month on Fox News, noting that other countries remained eager to strike new deals despite tariffs being in legal jeopardy.“Everybody came right back to the table,” he added.With the fate of the president’s tariffs hanging in the balance, the Trump administration has tried to project dueling narratives. Top aides have insisted publicly that their negotiations remain unharmed, even as some of those same officials have pleaded with the court to spare Mr. Trump from reputational damage on the global stage.The administration will face two crucial tests on Monday. The government is scheduled to submit a new legal brief to a federal appeals court outlining why the tariffs should not go away, while Mr. Lutnick and other close Trump advisers meet with their Chinese counterparts in London to hammer out new trade terms.The court could factor in “any sort of public statements the administration makes” as it decides whether to preserve existing tariffs as the case plays out, said Ted Murphy, a co-leader of the trade practice at the law firm Sidley Austin.While Mr. Murphy said it remained to be seen how judges would view the government’s recent bullishness, he said that a decision that invalidated the president’s tariffs could “weaken the U.S. position” abroad.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

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    Democrats Hate Trump’s Policy Bill, but Love Some of Its Tax Cuts

    There’s an undercurrent of Democratic support for elements of President Trump’s tax agenda, a dynamic that Republicans are trying to exploit as they make the case for enactment of their sprawling domestic legislation.Democrats have no shortage of criticism for the massive Republican policy bill winding its way through Congress carrying President Trump’s agenda. It would cost too much, they contend, rip health coverage and food assistance away from too many people and strip vital support from clean energy companies.When it comes to some of the tax cuts in the bill, however, Democrats have been less resistant. Some of them concede that they would support many of those provisions if they were not rolled into the larger piece of legislation. In recent weeks, they have taken pains to demonstrate that support.Last month, Senator Jacky Rosen, Democrat of Nevada, successfully moved to have the Senate unanimously approve a version of Mr. Trump’s “no tax on tips” proposal. While the effort was almost entirely symbolic — under the Constitution, the House must originate tax measures — it was still an opportunity for Democrats to go on the record backing a campaign promise of Mr. Trump’s that is broadly popular with the public.“I am not afraid to embrace a good idea, wherever it comes from,” Ms. Rosen said on the Senate floor at the time.The undercurrent of Democratic support for elements of the Republican tax agenda reflects the political potency of some of Mr. Trump’s campaign promises, even those that have been derided by tax policy experts. It also suggests that temporary provisions in the Republican bill, like exempting tips and overtime pay from the income tax, could ultimately become long-term features of the tax code.And it helps to explain why Mr. Trump and Republicans chose to wrap their policy agenda into one huge bill. By pairing the palatable tax cuts — including an extension of tax cuts set to expire at the end of the year — with less savory measures, like Medicaid cuts, Republicans can make the political case that anyone who fails to support the bill is voting for a tax increase.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

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    U.S. and China to Hold Economic Talks in London

    Top American economic officials will meet with their Chinese counterparts next Monday in hopes of breaking a trade stalemate, President Trump said.President Trump said on Friday that the United States and China would begin their second round of economic talks on Monday in London, resuming negotiations over tariffs and global supplies of rare earth minerals that have begun to threaten the global economic growthThe American delegation will be led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Jamieson Greer, the United States trade representative, Mr. Trump said in a post on Truth Social. It was not immediately clear who would represent China, but He Lifeng, China’s vice premier for economic policy, led the previous round of talks in Switzerland.The talks come at a fragile moment for the global economy, which has been slowed by uncertainty and supply chain disruptions. The United States in April paused some of the tariffs that Mr. Trump imposed on dozens of countries to provide time for trade negotiations.Those levies, as well as steep import taxes on Chinese goods, were thrust into further uncertainty in late May, when a U.S. trade court deemed them illegal. The tariffs, however, currently remain in place while an appeal process unfolds. As the U.S. delegation meets in London, the Trump administration has a deadline to make its case to a federal appeals court for why the tariffs should continue.The announcement of Monday’s talks came a day after Mr. Trump held a call with Xi Jinping, China’s president, that was intended to break a deadlock that threatened to derail a trade truce that the countries reached in early May in Geneva. Under that truce, the United States reduced Mr. Trump’s tariff on Chinese imports to 30 percent from 145 percent, and China lowered its import duty on American goods to 10 percent from 125 percent.But in recent weeks, the tension between the two countries returned, tied to mineral exports to the United States, which China had recently halted. The Trump administration also proposed a plan to revoke visas for Chinese students associated with the Communist Party or studying in critical fields.Mr. Bessent, who has been leading the negotiations with China for the United States, recently acknowledged that the talks had stalled and suggested that it would be up to the two leaders to get them back on track.Then, last week, Mr. Trump said on social media that China had “violated” the agreement that was brokered in Switzerland. Beijing rejected that notion, accusing Washington of severely undermining the trade truce.The back and forth continued this week when Mr. Trump wrote on social media on Wednesday that Mr. Xi was “VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH.”A day later, however, Mr. Trump said that his 90-minute call with Mr. Xi had been productive.“I just concluded a very good phone call with President Xi, of China, discussing some of the intricacies of our recently made, and agreed to, Trade Deal,” Mr. Trump said, adding that it “resulted in a very positive conclusion for both Countries.” More

