Evelyn Reynolds

More stories

  • 213 Shares179 Views

    in Economy

    Euro zone inflation unchanged at 2.2% in April, leaving path open for further ECB interest rate cuts

    Euro zone inflation was unchanged at 2.2% in April, flash data from statistics agency Eurostat showed.
    Economists polled by Reuters had been expecting the reading to come in at 2.1% in April compared to March’s 2.2%.
    Both the core and services inflation print re-accelerated compared to March’s readings.

    Shoppers buy fresh vegetables, fruit, and herbs at an outdoor produce market under green-striped canopies in Regensburg, Upper Palatinate, Bavaria, Germany, on April 19, 2025.
    Michael Nguyen/NurPhoto via Getty Images

    Euro zone inflation was unchanged at 2.2% in April, missing expectations for a move lower, flash data from statistics agency Eurostat showed Friday.
    Economists polled by Reuters had been expecting the reading to come in at 2.1% in April compared to March’s 2.2% as inflation has been easing back towards the European Central Bank’s 2% target.

    Core inflation, which excludes more volatile food, energy, alcohol and tobacco prices, accelerated to 2.7% from March’s 2.4%. The closely-watched services inflation print also picked up again, coming in at 3.9% compared to the previous 3.5% reading.
    The euro was higher against the U.S. dollar and the British pound following the data release. Bond yields were little changed, with the yield on 10-year German bonds continuing to trade around 3 basis points higher.
    The increase in services inflation was likely “driven mainly by Easter timing effects,” Franziska Palmas, senior Europe economist at Capital Economics, said in a note. These effects would reverse in the coming month, she added, suggesting that this left the door open for further interest rate cuts from the European Central Bank.
    “We think the services rate will decline significantly in the rest of this year as US tariffs weigh on activity and the labour market continues to weaken,” Palmas added.
    Michael Field, chief equity strategist at Morningstar, meanwhile urged caution, saying tariff uncertainty meant “any level of comfort we have here is precarious.” A further escalation of tariff tensions would mean a pick-up of inflation in Europe, he said.

    Field added that further ECB rate cuts were still on the table. “This relatively low level of headline inflation keeps the pressure off the ECB, who can in turn lower interest rates further,” he said.
    ECB President Christine Lagarde told CNBC last week that “we’re heading towards our [inflation] target in the course of 2025, so that disinflationary process is so much on track that we are nearing completion.”
    Lagarde and other policymakers last week warned the picture for inflation was less clear in the medium-term, with factors such as potential retaliation countermeasures from Europe against U.S. tariffs and fiscal shifts like Germany’s major infrastructure package coming into play.
    Lagarde said the ECB would be “data dependent to the extreme,” when making interest rate decisions. The central bank last cut interest rates last month, taking its key rate — the deposit facility rate — to 2.25%, down from highs of 4% in mid-2023.

    Several major euro zone economies had already earlier in the week released their latest inflation figures, which are harmonized for comparability across the bloc. Germany’s statistics office said Wednesday it expects consumer prices to have risen by 2.2% in April, below the previous month’s reading but slightly higher than expected. Meanwhile French harmonized inflation came in at 0.8%, also slightly ahead of expectations.
    Data released earlier this week indicated that the euro zone economy could be picking up steam, with the bloc’s gross domestic product rising 0.4% in the first quarter of 2025, according to a preliminary reading. This was higher than the forecast of 0.2%, and followed a revised 0.2% growth print in the last quarter of 2024.
    Growth is however widely expected to slow in the coming months due to the global tariff fallout. More

