Evelyn Reynolds

President Trump could still choose to pause the tariffs he is threatening to put on America’s largest trading partners Tuesday, but industries are preparing for the worst.When President Trump announced last week that an additional 10 percent tariff on Chinese goods would take effect on Tuesday, Logan Vanghele immediately called the logistics company that was handling a $120,000 shipment of aquarium products for his small business.The cargo was on a ship en route to Boston from China. His message was clear: “Get this thing off the boat, please.”Company executives and foreign officials are scrambling to avert the consequences of another tight deadline from Mr. Trump, who has threatened to put stiff tariffs on goods coming in from China, Canada and Mexico starting just after midnight Tuesday.The president describes this as an effort to pressure those countries to stop the flow of deadly drugs and migrants to the United States. But Mr. Trump’s game of brinkmanship with America’s three largest trading partners is creating intense uncertainty for business owners.That includes Mr. Vanghele, 28, who runs a small company that sells lighting and equipment for aquariums, all of which is made in China. He had no idea that the shipment — one of his biggest so far — could face such fees when it left Yantian Port in southeastern China in January, just days before Mr. Trump’s inauguration. In a frantic effort to avoid paying roughly $25,000 in tariffs, Mr. Vanghele pleaded with the logistics firm last week to unload his container at a port in Norfolk, Va., where it stopped on Friday, instead of traveling on to Boston.While it is possible that Mr. Trump’s new tariffs will include an exemption for goods that are already on the water, there is no guarantee.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 president initiated an investigation that could lead to tariffs on lumber imports, nearly half of which comes from Canada.President Trump on Saturday initiated an investigation into whether imports of lumber threaten America’s national security, a step that is likely to further inflame relations with Canada, the largest exporter of wood to the United States.The president directed his commerce secretary, Howard Lutnick, to carry out the investigation. The results of the inquiry could allow the president to apply tariffs to lumber imports. A White House official declined to say how long the inquiry would take.An executive memorandum signed by Mr. Trump ordered the investigation and was accompanied by another document that White House officials said would expand the volume of lumber offered for sale each year, increasing supply and helping to ensure that timber prices do not rise.The trade inquiry is likely to further anger Canada. Some of its citizens have called for boycotts of American products over Mr. Trump’s plans to impose tariffs on all Canadian imports beginning on Tuesday. The president, who also plans to hit Mexico with similar tariffs, says the levies are punishment for failure to stem the flow of drugs and migrants into the United States.Many Canadians have contested Mr. Trump’s assertion that fentanyl is flowing from its country into the United States.Canada and the United States have sparred over protections in the lumber industry for decades. The countries have protected their own industries with tariffs and other trade measures, and argued about the legitimacy of those measures in disputes both under the North American Free Trade Agreement and at the World Trade Organization.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 Atlanta Fed’s GDPNow tracker of incoming data is indicating that gross domestic product is on pace to shrink by 1.5% for the first quarter.
While the tracker is volatile through the quarter and typically becomes more reliable much later in the quarter, it does coincide with some other indicators showing a growth slowdown.

A customer shops for produce at an H-E-B grocery store on Feb. 12, 2025 in Austin, Texas.
Brandon Bell | Getty Images

Early economic data for the first quarter of 2025 is pointing towards negative growth, according to a Federal Reserve Bank of Atlanta measure.
The central bank’s GDPNow tracker of incoming metrics is indicating that gross domestic product is on pace to shrink by 1.5% for the January-through-March period, according to an update posted Friday morning.

Fresh indicators showed that consumers spent less than expected during the inclement January weather and exports were weak, which led to the downgrade. Prior to Friday’s consumer spending report, GDPNow had been indicating growth of 2.3% for the quarter.
While the tracker is volatile and typically becomes a more reliable measure much later in the quarter, it does coincide with some other measures that are showing a growth slowdown.
“This is sobering notwithstanding the inherent volatility of the very high frequency ‘nowcast’ maintained by the Atlanta Fed,” Mohamed El-Erian, chief economic advisor at Allianz and president of Queens’ College Cambridge, said in a post on social media site X.
The gauge had pointed to GDP gains as high as 3.9% in early February but has been on a decline since then as additional data has come in.
On Friday, the Commerce Department reported that personal spending fell 0.2% in January, missing the Dow Jones estimate for a 0.1% increase. Adjusted for inflation, spending fell 0.5%. As a result, that shaved a full percentage point off the expected contribution to GDP, down to 1.3%, according to the GDPNow calculation.

