Evelyn Reynolds

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    Trump Moves to Invalidate Recent Labor Agreements With Federal Workers

    In the latest effort to put his stamp on the federal work force, President Trump on Friday issued a memorandum invalidating government labor contracts finalized in the last 30 days before a presidential inauguration.The policy applies to certain contracts negotiated toward the end of the Biden administration, the memo says. Such “last-minute, lame-duck” agreements, it states, “are purposefully designed to circumvent the will of the people” and “inhibit the President’s authority to manage the executive branch.”Unions at several agencies rushed to negotiate collective bargaining agreements ahead of Mr. Trump’s inauguration to preserve some practices of the previous administration, like remote work, and insulate them from changes that could make it easier to fire civil servants.The memo appears to allude to such practices, which it calls “inefficient and ineffective,” and cites an agreement with the Education Department that attempts to preserve remote work arrangements. The memo says the agreements could be undone if they have not yet been approved by an “applicable” agency head.Other agencies, like the Social Security Administration, approved new collective bargaining agreements outside the 30-day window, presumably leaving them unaffected by the memo.It was unclear if the memo would survive legal pushback initiated by federal employee unions, though it appeared to anticipate legal challenges, noting that it should remain in force if a portion alluding to prohibited bargaining agreements from the Biden administration is found to be invalid.“Federal employees should know that approved union contracts are enforceable by law, and the president does not have the authority to make unilateral changes to those agreements,” Everett Kelley, the president of the American Federation of Government Employees, said in a statement. “Members will not be intimidated. If our contracts are violated, we will aggressively defend them.” More

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    Trump Will Hit Mexico, Canada and China With Tariffs

    President Trump plans to impose stiff tariffs on Mexico, Canada and China on Saturday, a move aimed at pressuring America’s largest trading partners into accepting more migrants and halting the flow of migrants and drugs into the United States.Mr. Trump will put a 25 percent tariff on goods from Mexico and Canada, along with a 10 percent tariff on Chinese products, Karoline Leavitt, the White House press secretary, said in a news briefing Friday.Speaking to reporters in the Oval Office on Friday, Mr. Trump said the tariffs were punishment for Canada, Mexico and China allowing drugs and migrants to flood into the United States.Mr. Trump’s decision to hit America’s trading partners with tariff could mark the beginning of a disruptive and damaging trade war, one that is far messier than the conflict that defined Mr. Trump’s first term.Back then, Mr. Trump placed tariffs on nearly two-thirds of Chinese imports, resulting in China hitting the U.S. with levies of its own. Mr. Trump also imposed tariffs on steel and aluminum, inciting retaliation from the European Union, Mexico and Canada.While the tariffs against allies were viewed as controversial, they were relatively limited in scope. It remains to be seen exactly what products Mr. Trump’s new tariffs apply to, but the president has implied that they would be expansive and cover imports from Canada and Mexico, close allies of the United States.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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    Ahead of Possible Tariffs, No Rush to Get Goods In From Canada and Mexico

    Companies in the United States do not appear to be making a concerted effort to rush in shipments from Mexico and Canada ahead of the high tariffs that President Trump has threatened to impose on Saturday.Mr. Trump said after taking office that the United States would apply tariffs of 25 percent on imports from Canada and Mexico, contending that they were allowing “mass numbers of people to come in and fentanyl to come in.”The tariffs would raise the cost of imports significantly, especially since tariffs are not applied to most goods under the U.S.-Mexico-Canada Agreement, the trade deal that Mr. Trump signed in 2020. Canada and Mexico together account for 30 percent of U.S. trade. Many industries could be saddled with extra costs, including the vast auto operations that straddle the U.S. borders with Mexico and Canada.Mr. Trump could withdraw his threat or reduce the tariff if he decides Canada and Mexico are doing more to address his complaints, Howard Lutnick, the president’s nominee to lead the Commerce Department, suggested on Wednesday.With the tariff deadline near, some data shows higher freight volumes on road and rail, but the increases are not especially large, and transportation experts say rail and trucking companies have the capacity to cope. The situation, they said, is quite different from 2021 and 2022, when a deluge of imports overwhelmed supply chains, causing shipping costs to skyrocket and helping fuel a rapid acceleration of inflation.“The industry’s probably never been in a better spot to deal with significant changes in the marketplace,” said Scott Shannon, vice president of North America cross-border at C.H. Robinson, a freight forwarder.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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    Key Fed measure shows core inflation at 2.8%, in line with expectations