  • 138 Shares199 Views

    in Economy

    Trump Ends Chinese Tariff Loophole, Raising the Cost of Online Goods

    Supporters say the change is important to stop cheap Chinese goods from entering the U.S. But the decision could drive up prices for goods Americans buy online.The Trump administration on Friday officially eliminated a loophole that had allowed American shoppers to buy cheap goods from China without paying tariffs. The move will help U.S. manufacturers that have struggled to compete with a wave of low-cost Chinese products, but it has already resulted in higher prices for Americans who shop online.The loophole, called the de minimis rule, allowed products up to $800 to avoid tariffs and other red tape as long as they were shipped directly to U.S. consumers or small businesses. It resulted in a surge of individually addressed packages to the United States, many shipped by air and ordered from rapidly growing e-commerce platforms like Shein and Temu.A growing number of companies used the loophole in recent years to get their products into the United States without facing tariffs. After President Trump imposed duties on Chinese goods during his first term, companies started using the exemption to bypass those tariffs and continue to sell their products more cheaply to the United States. Use of the loophole ramped up in Mr. Trump’s second term as he hit Chinese goods with a minimum 145 percent tariff.U.S. Customs and Border Protection processed a billion such packages in 2023, the average value of which was $54.In a cabinet meeting at the White House on Wednesday, Mr. Trump referred to the loophole as “a scam.”“It’s a big scam going on against our country, against really small businesses,” he said. “And we’ve ended, we put an end to it.”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

  • 163 Shares169 Views

    in Economy

    Jobs report Friday to provide important clues on where the economy is heading

    Economists expect nonfarm payrolls to post an increase of 133,000, a steep slide from the 228,000 in March. However, it would be only slightly below the 152,000 average for the first three months of the year.
    A downside surprise could be perilous considering the spate of bad economic news and the prevailing angst over the way President Donald Trump is implementing tariffs.

    Steven Chechette (C) speaks with a recruiter at the KeySource booth at the Mega JobNewsUSA South Florida Job Fair held in the Amerant Bank Arena on April 30, 2025, in Sunrise, Florida.
    Joe Raedle | Getty Images

    Clues on whether the U.S. economy is merely in a temporary tariff-induced funk or a more damaging longer-turn downtrend should come Friday when the Labor Department releases the April jobs report.
    Economists expect nonfarm payrolls to post an increase of 133,000, which would be a steep slide from the 228,000 in March, according to the Dow Jones consensus. However, it would be only slightly below the 152,000 average for the first three months of the year and likely would be enough to hold the unemployment rate around 4.2%.

    But a downside surprise could be perilous considering the recent spate of bad economic news and the prevailing angst over the way President Donald Trump is implementing tariffs against U.S. trading partners.
    “If it’s around 150,000 give or take, I think all will be forgiven,” said Mark Zandi, chief economist at Moody’s Analytics. “So I think we’ll end the week feeling OK, not great, but OK. Things aren’t falling apart.”
    However, Zandi and other economists say financial markets may want to brace for disappointment. Specifically, he has his eye on anything less than 100,000 for payrolls growth, which he expects would cause the dour economic feelings to take over.
    “If the number’s 100,000 or anything south of that, then I think I’d watch out,” he said. “Then all the other data will take on greater importance, and people will be marking down their expectations. That could be a tough day in the markets.”

    Bad news piles up

    Investors this week had to digest a gross domestic product reading that showed the economy contracted 0.3% annualized in the first quarter. They also saw a weak private payrolls reading from ADP, Labor Department reports showing a steeper slide in job openings and an uptick in unemployment claims, plus a mixed bag on inflation readings.

    Even with all that, Wall Street hung tough, pushing the Dow Jones Industrial Average near a 2% gain on the week as investors continued to focus on the latest tariff news out of the White House.
    Still, a bad jobs report could quickly change that, and there are underlying indications of weakness.
    ADP, a sometimes unreliable gauge for the nonfarm payrolls count, reported just 62,000 in private company hiring, well below expectations. At the same time, job openings fell to about 7.2 million, the lowest since September 2024.
    Other recent indicators also don’t bode well for the jobs picture. The unemployment rate for recent college graduates surged to 5.8% in March, the highest since July 2021, while the underemployment rate spiked to 41.2%, the highest since February 2022, according to New York Federal Reserve data.