At the same time, the contribution of net exports tumbled from -0.41 percentage point to -3.7 percentage points.
The combination of data and its impact on the growth outlook comes with surveys showing decreasing consumer confidence and worries about rising inflation. The Commerce Department also reported that an inflation measure the Fed favors moved lower during the month, as the core personal consumption expenditures price index fell to 2.6%, down 0.3 percentage point from December.
The week also brought some concerning news out of the labor market as initial unemployment claims hit a level that was last higher in early October.
In addition, the bond market also has been pricing in slower growth. The 3-month Treasury yield this week moved above the 10-year note, a historically reliable indicator of a recession at the 12- to 18-month horizon.
The economic and policy uncertainty has led to a bumpy start to the year for the stock market. The Dow Jones Industrial Average is up 2% in 2025 amid wild fluctuations in a volatile news cycle.
“My sense is that the complacency that has crept into asset markets is about to be disrupted,” said Joseph Brusuelas, chief U.S. economist at RSM.
Markets increasingly believe the Fed will respond to the slowdown with multiple interest rate cuts this year. Traders in the fed funds futures market increased the odds of a quarter percentage point reduction in June to about 80% as of Friday afternoon and raised the possibility of three such cuts total this year.

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The personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, increased 0.3% for the month and showed a 2.5% annual rate.
Excluding food and energy, core PCE also rose 0.3% for the month and was at 2.6% annually. Fed officials more closely follow the core measure as a better indicator of longer-term trends.
Personal income posted rose 0.9% against expectations for a 0.4% increase. However, the higher incomes did not translate into spending, which decreased 0.2%, versus the forecast for a 0.1% gain.

Inflation eased slightly in January as worries accelerated over President Donald Trump’s tariff plans, according to a Commerce Department report Friday.
The personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, increased 0.3% for the month and showed a 2.5% annual rate.

Excluding food and energy, the core PCE also rose 0.3% for the month and was at 2.6% annually. Fed officials more closely follow the core measure as a better indicator of longer-term trends. The 12-month core measure showed a step down from the upwardly revised 2.9% level in December. Headline inflation eased by 0.1 percentage point.
The numbers all were in line with Dow Jones consensus estimates and likely keep Fed Chair Jerome Powell and his colleagues on hold for the time being regarding interest rates.
The inflation report was “good, but we’re not done,” said Jose Rasco, chief investment officer for the Americas at HSBC Global Private Banking and Wealth Management. “So that prudent patient Powell, as I call him, is going to remain in play, and I think he’s going to wait.”
Elsewhere in the report, income and spending numbers showed some surprises.
Personal income posted a much sharper increase than expected, up 0.9% on the month against expectations for a 0.4% increase. However, the higher incomes did not translate into spending, which decreased 0.2%, versus the forecast for a 0.1% gain.

The personal savings rate also spiked higher, rising to 4.6%.
Stock market futures pointed higher following the report while Treasury yields were mostly lower.
The report comes as Fed policymakers weigh their next move for interest rates. In recent weeks, officials mostly have expressed hopes that inflation will continue to gravitate lower. However, they have indicated they want more evidence that inflation is headed sustainably back to their 2% goal before they will lower interest rates further.
Goods prices rose 0.5% on the month, pushed by a 0.9% increase in motor vehicles and parts as well as a 2% jump in gasoline. Services increased just 0.2% and housing rose 0.3%.
Following the report, futures traders slightly raised the odds of a June quarter percentage point rate cut, with the market-implied probability now just above 70%, according to the CME Group’s FedWatch gauge. Markets expect two cuts by the end of the year, though the odds for a third reduction have risen in recent days.
Though the public more closely follows the consumer price index, released earlier in the month by the Bureau of Labor Statistics, the Fed prefers the PCE measure because it is broader based, adjusts for changes in consumer behavior and places considerably less emphasis on housing costs.
The CPI for January showed an all-items inflation rate of 3% and 3.3% at the core.

