Evelyn Reynolds

Inflation eased more than expected in February, a welcome sign for the Federal Reserve as it grapples with the prospect of higher prices and slower growth as a result of President Trump’s trade war.The Consumer Price Index was up 2.8 percent from a year earlier, after rising another 0.2 percent on a monthly basis. That was a step down from January’s surprisingly large 0.5 percent increase and came in below economists’ expectations.The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, also ticked lower. The index rose 0.2 percent from the previous month, or 3.1 percent from a year earlier. Both percentages were below January’s increases.The data from the Bureau of Labor Statistics underscored the bumpy nature of the Fed’s progress toward its 2 percent goal. Prices for consumer staples, such as eggs and other grocery items, are rising steeply again, but costs for other categories like gasoline fell. A 4 percent drop in airfares in February was a primary driver of the better-than-expected data.Egg prices rose another 10.4 percent in February, as an outbreak of avian influenza continued to exacerbate a nationwide egg shortage. Prices for eggs are up nearly 60 percent since last year. Food prices more broadly rose 0.2 percent, or 2.8 percent from a year earlier.The cost of used cars also rose 0.9 percent in February, although new vehicle prices declined slightly. Car insurance, which was a huge driver of the index’s unexpectedly large increase in January, rose again, but at a much slower pace of 0.3 percent. It is up just over 11 percent over the past year. More

The U.S. Treasury Building is seen from the Washington Monument on a cold, winter day on Jan. 21, 2025 in Washington, DC.
Kevin Carter | Getty Images

The U.S. debt and deficit problem worsened during President Donald Trump’s first month in office, as the budget shortfall for February passed the $1 trillion mark even though the fiscal year is not yet at the halfway point.
Government spending eased slightly on a monthly basis though it still far outpaced revenue, according to a Treasury Department statement Wednesday. The deficit totaled just over $307 billion for the month, nearly 2½ times what it was in January and 3.7% higher than February 2024.

Receipts and expenditures set records for the month, a Treasury spokesman said.
For the year, the deficit totaled $1.15 trillion through the first five months of fiscal 2025. The total is about $318 billion more than the same span in 2024, or roughly 38% higher, and set a record for the period.
Net costs to finance the $36.2 trillion national debt edged lower to $74 billion for the month. However, the total net interest payments year to date rose to $396 billion, just behind national defense and health. Social Security and Medicare are the largest costs in the U.S. budget.
The deficit swelled in the final three years of former President Joe Biden’s term, growing from $1.38 trillion to $1.83 trillion.
Trump has made getting the government’s fiscal house in order a priority since taking office. Since taking over, he created the so-called Department of Government Efficiency, led by Elon Musk. The advisory board has spearheaded job cuts across multiple departments in addition to early retirement incentives. A Treasury spokesman said there were no apparent impacts yet from the DOGE efforts but referred further comment to the Musk-led panel.
At the same time, Trump wants to extend the Tax Cuts and Jobs Act, spearheaded during his first administration. While Trump has touted growth that the tax reductions would bring, multiple think tanks say renewing the act also would add $3.3 trillion to the deficit over the next decade.

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Policymakers are grappling with “exceptionally high” uncertainty, Christine Lagarde, the president of the European Central Bank, said on Wednesday, just hours after the European Commission announced tariffs on U.S. imports in response to levies imposed by the Trump administration. Later, Canada announced a new round of retaliatory tariffs on U.S. imports.The unpredictability of trade policy and geopolitics, which is likely to mean more large economic shocks, will make it harder for central bankers to keep inflation at their 2 percent target, Ms. Lagarde said.There was a somewhat bewildered mood among some of the E.C.B. officials, economists and analysts at an annual gathering held in Frankfurt, where Ms. Lagarde delivered her speech. Participants reflected on the rapidly shifting economic environment stemming from the escalating trade tensions and a substantial increase in military spending planned by European countries, particularly Germany.Under different circumstances, this year’s conference could have seemed like more of a celebration: Inflation in the eurozone slowed to 2.4 percent in February, near the central bank’s target, and policymakers have been able to cut interest rates six times since the middle of last year.Instead, President Trump’s imposition of sweeping tariffs, and his shifting policies on military aid to Ukraine, are unnerving European leaders. In response, European officials are proposing to borrow more to fund defense and infrastructure investments, significantly altering the region’s fiscal situation. The conference began with one speaker emphasizing the importance of preparing for war in order to avoid war.“Established certainties about the international order have been upended,” Ms. Lagarde said. “Some alliances have become strained while others have drawn closer. We have seen political decisions that would have been unthinkable only a few months ago.”When introducing a panel, François Villeroy de Galhau, the governor of the French central bank, said, “We are aware this environment can change tweet by tweet from one day to the next.” He invited panelists to begin their presentations but noted they could be referring to something that may be reversed by the same afternoon.“We live in a world not only of uncertainty, but still more unpredictability and still more, these last days, irrationality,” he said. More

The consumer price index for both all-items and core increased 0.2% in February, slightly below expectations.
On an annual basis, headline inflation was at 2.8%, while core was at 3.1%. Both also were 0.1 percentage point below the Wall Street consensus and the previous month’s levels.
The report provided some relief as consumers and businesses worry about the looming impact tariffs might have on inflation

Prices for goods and services moved up less than expected in February, providing some relief as consumers and businesses worry about the looming impact tariffs might have on inflation, the Bureau of Labor Statistics reported Wednesday.
The consumer price index, a wide-ranging measure of costs across the U.S. economy, ticked up a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 2.8%, according to the Labor Department agency. The all-item CPI had increased 0.5% in January.