    The personal consumption expenditures price index increased 2.6% on a year-over-year basis in December, while core PCE was at 2.8%, both in line with expectations but well ahead of the Fed’s 2% target.
    Personal income climbed 0.4% as forecast, while spending rose 0.7%.

    Inflation closed out 2024 on a strong note, as a price gauge the Federal Reserve focuses on came in well above the central bank’s target, the Commerce Department reported Friday.
    The personal consumption expenditures price index increased 2.6% on a year-over-year basis in December, 0.2 percentage point higher than the November reading and in line with the Dow Jones estimate.

    Excluding food and energy, core PCE registered a 2.8% reading, also meeting expectations and the same as the prior month. Though the Fed considers both readings, historically officials have seen core as the better gauge of long-run inflation.
    On a monthly basis, headline PCE rose 0.3% while core increased 0.2%, both in line with forecasts as well.
    The Fed targets annual inflation at 2%, a level the price gauge has not seen since February 2021.
    Chicago Fed President Austan Goolsbee told CNBC that the PCE data was “even a little better than expected.”
    “I don’t make too much of any one month, but you know, I’ve been saying that I felt like we are on path to 2%,” he said during a “Squawk on the Street” interview. “I have comfort, I won’t say overconfidence, but I have comfort that we’re on that path.”

    Food prices increased just 0.2% on the month, but energy jumped 2.7%. Durable goods prices, which include items such as aircraft, appliances and electronics, showed deflation, falling 0.4%. Nondurables saw a 0.5% increase.
    The report comes two days after the central bank voted unanimously to hold its key interest rate in a range between 4.25%-4.5%, taking a break after three consecutive cuts totaling a full percentage point.
    “Inflation is still firmly above the Federal Reserve’s 2% target. While Friday’s PCE print was in-line with expectations, the data shows that inflation remained elevated in December to end 2024, making it somewhat ironic that the Federal Reserve cut interest rates during the same month,” wrote Clark Bellin, chief investment officer at Bellwether Wealth.
    In remarks delivered Friday morning, Fed Governor Michelle Bowman said she expects inflation to decelerate through 2025, but thinks the central bank should stay on hold until there are clear signs that is happening, particularly in light of uncertainty on fiscal policy out of the Trump administration.
    “There is still more work to be done to bring inflation closer to our 2 percent goal. I would like to see progress in lowering inflation resume before we make further adjustments to the target range,” Bowman said in remarks before business leaders in Portsmouth, New Hampshire. “I do expect that inflation will begin to decline again and that by year-end it will be lower than where it now stands.”
    The report Friday also showed that personal income increased 0.4% in December as forecast, while spending rose 0.7%, or one-tenth of a percentage point ahead of the estimate.
    In related news, the Bureau of Labor Statistics reported Friday that the employment cost index rose at a seasonally adjusted 0.9% in the fourth quarter of 2024, in line with expectations though slightly ahead of the third-quarter reading. On an annual basis, the ECI increased 3.8%, one-tenth of a point below the Q3 reading.
    Correction: Consumer spending rose 0.7% in December. An earlier version misstated the metric.

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    Germany’s inflation steady at 2.8% in January ahead of February election

    Customers waiting at the checkout in a supermarket.
    Markus Scholz | Picture Alliance | Getty Images

    German inflation was unchanged year-on-year at 2.8% in January, preliminary data from the country’s statistics office Destatis showed Friday in the last reading before Germans head to the polls next month.
    The reading was also in line with a forecast from economists polled by Reuters. The print is harmonized across the euro area for comparability. 