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People shop and walk in the shopping streets in the city center of Munich, Bavaria, Upper Bavaria, Germany, on February 20, 2025.
Michael Nguyen| Nurphoto | Getty Images

German annual inflation came in at an unchanged but higher-than-expected 2.8% in February, provisional data from statistics agency Destatis showed Friday.
The print is harmonized across the euro area for comparability. 

The February print compares to a 2.7% estimate from economists surveyed by Reuters. The January harmonized annual inflation reading had come in at 2.8%, unchanged from December.
German inflation had fallen below the 2% European Central Bank target in September last year, but re-accelerated after and has remained above the crucial mark for five months in a row now.
The German data arrives ahead of the consumer price index print for the euro zone on Monday and the latest ECB decision later next week. The central bank in January cut interest rates for the fifth time since starting to ease monetary policy last summer and markets are widely pricing in another trim on Thursday.
The figures are also one of the first key economic data points to be released since the German election last weekend, in which the conservative alliance between the Christian Democratic Union and the Christian Social Union secured the largest share of votes.
This puts their lead candidate Friedrich Merz in line to take over from Olaf Scholz as chancellor, although it appears likely that the CDU-CSU will form a governing coalition with Scholz’s Social Democratic Party.

Economics was a hot topic during campaigning, with Merz suggesting that his policy plans — including income and corporate tax cuts, less bureaucracy, changes to social benefits and deregulation — would give the country’s economy a needed boost. Germany’s gross domestic product has long been hovering around recession territory, and shrank 0.2% after price, seasonal and calendar adjustments in the last quarter of 2024 from the previous three months, according to Destatis.
This breaking news story is being updated. More

The president has promised big results, from raising revenue to reviving domestic manufacturing. But many of his goals undermine one another.President Trump has issued an unremitting stream of tariff threats in his first month in office, accompanied by nearly as many reasons for why they should go into effect.Tariffs on Canada, Mexico and China are a cudgel to force those countries, America’s largest trading partners, to crack down on the flow drugs and migrants into the United States. Levies on steel, aluminum and copper are a way to protect domestic industries that are important to defense, while those on cars will prop up a critical base of manufacturing. A new system of “reciprocal” tariffs is envisioned as a way to stop America from being “ripped off” by the rest of the world.Those goals are almost always followed by another reason for hitting allies and competitors alike with tariffs: “Long term, it’s going to make our country a fortune,” Mr. Trump said as he signed an executive order on reciprocal tariffs this month.Mr. Trump maintains that tariffs will impose few, if any, costs on the United States and rake in huge sums of revenue that the government can use to pay for tax cuts and spending and even to balance the federal budget.But trade experts point out that tariffs cannot simultaneously achieve all of the goals that Mr. Trump has expressed. In fact, many of his aims contradict and undermine one another.For instance, if Mr. Trump’s tariffs prod companies to make more of their products in the United States, American consumers will buy fewer imported goods. As a result, tariffs would generate less revenue for the government.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

Black American workers made up just under 20% of the federal workforce in 2021, higher than the group’s share of employment as a whole, according to a study by the U.S. Government Accountability Office.
Other groups with relatively high representation in the federal workforce include Native Americans and people with disabilities.
The recent cuts have made some job-seekers rethink their career paths, said Janine Wiggins, owner of Resumes by Neen, an Alabama-based job search coaching business focused on federal workers.

A person displays a sign as labor union activists rally in support of federal workers during a protest, with the U.S. Capitol in the background on Capitol Hill in Washington, U.S., Feb. 11, 2025. 
Craig Hudson | Reuters

The sudden cuts to the federal workforce under President Donald Trump will likely throw a curveball into the retirement plans of many Americans, including those from typically disadvantaged backgrounds like Black Americans.
The federal government is often seen as a stable employer with generous benefits, including a defined benefit retirement package that has become rare in corporate America.

But the recent cuts, such as the widespread culling of employees with probationary status, have made some job-seekers rethink their career paths, said Janine Wiggins, owner of Resumes by Neen, an Alabama-based job search coaching business focused on federal workers.
“They’re growing distrust toward federal jobs, just because of the mass layoffs and all of the different executive orders that have been going out. There’s a lot of volatility now. … Before, I would get a lot of clients that want to work for the government because they see it as somewhere where they can stay long-term and retire,” Wiggins said.