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    Russia lowers interest rates to 20% in first cut since 2022 as inflation pressures ease

    The Bank of Russia reduced its sky-high interest rates on Friday, as inflation eases and economic growth slows.
    Some economists forecast the cut to 20% from 21%, but overall it was a dovish surprise to the market, with the ruble dropping against the U.S. dollar following the decision.
    Russia’s war in Ukraine has led to intense pressure on its economy, with growth concentrated in manufacturing and supported by state spending.

    A Moscow shopping mall pictured earlier this year.
    Anadolu | Anadolu | Getty Images

    Russia’s central bank on Friday cut its sky-high interest rates for the first time since September 2022, in a sign that inflation pressures — not long ago described by President Vladimir Putin as “alarming” — are beginning to ease.
    The Bank of Russia took rates down by 100 basis points to 20%. They had been held at 21% since last October, the highest level since the new benchmark rate was introduced in 2013.

    The inflation rate in April was 6.2%, it said, down from an average 8.2% across the first quarter of 2025.
    “While domestic demand growth is still outstripping the capabilities to expand the supply of goods and services, the Russian economy is gradually returning to a balanced growth path,” the central bank said Friday, adding that monetary policy would remain tight “for a long period” in order to return inflation to its 4% target.
    Russia’s full-scale invasion of Ukraine in February 2022 has put immense strain on prices, with a weaker ruble pushing up import prices, and on an economy it has had to re-orient through subsequent years of war.
    Russia’s economy minister Maxim Reshetnikov had urged the central bank to cut rates earlier in the week, as concerns mount about falling output in various sectors. Russian gross domestic product growth rebounded strongly after a period of sharp contraction across 2022 and early 2023, but fell to 1.4% in the first quarter 2025 from 4.5% at the end of last year. Economists meanwhile note that growth has been concentrated in manufacturing, specifically in defense and related industries, and propped up by state spending.
    Hopes at the start of the year that U.S. President Donald Trump might be able to push Moscow and Kyiv toward a lasting ceasefire or even a deal to end the war have dwindled quickly, and direct attacks between the countries continue.

    Russia’s struggling war economy might be what finally drives Moscow to the negotiating table

    Despite this, the ruble is the world’s best-performing currency so far this year, according to Bank of America, attributed to capital controls, policy tightening and a decline in the U.S. dollar. The greenback was 2.72% higher against the ruble on Friday following the rate cut announcement.
    Nicholas Farr, emerging Europe economist at Capital Economics, said the cut to 20% was a dovish surprise to the market – meaning a deeper cut than expected – and forecast rates would end the year at 17% from a previous estimate of 18%.
    “That said, demand-supply imbalances from the war suggest interest rates will need to stay in restrictive territory,” Farr added.

    Stock chart icon

    U.S. dollar/Russian ruble.

    — CNBC’s Lee Ying Shan and Holly Ellyatt contributed. More

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    U.S. payrolls increased 139,000 in May, more than expected; unemployment at 4.2%

    Hiring decreased just slightly in May even as consumers and companies braced against tariffs and a potentially slowing economy, the Bureau of Labor Statistics reported Friday.
    Nonfarm payrolls rose 139,000 for the month, above the muted Dow Jones estimate for 125,000 and the downwardly revised 147,000 that the U.S. economy added in April.

    The unemployment rate held steady at 4.2%.
    Worker pay grew more than expected, with average hourly earnings up 0.4% during the month and 3.9% from a year ago, compared to respective forecasts for 0.3% and 3.7%.