    Job fears

    Workers also are growing discontented with their situations.
    Specifically, wage satisfaction hit its lowest level, at 54.8%, since November 2021, according to March data also from the New York Fed. At the same time, the average “reservation” wage, or the lowest salary acceptable to take a job, tumbled to $74,236, a slide of nearly 10% from the November 2024 peak.
    There’s also the lingering concern over federal government layoffs as Elon Musk’s Department of Government Efficiency slashed the federal workforce since President Donald Trump took over in January. Announced federal layoffs thus far have totaled 281,452, according to consultancy Challenger, Gray & Christmas.
    However, the actual toll could be well higher: Atlanta Fed researcher M. Melinda Pitts estimates that including related hits on contractors and grant employees, the total impact could be on the order of 1.2 million. Those cuts, though, won’t be fully felt until later in the year after government severance checks run out.
    In the interim, the jobs numbers likely will indicate a slowing economy, though not one falling off a cliff.
    Citigroup forecasts job growth of 105,000, which “is not spectacular but given the slowdown in immigration it may be around the rate of job growth required to keep the unemployment rate unchanged,” Citi economist Andrew Hollenhorst wrote.
    In addition to the headline payrolls number, the Bureau of Labor Statistics will release wage information, which will be watched closely for signs that inflation is slowing. The Wall Street consensus is that average hourly earnings rose 0.3% in April, good for a 3.9% increase year over year, or slightly higher than in March.
    The report will be released at 8:30 a.m. ET.

    Don’t miss these insights from CNBC PRO More

  • 175 Shares199 Views

    in Economy

    GM Cuts Profit Forecast by 20% and Says Auto Tariffs Will Cost It Billions

    General Motors now expects to earn a lot less than it did before President Trump imposed 25 percent tariffs on imported cars and auto parts.General Motors cut its profit forecast for 2025 on Thursday by more than 20 percent and said the Trump administration’s tariffs would increase its costs by $4 billion to $5 billion this year.In a conference call with analysts, G.M. executives said the company now expected to make $8.2 billion to $10.1 billion this year, down from a previous forecast of $11.2 billion to $12.5 billion.“G.M.’s business is fundamentally strong as we adapt to the new trade policy environment,” the company’s chief executive, Mary T. Barra, said.In April, President Trump imposed tariffs of 25 percent on imported vehicles and will begin imposing the same duty on imported auto parts on Saturday. On Tuesday, the president modified how the tariffs are applied to give automakers some relief, including partial reimbursement for tariffs on imported parts for two years.Ms. Barra said G.M. hoped to offset about 30 percent of the impact of the tariffs by increasing production in U.S. plants, cutting costs and working with suppliers to raise their domestic production of parts and components.G.M. had previously said it was increasing pickup truck production at a plant near Fort Wayne, Ind., which will reduce the number of vehicles it imports from Canada and Mexico. Ms. Barra said output at the Fort Wayne factory would increase by about 50,000 trucks this year.She also said G.M. now planned to make more battery modules in its U.S. plants to raise the portion of domestic content in its electric vehicles.About $2 billion in tariff-related cost increases will come from vehicles that are made in Canada, Mexico and South Korea and sold in the United States.Analysts have predicted that the tariffs will add thousands of dollars to the cost of new cars and trucks, and that some or all of that will be passed on to consumers. In the call, G.M.’s chief financial officer, Paul Jacobson, said the company now expected new vehicle prices to rise 0.5 percent to 1 percent this year. Previously, the company forecast that pricing would fall by 1 percent to 1.5 percent.Other automakers are also planning to produce more vehicles in the United States. Mercedes-Benz said Thursday that it would build a new vehicle at an Alabama factory as part of what the German carmaker called a “deepening commitment” to manufacturing in the United States.While the company did not mention tariffs, Mercedes and other carmakers have been at pains in recent weeks to emphasize how many cars they already build in the United States and their plans to make more. Mercedes did not provide details about the car, except to say it will be a new design tailored to the U.S. market and begin production in 2027.The company’s factory near Tuscaloosa, Ala., primarily assembles luxury sport utility vehicles, including electric models, for sale in the United States and export to other markets.Jack Ewing More