    On a monthly basis, the harmonized consumer price index fell by 0.2%
    Germany’s inflation rate has now stayed above the European Central Bank’s 2% target for the fourth month in a row, after falling below that threshold in September last year.
    This roughly mirrors the development of re-accelerating inflation in the wider euro area. The European Central Bank on Thursday said that disinflation in the bloc “is well on track” and has broadly developed in line with staff projections.
    Euro area inflation came in at 2.4% in December. The January figures are slated for release next week.
    The January inflation print is among the final key economic data released before Germany’s election on Feb. 23, which is taking place earlier than originally scheduled after the collapse of the ruling coalition in November 2024.

    Germany’s economy has been one of big topics during campaigning next to immigration, as the country has been grappling with lackluster economic growth and the renewed rise of inflation.
    The government earlier this week slashed gross domestic product expectations to 0.3% for full-year 2025, after annual GDP contracted in the last two years. Quarterly growth has also been sluggish, even as the economy has so far avoided a technical recession characterized by two consecutive quarter of contraction.
    Non-harmonized inflation is expected to average 2.2% this year, the government added in its annual economic report.
    This is a breaking news story. Please check back for updates. More

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    High Inflation and New Tariffs Will Make the Fed’s Job Tougher

    Fresh tariffs amid high inflation are making the Fed’s job uniquely difficult and feeding uncertainty about what to expect for interest rates this year.High inflation is stoking fresh debate about how the Federal Reserve should respond to President Trump’s sweeping plans to reorder the world economy through tariffs, leading to questions about whether old playbooks still apply.On Saturday, Mr. Trump is poised to impose 25 percent tariffs on imports from Mexico and Canada as well as an additional 10 percent tariff on Chinese goods. That move comes on the heels of threats to impose hefty tariffs on Colombia, which were rescinded after its government complied with Mr. Trump’s demands to accept deported migrants.Howard Lutnick, Mr. Trump’s nominee to oversee the Commerce Department and trade, said at a confirmation hearing on Wednesday that he favored “across-the-board” tariffs that would hit entire countries.The volume of trade policy proposals is making the Fed’s already tricky job even more difficult and sowing uncertainty about what to expect from the central bank as it tries to fully wrestle inflation back to more normal levels.Tariffs are broadly seen by economists and policymakers as likely to stoke higher prices for U.S. businesses and consumers at least initially, and over time weigh on growth. That, as well as Mr. Trump’s plans to also enact mass deportations, steep tax cuts and reduced deregulation, has complicated the path forward for the Fed, which is debating how quickly to resume rate cuts and by what magnitude after pressing pause this week.What comes next is far from clear, leaving central bank officials to parse playbooks both old and new to formulate the right strategy.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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    Federal Debt Is Now Worrying Even Progressives

    Long a focus of conservatives, the level of public borrowing is starting to concern left-leaning economists. Proposed remedies still differ radically.The 119th Congress began, as it so often has in recent years, with calls from Republican politicians for wrestling down the national debt, which is near a record level relative to the size of the economy.But this time, the G.O.P. had company: Progressive economists and budget wonks, who have often dismissed finger-wagging about debt levels as a pretext for slashing spending on programs for the poor, are starting to ring alarm bells as well.What’s changed? In large part, long-term interest rates look unlikely to recede as quickly as had been hoped, forcing the federal government to make larger interest payments. And the Trump administration has promised to extend and expand its 2017 tax cuts, which will cost trillions if not matched by spending reductions.“I find it easier to stay calm about this threat when I think the interest rate is low and steady, and I think in the past year or so that steadiness has been dented,” said Jared Bernstein, who led the Council of Economic Advisers in the Biden administration. “If one party refuses to raise revenues, and the Democrats go along more than is fiscally healthy, that’s also a big part of the problem.”To be clear, conservative warnings on the debt have generally been met with little action over the past two decades. A paper by two political scientists and an economist recently concluded that after at least trying to constrain borrowing in the 1980s and 1990s, Republicans have “given up the pretense” of meaningful deficit reduction. Democrats and Republicans alike tend to express more concerns about fiscal responsibility when their party is out of power.Historically, the stock of debt as a share of the economy has risen sharply during wars and recessions. It peaked during World War II. In the 21st century, Congress has not managed to bring the debt back down during times of peace and economic growth.Revenues Are Not Keeping Up With Projected SpendingIf not addressed, debt will probably mount to unprecedented levels.