The full impact of the jobs cuts is to be determined. However, there’s a chance that they could impact certain minority groups at a relatively high rate, given the demographics of the federal workforce.
According to a study by the U.S. Government Accountability Office, Black American workers made up just under 20% of the federal workforce in 2021. Recent data from the Bureau of Labor Statistics puts the Black American share of the civilian workforce at roughly 13%. Other groups with relatively higher representation in the federal workforce include Native Americans and people with disabilities.
One of those current employees is Katrina Ayers, a 36-year old African American mother of three in Mobile, Alabama, who works as a technician for the National Guard.

“What attracted me to was of course job security and the health insurance. That was the biggest thing. It was something that was stable,” Ayers said. She has been a federal employee for nine years.
Ayers said that she has private retirement savings, including a Roth IRA, in addition to her federal benefits. Still, she says she knows some federal workers rely solely on the government plans.

Federal retirement benefits

The retirement package for most federal workers consists of three main programs: Social Security, a 401(k)-like Thrift Savings Plan, and an annuity program called the Basic Benefit Plan. The minimum retirement age for the annuity plan is 57 years old for workers born in 1970 or later. There are options of deferred or early retirements for workers who meet certain thresholds.
That basic annuity is calculated using years of service and the highest average pay during three consecutive years of service, so even employees who are eligible for the program could end up with a lower-than-expected benefit if they are pushed out. Employees who are separated from their federal jobs before they are eligible for retirement can receive a lump sum of their retirement contributions.
The 401(k)-style Thrift Savings Plan is better than the average 401(k) plan found in the private sector, said J. Mark Iwry, who is currently a nonresident senior fellow at the Brookings Institution and a visiting scholar at the Wharton School. He previously served as senior advisor to the secretary of the Treasury from 2009 to 2017.

The defined benefit pension plan for many federal workers provides a somewhat lower level of benefits than some of the comparable private sector plans that are still in operation, Iwry said. However, the federal plan does have the rare perk of being largely adjusted for inflation.
Of course, the impact on retirement savings can also depend on how long it takes for workers to find a new job, and if they need to liquidate some of their assets in the meantime.
“You may end up having a need to tap your retirement savings that you wouldn’t if you didn’t have to change jobs,” said Craig Copeland, director of wealth benefits research with the Employee Benefit Research Institute.
Some workers in lower-income communities or with lower family wealth may also have more people to support, putting additional strain on their finances. This could be a reason that, at higher levels of income, there’s some evidence that Black workers save less than their white counterparts, Copeland said.
“The wealthier individuals that are Black or Hispanic felt that they had more of a responsibility to care for other loved ones than save for their retirement. So that limited somewhat of how much they saved,” Copeland said.
In general, the wealth gap between Black and white savers has been widening due to an array of factors, including Black households having less exposure to the stock market, existing barriers to Black homeownership and the undervaluation of homes in communities of color. This disparity in wealth also continues to grow as people age.

What’s next

The exact extent of the job cuts among federal workers is unclear. Several legal challenges have already been filed against Elon Musk’s Department of Government Efficiency, which has been pushing for some of the job cuts. Tech executive Musk took a similar cost-cutting approach when he bought the company formerly known as Twitter.
The government has also done some backtracking, such as the U.S. Food and Drug Administration re-hiring some of medical device division staff, suggesting that some of the eliminated roles may need to be filled again in the near future.
“People make the country run. So you need people in place, and to lay off all these federal workers, I’m just not understanding the rhyme and reason why, because I just feel like it’s going to be a domino effect,” Ayers said.
For her part, Ayers said that she has a backup plan if she needs to transition full-time into the private sector but isn’t ready to give up on her career with the federal government just yet.
“I’m going to still apply for jobs because I still believe in career progression, and I would like to stay on in the federal sector since I’ve invested so many years,” Ayers said. More

The 10-year Treasury yield passed below that of the 3-month note in Wednesday trading. In market lingo, that’s known as an “inverted yield curve,” and it’s had a sterling prediction record.
While there’s no certainty that growth will turn negative this time around, investors worry that expected growth from an ambitious agenda under President Donald Trump may not happen.
Yield curve inversions have had a strong but not perfect forecasting history. In fact, the previous inversion happened in October 2022, and there’s still been no recession, 2½ years later.

