Evelyn Reynolds

The Trump administration is more focused on keeping Treasury yields low rather than on what the Fed does, Treasury Secretary Scott Bessent said.
Bessent indicated that Trump will not be hectoring the Fed to cut, as he did during his first term.

U.S. Secretary of the Treasury Scott Bessent speaks, at the White House, in Washington, U.S. February 3, 2025. 
Elizabeth Frantz | Reuters

The Trump administration is more focused on keeping Treasury yields low rather than on what the Federal Reserve does, Treasury Secretary Scott Bessent said.
While in the past President Donald Trump has implored the Fed to cut its benchmark rate, Bessent said Wednesday that the current strategy is using the levers of fiscal policy to keep rates low. The benchmark the administration is using will be the 10-year Treasury, not the federal funds rate that the central bank controls, he added.

“The president wants lower rates,” Bessent said in an interview with Fox Business host Larry Kudlow, who served as director of the National Economic Council during Trump’s first term. “He and I are focused on the 10-year Treasury and what is the yield of that.”
Beginning in September 2024, the Fed engaged in a rate-cutting cycle that took a full percentage point off the funds rate. The benchmark sets what banks charge each other for short-term lending but historically has influenced a host of other rates for things like car loans, mortgages and credit cards.
However, Treasury yields actually jumped following the Fed reductions, as did market-based indicators of inflation expectations. Since Trump has taken office, though, the 10-year Treasury has been moving mostly lower and dropped about 10 basis points, or 0.1 percentage point, in Wednesday trading.

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10-year yield

Bessent indicated that Trump will not be hectoring the Fed to cut, as he did during his first term.
“He wants lower rates. He is not calling for the Fed to lower rates,” Bessent said. Trump believes that “if we deregulate the economy, if we get this tax bill done, if we get energy down, then rates will take care of themselves and the dollar will take care of itself.”

One priority of the administration is to get the Tax Cuts and Jobs Act made permanent, while it also will focus on energy exploration and deficit reduction.
“We cut the spending, we cut the size of government, we get more efficiency in government, and we’re going to go into a good interest rate cycle,” Bessent said.
The Treasury secretary’s statement on targeting bond yields “is consistent with our view that he has essentially one job – to try to prevent the 10y yield from breaking 5 percent at which point we think Trumponomics breaks down, with equities rolling over and housing and other rate sensitive sectors breaking lower,” wrote Krishna Guha, head of global policy and central bank strategy at Evercore ISI.
The 10-year last traded at 4.45%, down from its mid-January peak of 4.8%.
Shortly after taking office, Trump said he would demand lower interest rates. However, a few days ago, the president said he agreed with the Fed’s Jan. 29 decision to keep the funds rate steady, which Guha said “eases tension” between the two sides and could be positive for markets.

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The Labor Department’s January survey will include revisions making data for previous months look stronger in some cases and weaker in others.The Labor Department’s latest monthly report on hiring and unemployment will include revisions for previous months that should give a more accurate picture of the U.S. job market — but that could also sow confusion.When the data is released on Friday, one major measure of employment will be revised up. Another will be revised down. Some historical numbers will be revised, but others won’t. And the updates, though part of a routine process, will be taking place in a political environment where both sides have at times expressed skepticism of government economic statistics.“There is going to be a massive amount of confusion,” said Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution.Here is what economists say you will need to know about the revisions to make sense of the numbers.The revisions are part of a longstanding annual process.The monthly job figures are based on two surveys, one of employers and one of households. Those surveys are generally reliable — they involve a number of interviews far larger than a presidential election poll, for example — but they aren’t perfect. And so, once a year, the government reconciles the numbers with less timely but more reliable data from other sources. Similar processes are in place for revising other government statistics, like gross domestic product and personal income.“Revisions are how statistical agencies achieve both timeliness and accuracy,” said Jed Kolko, who oversaw economic statistics at the Commerce Department during the Biden administration. “Near-real-time data like the jobs report later get revised to match other data sources that are more accurate but take longer to collect and publish.”The revisions being released on Friday were scheduled far in advance and will use methodologies that were announced ahead of time, allowing economists, including Mr. Kolko and Ms. Edelberg, to publish detailed forecasts of what the new figures will show.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