    Source: Congressional Budget OfficeBy The New York TimesSpending Has Been Creeping UpAs a share of economic output, mandatory outlays — mostly Medicare, Medicaid, and Social Security — are growing fastest. But as debt rises, so do interest costs.

    Source: Office of Management and BudgetBy 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

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    GDP grew at a 2.3% pace in the fourth quarter, less than expected

    GDP accelerated at a 2.3% annualized pace in the fourth quarter, the Commerce Department said. Economists surveyed by Dow Jones had been expecting an increase of 2.5% after growth of 3.1% in the third quarter.
    For the full year, GDP accelerated 2.8%, compared with 2.9% in 2023.
    Consumer spending rose at a robust 4.2% pace and, as usual, amounted to about two-thirds of all activity.
    In other economic news, the Labor Department reported initial unemployment claims totaled 207,000 for the week ending Jan. 25, a sharp decline of 16,000 from the prior period and well below the forecast for 228,000.

    U.S. economic growth slowed a bit more than expected in the final three months of 2024, the Commerce Department reported Thursday.
    Gross domestic product, a measure of all the goods and services produced across the sprawling U.S. economy during the period, showed that the economy accelerated at a 2.3% annualized inflation-adjusted pace in the fourth quarter. Economists surveyed by Dow Jones had been expecting an increase of 2.5% after growth of 3.1% in the third quarter.

    The report closes out 2024 on a somewhat downbeat note, though growth held reasonably solid. For the full year, GDP accelerated 2.8%, compared with 2.9% in 2023. Growth was 2.5% from Q4 of 2023 to Q4 of 2024. Thursday’s release was the first of three estimates the department’s Bureau of Economic Analysis will provide.
    “Today’s GDP report confirms that the U.S. economic expansion continued apace into the end of 2024 on relatively firm footing,” wrote Mike Reynolds, vice president of investment strategy at Glenmede. “As goes the consumer, so goes the broader economy in the U.S., and household spending put in an exceptionally strong showing in Q4.”
    Growth held up largely on the backs of consumers who continued to spend briskly despite the ongoing burden of high prices on everything from homes to cars to eggs at the supermarket. While inflation is well off the boil from its mid-2022 40-year high, it remains a burden for households, particularly those on the lower end of the income scale.
    Consumer spending rose at a robust 4.2% pace and, as usual, amounted to about two-thirds of all activity. Government spending also provided a boost, accelerating at a 3.2% level.
    Trade was a drag on growth in the period, with imports, which subtract from the GDP calculation, off 0.8%. Exports also declined 0.8%. Gross private domestic investment slumped by 5.6%, shaving more than a full percentage point off the topline number. An easing in inventories also cut nearly 1 percentage point.

    In other economic news Thursday, initial unemployment claims totaled 207,000 for the week ending Jan. 25, a sharp decline of 16,000 from the prior period and well below the forecast for 228,000, the Labor Department reported. Continuing claims, which run a week behind, also fell, down 42,000 to 1.86 million.
    The resilience of the U.S. economy and the relative deceleration in inflation has allowed the Federal Reserve to assume a patient stance on monetary policy. Though the Fed cut its key interest rate by a full percentage point in the last four months of 2024, officials have indicated that aggressive reductions are unlikely this year.
    At the recently concluded Fed meeting, central bankers gave no indication that they are expecting cuts anytime soon, with Chair Jerome Powell insisting that he is in no hurry to ease.
    Fed officials have been expressing some concern about whether the moves lower in inflation have stalled. Thursday’s report showed that the so-called chain-weighted price index, which measures prices and accounts for consumers substituting less-expensive products for more costly items, increased 2.2% on the quarter, faster than the 1.9% move in the third quarter but slightly below the 2.3% estimate.
    However, the data also showed that consumers are dipping into savings to fund their purchases. The personal saving rate was 4.1%, down 0.2 percentage point from the prior quarter, for the lowest level in two years. More