Eggs are displayed for sale in a Manhattan grocery store on Feb. 25, 2025 in New York City.
Spencer Platt | Getty Images

An ominous measure that the Federal Reserve considers a near surefire recession signal again has reared its head in the bond market.
The 10-year Treasury yield passed below that of the 3-month note in trading Wednesday. In market lingo, that’s known as an “inverted yield curve,” and it’s had a sterling prediction record over a 12- to 18-month timeframe for downturns going back decades.

In fact, the New York Fed considers it such a reliable indicator that it offers monthly updates on the relationship along with percentage odds on a recession occurring over the next 12 months.
At the end of January, when the 10-year yield was about 0.31 percentage point clear of the 3-month, the probability was just 23%. However, that is almost certain to change as the relationship has shifted dramatically in February. The reason the move is considered a recession indicator is the expectation that the Fed will cut short-term rates in response to an economic retreat in the future.

Stock chart icon

10-year 3-month curve

“This is what one would expect if investors are adopting a much more risk-averse attitude set of behavior due to a growth scare, which one periodically sees late in business cycles,” said Joseph Brusuelas, chief economist at RSM. “It’s not clear yet whether it’s more noise or it’s a signal that we’re going to see a more pronounced slowdown in economic activity.”
Though markets more closely follow the relationship between the 10- and 2-year notes, the Fed prefers measuring against the 3-month as it is more sensitive to movements in the central bank’s federal funds rate. The 10-year/2-year spread has held modestly positive, though it also has flattened considerably in recent weeks.

Stock chart icon

10-year 2-year yield curve

To be sure, yield curve inversions have had a strong but not perfect forecasting history. In fact, the previous inversion happened in October 2022, and there’s still been no recession 2½ years later.

So while there’s no certainty that growth will turn negative this time around, investors worry that expected growth from an ambitious agenda under President Donald Trump may not happen.
Economic obstacles arising
The 10-year yield soared following the Nov. 5, 2024, presidential election, building on gains that began when Trump moved higher in the polls in September and peaking about a week before the Jan. 20 inauguration. That would normally be a telltale sign of investors expecting more growth, though some market pros saw it also as an expression of worries over inflation and the extra yield investors were demanding from government paper amid a mounting debt and deficit issue for the U.S.
Since Trump took office last month, yields have tumbled. The 10-year has fallen about 32 basis points, or 0.32 percentage point, since the inauguration as investors worry that Trump’s tariff-focused trade agenda could spike inflation and slow growth. The benchmark yield is now essentially unchanged from Election Day.

Stock chart icon

10-year yield

“There are quite a number of little potholes in the roadway that we really need to navigate around,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. “What’s happening is all the uncertainty around the tariffs in particular is putting a very high-powered magnifying glass over all those cracks. People are starting to perk up and pay attention to this now.”
Recent sentiment surveys have reflected consumer and investor angst over prospects that growth could slow as inflation perks up just as it appeared to be easing.
In the University of Michigan’s monthly survey, respondents put their longer-term view on inflation, over the next five years, at its highest level since 1995. On Tuesday, the Conference Board reported that its forward-looking expectations index had sunk back down to levels consistent with recession in February.
Still, most of the “hard” economic data such as consumer and labor market indicators have held positive even in the face of downbeat sentiment.

“We are not looking for a recession,” Porcelli said. “We don’t expect one. We do, however, expect softer economic activity in the coming year.”
Markets are coming around to the same view of weaker activity as well.
In response, traders are now pricing in at least a half percentage point of interest rate cuts this year from the Fed, an implication that the central bank will ease as growth slows, according to the CME Group’s FedWatch measure of futures prices. The bond market smells “recession in the air,” said Chris Rupkey, chief economist at FWDBONDS.
However, Rupkey also said he’s not sure whether a recession will actually happen, since the labor market isn’t yet signaling that one is coming.
The yield curve inversion “is a pure play on the economy being not as strong as people thought it was going to be at the beginning of the Trump administration,” he said. “Whether or not we’re forecasting a full-blown recession, I don’t know. You need job losses for a recession, so we’re missing one key point of the data.”

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