Excluding food and energy prices, the core CPI also rose 0.2% on the month and was at 3.1% on a 12-month basis. The core CPI had climbed 0.4% in January.
Economists surveyed by Dow Jones had been looking for 0.3% increases on both headline and core, with respective annual rates of 2.9% and 3.2%, meaning that all of the rates were 0.1 percentage point less than expected.

Stock market futures added to gains after the release while Treasury yields rose.
Shelter costs moved up 0.3%, less than in January but still responsible for about half the monthly increase in the CPI, the BLS said. The category makes up more than one-third of the total weighting in the CPI, with particular focus on a measure in what homeowners estimate they could get in rent for their properties, which also increased 0.3%.
Food and energy indexes both increased 0.2%. Used vehicle prices jumped 0.9% and apparel rose 0.6%. Within food, egg prices soared another 10.4%, taking the 12-month increase to 58.8% and pushing a broader measure that also includes meat, poultry and fish up 7.7% on the year. Beef prices also climbed 2.4% in February.

Motor vehicle insurance posted a 0.3% increase on the month and was up 11.1% annually. However, airline fares slipped 4% in February and were down 0.7% from a year ago.
Inflation-adjusted average hourly earnings increased 0.1% for the month and were up 1.2% from a year ago, the BLS said in a separate release.
The report comes at a potentially critical juncture for the U.S. economy and financial markets, which have been shaken lately as President Donald Trump escalates a trade war and concerns rise of a growth scare.
In the latest developments, Trump’s 25% duties on steel and aluminum took effect Wednesday, prompting retaliatory measures from the European Union. Trump also has slapped 20% levies on goods from China.
Federal Reserve officials are watching the developments closely. Central bank policymakers generally consider tariffs to have modest impacts on inflation and often are viewed as one-off measures that don’t have lasting impact on longer-term gauges.
However, a broader trade war could change that if the pace of increases becomes more ingrained in the economy. Markets currently expect the Fed to resume cutting interest rates in May, with a total of 0.75 percentage point in reductions by the end of 2025.
“The February CPI release showed further signs of progress on underlying inflation, with the pace of price increases moderating after January’s strong release,” said Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management. “While the Fed is still likely to remain on hold at this month’s meeting, the combination of easing inflationary pressures and rising downside risks to growth suggest that the Fed is moving closer to continuing its easing cycle.”
The Fed meets next week and is widely expected to hold its key borrowing rate in a target range between 4.25%-4.5%.
Economic growth is trending negative in the first quarter, according to the Atlanta Fed’s GDPNow tracker of incoming data. The measure has pegged Q1 growth at a 2.4% decline, which would be the first negative growth quarter in three years.

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As a presidential candidate, Donald J. Trump promised an economic “boom like no other.”But eight weeks into his presidency, Mr. Trump is refusing to rule out a recession — a striking change in tone and message for a man who rode widespread economic dissatisfaction to the White House by promising to “make America affordable again.”His comments come as the stock market is tumbling — the S&P 500 fell 2.7 percent Monday after falling 3.1 percent last week — and business leaders are spooked about the uncertainty over his tariffs. Even some Republicans, who fear retribution if they cross Mr. Trump, have started to raise concerns about his levies.The moment captures a fundamental challenge for Mr. Trump, a showman who makes absolute and sweeping promises that inevitably run into the reality of governing.The economy Mr. Trump inherited was by many standards in solid shape, with low unemployment, moderate growth and an inflation rate that, while still higher than what the Federal Reserve wants, had declined substantially. But the uncertainty that his policies have injected into the outlook is a jarring contrast with the picture Mr. Trump painted on the campaign trail.“We will begin a new era of soaring incomes,” Mr. Trump said at a rally in October. “Skyrocketing wealth. Millions and millions of new jobs and a booming middle class. We are going to boom like we’ve never boomed before.”That vow to create an economic boom has come into conflict, at least for now, with the president’s favorite economic tool: tariffs. He promised those too during the campaign and, as economists warned, they are the primary driver of the country’s cloudy economic outlook. Forecasts from both JP Morgan and Goldman Sachs say a recession over the next year has become more likely because of Mr. Trump’s tariffs.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