  • 138 Shares149 Views

    in Economy

    A Tidal Wave of Change Is Headed for the U.S. Economy

    When the Covid pandemic hit, factories in China shut down and global shipping traffic slowed. Within a matter of a few weeks, products began disappearing from U.S. store shelves and American firms that depend on foreign materials were going out of business.A similar trend is beginning to play out, but this time the catalyst is President Trump’s decision to raise tariffs on Chinese imports to a minimum of 145 percent, an amount so steep that much of the trade between the United States and China has ground to a halt. Fewer massive container ships have been plying the ocean between Chinese and American ports, and in the coming weeks, far fewer Chinese goods will arrive on American shores.While high tariffs on Chinese products have been in place since early April, the availability of Chinese products and the price that consumers pay for them has not changed that much. But some companies are now starting to raise their prices. And experts say that the effects will become more and more obvious in the coming weeks, as a tidal wave of change stemming from canceled orders in Chinese factories works its way around the world to the United States.The number of massive container ships carrying metal boxes of toys, furniture and other products departing China for the United States has plummeted by about a third this month.The reason consumers haven’t felt many of the effects yet is because it takes 20 to 40 days for a container ship to travel across the Pacific Ocean. It then takes another one to 10 days for Chinese goods to make their way by train or truck to various cities around the country, economists at Apollo Global Management wrote in a recent report. That means that the higher tariffs on China that went into effect at the beginning of April are just starting to result in a drop in the number of ships arriving at American ports, a trend that should intensify.By late May or early June, consumers could start to see some empty shelves, and layoffs could occur for retailers and logistics industries. The major effects on the U.S. economy of shutting down trade with China will start to become apparent in the summer of 2025, when the United States might slip into a recession, said Torsten Slok, an economist at Apollo.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

  • 175 Shares159 Views

    in Economy

    Trump, on Tariffs, Says ‘Maybe the Children Will Have 2 Dolls Instead of 30’

    At the end of a cabinet meeting, the president allowed for the possibility that trade war could disrupt supply chains.President Trump has a message for the nation’s children: Prepare to sacrifice for your country.He was taking questions at the end of one of his marathon cabinet meetings when he finally allowed that, yes, his tariff policies and the trade war he has set off with China may soon result in some emptier-than-usual shelves in stores. Specifically, toy stores.“You know, somebody said, ‘Oh, the shelves are going to be open,’” Mr. Trump said. “Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.”This, from the billionaire, crypto-salesman, golf-club-operating, Palm Beach-by-way-of-Fifth Avenue president with the golden office and the golden triplex apartment. There he sat, surrounded by the other billionaires with whom he has filled his cabinet, telling the boys and girls of America they’ll just have to make do with fewer toys this year for the greater good.This grinchy pronouncement by the president had the value of being truthful.Many American toymakers and retailers have started to pause their orders as the effects of Mr. Trump’s tariffs ripple out, threatening to snarl supply chains. It could all have a big impact on this year’s holiday season since it takes months to manufacture, package and ship many products to the United States.Greg Ahearn, chief executive of the Toy Association, a U.S. industry group representing 850 toy manufacturers, told The Times that there is now a “frozen supply chain that is putting Christmas at risk.”“If we don’t start production soon,” Mr. Ahearn said, “there’s a high probability of a toy shortage this holiday season.”You hear that, kids? More

  • 188 Shares179 Views

    in Economy

    U.S. economy shrank 0.3% in the first quarter as Trump policy uncertainty weighed on businesses

    Gross domestic product fell at a 0.3% annualized pace, largely pushed by a surge in imports ahead of President Donald Trump’s tariffs.
    Imports soared 41.3%, driven by a 50.9% increase in goods. Imports subtract from GDP, so the contraction in growth may not be viewed as negatively given the potential for the trend to reverse.
    The report provided cross signals for the Fed. While the negative growth number might push the central bank to consider lowering interest rates, inflation readings could give policymakers pause.