    Nearly half the job growth came from health care, which added 62,000, even higher than its average gain of 44,000 over the past year. Leisure and hospitality contributed 48,000 while social assistance added 16,000.
    On the downside, government lost 22,000 jobs as efforts to cull the federal workforce by President Donald Trump and the Elon Musk-led Department of Government Efficiency began to show an impact.
    Stock market futures jumped higher after the release as did Treasury yields.

    Though the May numbers were better than expected, there were some underlying trouble spots.
    The April count was revised lower by 30,000, while March’s total came down by 65,000 to 120,000.
    There also were disparities between the establishment survey, which is used to generate the headline payrolls gain, and the household survey, which is used for the unemployment rate. The latter count, generally more volatile than the establishment survey, showed a decrease of 696,000 workers.

    The report comes against a teetering economic background, complicated by President Donald Trump’s tariffs and an ever-changing variable of how far he will go to try to even the global trading field for American goods.
    Most indicators show that the economy is still a good distance from recession. But sentiment surveys indicate high degrees of anxiety from both consumers and business leaders as they brace for the ultimate impact of how much tariffs will slow business activity and increase inflation.
    For their part, Federal Reserve officials are viewing the current landscape with caution.
    The central bank holds its next policy meeting in less than two weeks, with markets largely expecting the Fed to stay on hold regarding interest rates. In recent speeches, policymakers have indicated greater concern with the potential for tariff-induced inflation.
    This is breaking news. Please refresh for updates. More

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    As Trump’s Tariffs Reshape Trade, Businesses Struggle With Economic Uncertainty

    At the worst point of the labor shortage that emerged in the wake of the Covid-19 lockdowns, Thunderdome Restaurant Group had 100 people sign up for a job interview and only 15 show up. Of the two workers it hired, one never came in.The job market has cooled significantly since then, and Joe Lanni, who runs the Cincinnati-based company with his brother, now faces a different dilemma: how to grow the business, which has over 50 locations, while controlling costs as concerns about the economy spread.So they’re rethinking menu items like freshly made tortillas that require a dedicated full-time worker. They are also planning to shutter a handful of locations where sales have been softest, while adding more outposts of their fast casual restaurants that are doing well.Uncertainty about the economy has skyrocketed as President Trump has begun to radically reshape the global trading system with tariffs, cut off a crucial supply of workers with an immigration crackdown and floated big changes to the rules and regulations that govern how businesses operate. Consumers, who fuel the American economy, have become more hesitant to spend, and according to recent surveys, both the services and manufacturing sectors are slowing.But the economy does not appear to be at the cliff’s edge just yet, and employers like Mr. Lanni don’t want to be too cautious and miss out on opportunities.As his restaurants gear up for outdoor service this summer, Mr. Lanni said, he still expects head count across the company to swell by about 200 people, to around 1,500 employees, before receding in the fall. The stakes are high, however.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

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    Fired by DOGE, More Federal Workers Are Flooding the Job Market

    The drastic, sudden pullback in federal dollars is collapsing opportunities for many who’ve spent years in public service.After Matt Minich was fired from his job with the Food and Drug Administration in February, he did what many scientists have done for years after leaving public service. He looked for a position with a university.Mr. Minich, 38, was one of thousands swept up in the mass layoffs of probationary workers at the beginning of President Trump’s second administration. The shock of those early moves heralded more upheaval to come as the Department of Government Efficiency, led by the tech billionaire Elon Musk, raced through agency after agency, slashing staff, freezing spending and ripping up government contracts.In March, about 45 minutes after Mr. Minich accepted a job as a scientist in the University of Wisconsin School of Medicine and Public Health, the program lost its federal grant funding. Mr. Minich, who had worked on reducing the negative health impacts of tobacco use, observed that he had the special honor of “being DOGE-ed twice.”“I’m doubly not needed by the federal government,” he said in an interview.He is still hunting for work. And like hundreds of thousands of other former civil servants forced into an increasingly crowded job market, he is finding that drastic cuts to grants and contracts in academia, consulting and direct services mean even fewer opportunities are available.Some states that were hiring, another avenue for former federal government employees, have pulled back. So, too, have the private contractors typically seen as a landing place. The situation is expected to worsen as more layoffs are announced, voluntary departures mount and workers who were placed on administrative leave see the clock run out.More than 700 people attended a recent resource fair in Arlington, Va., to receive free consultation, professional headshots and workshops.Maansi Srivastava for The New York TimesWe 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