The European Union is putting tariffs on a range of products from the United States in retaliation to President Trump’s steel and aluminum tariffs, and items that come from Republican-held states rank high on the hit list.The European Union plans to institute the tariffs in two phases: The first wave will take hold on April 1, and will impact goods that already had tariffs applied during Mr. Trump’s first term, such as bourbon, boats and motorcycles. For certain products like whiskey and Harley-Davidson motorcycles, those tariffs would be as much as a crushing 50 percent.The second wave is still being figured out, though the list of products that could be affected is already public — and is 99 pages long. In that phase, the E.U. is planning to add levies to goods worth about 18 billion euros, or 19.6 billion dollars, and is aiming for them to go into effect on April 13.The proposed goods include:Poultry, beef and porkSoybeansWine and sparkling wineBeerPants, shirts and other clothingHandbagsRefrigeratorsWashing machinesMowersExactly what those tariffs will look like remains to be seen. For now, Europe is consulting consumers, companies and policymakers across the 27-nation bloc as it finalizes the list. Many of the potential targets are largely produced in Republican-held areas, such as crops from the Louisiana district that elected Mike Johnson, the House speaker, and livestock from Nebraska and Kansas.The goal? Officials want to hit America where it hurts in order to force the United States to the negotiating table, while doing as little damage as possible to Europeans. More

President Trump’s sweeping tariffs on foreign steel and aluminum went into effect on Wednesday, escalating America’s trade spats with global competitors, including close allies already reeling from his on-and-off approach to trade penalties.Mr. Trump’s tariffs of 25 percent on the metals hit imports that enter the United States from any country in the world. The move, which many domestic steel and aluminum makers support, is expected to raise costs for American manufacturers of cars, tin cans, solar panels and other products, potentially slowing the wider U.S. economy.The action on metals was just the latest attempt by Mr. Trump to leverage the power of tariffs and the American market against foreign governments. Last week, he issued steep tariffs on imports from Canada, Mexico and China, blaming those countries for the entry of drugs and migrants into the United States, before quickly paring some of them back. The president is threatening to impose a raft of other tariffs, including on foreign cars and against countries that he says discriminate against the United States.His approach has been met with a market slump and has sent many U.S. allies into a defensive mode as they try to decipher what the president actually wants. On Tuesday, Mr. Trump threatened to double the tariffs on Canadian metal after Ontario had responded to Mr. Trump’s previous tariffs by putting a surcharge on electricity exported to the United States. Within hours, Ontario had suspended its surcharge, and Mr. Trump walked back his threats.The metal tariffs, and other levies to come, are likely to again worsen trade disputes. Foreign governments, including in Canada, have vowed to retaliate by issuing levies that will most likely hurt U.S. exporters. On Wednesday, Europe swiftly announced tariffs on up to $28 billion worth of goods in response. The metal tariffs mainly affect U.S. allies: Canada is by far the largest supplier of both steel and aluminum to the United States. Brazil, Mexico, South Korea and Vietnam are also top suppliers of steel, while the United Arab Emirates, Russia and China are top suppliers of American aluminum.The tariffs restore and expand similar measures that Mr. Trump put in place in 2018, which ushered in several long-running trade wars. Mr. Trump argued that the tariffs were needed to protect national security and provide a reliable source of metal for the military in wartime.Biggest Steel ImportersAnnual steel imports by the top 12 places of origin More

President Trump’s imposition of tariffs on all steel and aluminum imports could make it more expensive to produce cars in the United States, dealing another blow to automakers already facing the potential of rising steel prices because of other policies from his administration.Top of mind for auto executives was the bid by the Japanese steel maker Nippon Steel to buy U.S. Steel. Many of them had hoped that Mr. Trump would be open to negotiating a deal to allow the acquisition to go ahead. Instead, the president confirmed last month that he opposed the proposed deal.Many auto industry executives believe that the merger could have increased competition and supply in the American steel industry, ultimately lowering steel prices.In the United States, U.S. Steel and Cleveland-Cliffs are the only major American producers of the high-finish steel favored by automakers. Cleveland-Cliffs has long sought to acquire its rival, but such a merger has raised concerns in the auto industry that it could create a monopoly, giving the combined company the power to raise prices.By contrast, industry groups expected the proposed Nippon Steel deal to preserve competition in the market. The Alliance for Automotive Innovation, a trade group representing major U.S., Japanese, and European automakers, expressed support for Nippon Steel’s acquisition, saying that a Cleveland-Cliffs-led deal would result in “anti-competitive pricing of materials.”Even after former President Joseph R. Biden Jr. rejected the deal in January, Nippon Steel continued efforts to revive it. Cleveland-Cliffs has recently indicated that it remains interested in bidding for the financially troubled U.S. Steel. Last month, Mr. Trump reiterated that U.S. Steel must remain American-owned, and said he would block Nippon Steel from taking a controlling stake in the company.For automakers struggling with challenges such as rising competition from Chinese rivals, costly technological transitions, and signs of a slowdown in U.S. consumer spending, the new steel tariffs are expected to further squeeze profits. The 25 percent levies, which went into effect on Wednesday, are expected to cause steel prices in the United States to rise about 16 percent compared to prices in 2024, according to the research firm Wolfe Research. More