    The U.S. economy contracted in the first three months of 2025, fueling recession fears at the start of President Donald Trump’s second term in office as he wages a potentially costly trade war.
    Gross domestic product, a sum of all the goods and services produced from January through March, fell at a 0.3% annualized pace, according to a Commerce Department report Wednesday adjusted for seasonal factors and inflation. This was the first quarter of negative growth since Q1 of 2022.

    Economists surveyed by Dow Jones had been looking for a gain of 0.4% after GDP rose by 2.4% in the fourth quarter of 2024. However, over the past day or so some Wall Street economists changed their outlook to negative growth, largely because of an unexpected rise in imports as companies and consumers sought to get ahead of the Trump tariffs implemented in early April.
    Indeed, imports soared 41.3% for the quarter, driven by a 50.9% increase in goods. Imports subtract from GDP, so the contraction in growth may not be viewed as negatively given the potential for the trend to reverse in subsequent quarters. Imports took more than 5 percentage points off the headline reading. Exports rose 1.8%.
    “Maybe some of this negativity is due to a rush to bring in imports before the tariffs go up, but there is simply no way for policy advisors to sugar-coat this. Growth has simply vanished,” said Chris Rupkey, chief economist at Fwdbonds.

    People shop in a Manhattan store on July 27, 2023 in New York City.
    Spencer Platt | Getty Images News | Getty Images

    Consumer spending slowed during the period but was still positive. Personal consumption expenditures increased 1.8% for the period, the slowest quarterly gain since Q2 of 2023 and down from a 4% gain in the prior quarter.
    Moreover, private domestic investment soared during the period, rising 21.9%, primarily driven by a 22.5% surge in equipment spending that also could have been tariff driven.

    “No surprise that GDP took a hit in the first quarter, mainly because the balance of trade blew up as companies imported goods like crazy to front-run tariffs. The more telling number for the future of the expansion was consumer spending, and it grew, but at a relatively weak pace,” said Robert Frick, corporate economist with Navy Federal Credit Union. “That’s concerning, but not alarming as it could have been due to bad weather and a spending surge at the end of last year.”
    Stock market futures slipped following the report while Treasury yields moved higher.
    The report provided cross signals for the Federal Reserve ahead of its policy meeting next week. While the negative growth number might push the central bank to consider lowering interest rates, inflation readings could give policymakers pause.
    The personal consumption expenditures price index, the Fed’s preferred inflation measure, posted a 3.6% gain for the quarter, up sharply from the 2.4% increase in Q4. Excluding food and energy, core PCE was up 3.5%. Fed officials consider the core reading a better gauge of long-term trends.
    A related reading known as the chain-weighted price index, which adjusts for changes in consumer behavior and other factors, rose 3.7%, well above the 3% estimate.
    Markets still are pricing in a rate cut at the June meeting and a total four moves by the end of the year, a potential indication that the Fed will prioritize economic growth over inflation.
    Also Wednesday, the Bureau of Labor Statistics reported that its employment cost index rose 0.9% in the first quarter, in line with expectations.
    While the economy is still adding jobs and consumers are still spending, the GDP report raises both the danger of recession and the stakes for Trump as he negotiates deals with U.S. trading partners.
    The traditional rule of thumb for recession is two consecutive negative quarters, though the official arbiter, the National Bureau of Economic Research, uses a definition of “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
    Markets next will look for the BLS nonfarm payrolls data, to be released Friday. Payrolls processing firm ADP reported Wednesday that private hiring rose just 62,000 in April.

    Don’t miss these insights from CNBC PRO More

  • 125 Shares99 Views

    in Economy

    German inflation dips less than expected to 2.2% in April

    German harmonised consumer inflation came in at 2.2% in April, preliminary data showed.
    The country’s economy expanded by 0.2% in the first quarter from the previous three-month period, preliminary data indicated.
    Germany’s economy, the largest in Europe, has long been sluggish, with its GDP flip-flopping between growth and contraction in each quarter throughout 2023 and 2024.

    Two German flags fly in front of and on top of the Reichstag building at sunset.
    Photo by Hannes P Albert/picture alliance via Getty Images

    German consumer inflation came in at 2.2% in April on an annual basis, easing slightly from March levels but coming in above expectations, preliminary data showed Wednesday.
    Economists polled by Reuters had estimated a 2.1% reading. The country’s consumer price index, harmonized for comparability across the euro zone, had come in at 2.3% in March on an annual basis.

    So-called core inflation, which excludes food and energy prices, accelerated to 2.9% in April from 2.6% in March. The closely-watched services print also jumped to 3.9%, after a 3.5% reading in the previous month.
    Energy prices meanwhile dropped sharply, falling by 5.4% according to the statistics office.
    While the inflation rate closing in on the European Central Bank’s 2% mark is good news for consumers at first glance, there are some less positive points about the data on closer look, Sebastian Becker, economist at Deutsche Bank, said in a note Wednesday.
    The slight decrease of the headline figures only took place due to lower energy and food costs, he said. “In comparison, the core inflation rate, which is more important for the ECB … rose notably again.” And services inflation appears “considerably more stubborn than expected,” Becker added.

    Economic growth

    Earlier on Wednesday, preliminary data showed that Germany’s economy expanded by 0.2% in the first quarter from the previous three-month period.

    The figure, released by the German federal statistics office, is adjusted for price, calendar and seasonal variations.
    The gross domestic product reading was in line with estimates from economists polled by Reuters. Germany’s gross domestic had contracted by 0.2% in the fourth quarter.
    The statistics office attributed the quarterly increase to the fact “that both household final consumption expenditure and capital formation were higher than in the previous quarter.”
    While acknowledging Wednesday’s figures were positive, “the quarterly increase is still far too small to end the country’s long-lasting stagnation,” Carsten Brzeski, global head of macro at ING, said in a note.
    Europe’s largest economy has long been sluggish, with its GDP flip-flopping between growth and contraction in each quarter throughout 2023 and 2024. The country has so far avoided technical recession, which is defined by two consecutive quarters of contraction.
    Key sectors of the economy, such as autos, have been suffering from stronger competition from China. Other industries including housebuilding and infrastructure have also been going through trying times that have been linked to higher costs, muted investment and bureaucratic hurdles.
    Separately, U.S President Donald Trump’s tariff policies have thrust uncertainty onto export reliant Germany which counts the U.S. as its most important trading partner.
    As part of the European Union, Germany is facing 20% blanket tariffs on goods exported to the U.S., although these levies have been temporarily reduced to 10% to allow time for negotiations. U.S. duties on steel, aluminum and autos also affect the country.
    The German government last week cut its economic outlook to predict stagnation in 2025, with outgoing economy minister Robert Habeck saying Trump’s trade policies and their impact on the country were the main factor behind the revision.

    Fiscal upheaval

    One bright spot could emerge on the horizon. Germany earlier this year made changes to its long-standing debt brake fiscal rule, enabling higher defense spending, and creating a 500 billion euro ($570 billion) fund dedicated to infrastructure and climate investments.
    This move has widely been regarded as a positive shift for the German economy, although much still depends on how the changes are implemented.
    “Today’s GDP report paints a picture of what could have happened if it hadn’t been for US President Donald Trump’s tariff blast – an economy that bottoms out and goes through a weak cyclical rebound, but could gain momentum with the announced fiscal stimulus,” ING’s Brzeski said.
    While this recovery could still happen, the process now will likely take longer, the analyst said. He stressed that tariffs, uncertainty and other shifts in trade and geopolitics are weighing on the short-term economic outlook, while the planned fiscal measures can boost long-term growth. More