Many Democrats and activists are rallying to defend diversity programs, but others say they distract from deeper efforts to address inequality.A few days after President Trump issued an order urging the private sector to end “Illegal D.E.I. Discrimination and Preferences,” the Rev. Al Sharpton led about 100 people into a Costco in East Harlem for a so-called buy-cott. The idea was to shop and support the company for maintaining its diversity, equity and inclusion policies amid pressure from the new administration.But the gesture by the civil rights activist did not win universal acclaim on the political left. In interviews, self-identified socialists and other leftists worried that Mr. Sharpton’s action helped bolster the company at a moment when it faced pressure from unionized workers, who had threatened to strike beginning Feb. 1.“Al Sharpton making Costco into a titan of progress that needs mass support days before a potential strike,” Bhaskar Sunkara, the president of the progressive magazine The Nation, grumbled on the platform X.The episode at Costco, which did not respond to a request for comment, illustrates an underappreciated tension on the left at a time when Mr. Trump has targeted diversity initiatives: Some on the left have expressed skepticism of such programs, portraying them as a diversion from attacking economic inequality — and even an obstacle to doing so.“I am definitely happy this stuff is buried for now,” Mr. Sunkara said in an interview. “I hope it doesn’t come back.”Corporate-backed initiatives promoting diversity can take various forms. Starbucks, for instance, pledges to “work hard to ensure our hiring practices are competitive, fair and inclusive” and says it is “committed to consistently achieving 100 percent gender and race pay equity.” It also offers anti-bias training.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

In recent days, multiple central bank policymakers not only have noted the uncertainty surrounding tariffs, they also have highlighted the potential impact on inflation.
Chicago Fed President Austan Goolsbee cited a number of supply chain threats that include “large tariffs and the potential for an escalating trade war.”
Economists generally see tariffs as having one-time impacts on prices. However, in this case President Donald Trump is casting a wide enough net that it could generate the kind of underlying inflation the Fed fears.

Austan Goolsbee speaking at Jackson Hole on August 23, 2024.
David A. Grogan | CNBC

Federal Reserve officials take great pains not to comment on fiscal policy, but the looming threat from tariffs is forcing their hand.
In recent days, multiple central bank policymakers not only have noted the uncertainty surrounding President Donald Trump’s desire to slap broad-ranging duties on products from Canada, Mexico and China — and perhaps the European Union — they also have highlighted the potential impact on inflation.

Any indication that the tariffs are presenting longer-lasting pressure in prices could make the Fed hold interest rates higher for longer.
In remarks at an auto symposium Wednesday in Detroit, Chicago Fed President Austan Goolsbee cited a number of supply chain threats that include “large tariffs and the potential for an escalating trade war.”
“If we see inflation rising or progress stalling in 2025, the Fed will be in the difficult position of trying to figure out if the inflation is coming from overheating or if it’s coming from tariffs,” Goolsbee said. “That distinction will be critical for deciding when or even if the Fed should act.”
On Jan. 29, the Federal Open Market Committee, of which Goolsbee is a voting member, voted to hold its benchmark interest rate steady at a range of 4.25% to 4.50% as it evaluates the evolving set of economic conditions.
The vote came amid a backdrop of gamesmanship between Trump and its largest U.S. trading partners, in which he postponed levies against Canada and Mexico but added 10% in tariffs against China, which retaliated with its own measures.

Economists generally see tariffs as having one-time impacts on prices, affecting particular goods where the duties are targeted but not acting as more widespread and more fundamental drivers of inflation. However, in this case Trump is casting a wide enough net that it could generate the kind of underlying inflation the Fed fears.
A limited road map
In an interview Monday with CNBC, Boston Fed President Susan Collins, also an FOMC voter, said she and her staff are studying the potential impact of tariffs, and she noted the unusual nature of the sweeping tariffs Trump has proposed.
“We have limited experience of such large and very broad-based tariffs,” she said. “There are many different dimensions, and there are second-round effects as well, which make it particularly hard to really assess what the amounts would be … We don’t know what the time frame would be that would cause a rise in a price level.”
If the tariffs were short-lived, “you’d expect the Federal Reserve would try to look through,” she said. “But of course, there are many factors going on from that perspective. So I’ll just say quickly that the underlying trends in inflation in the economy really matter a lot for how, you know, how I think about policy going forward.”
Other Fed officials, such as Philadelphia President Patrick Harker and the Atlanta Fed’s Raphael Bostic, also said they are concerned about potential inflationary effects and said they also will be watching for longer-term impacts.
For his part, Chair Jerome Powell deflected multiple questions about tariffs at his post-meeting news conference last week, saying it’s too early to make judgments about fiscal policy.
“We don’t know what will happen with tariffs, with immigration, with fiscal policy, and with regulatory policy,” he said. “I think we need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be.”
— Reuters contributed to this report. More

A strong dollar helped drive an uptick in U.S. imports last year, while export growth remained modest.The U.S. trade deficit in goods hit a record $1.2 trillion last year, as American consumers snapped up imported products and a strong U.S. dollar weighed on export growth.Data released Wednesday morning by the Commerce Department showed that U.S. imports of goods and services grew 6.6 percent to a record $4.1 trillion, as Americans bought large amounts of auto parts, weight-loss drugs, computers and food from other countries.U.S. exports of goods and services to the world also hit a record, reaching $3.2 trillion in 2024.That was driven by record sales of U.S. services, like business and financial advising, as well as foreign spending on travel in the United States. But exports of goods taken on their own grew more sluggishly, as a strong U.S. dollar made it more expensive for other countries to buy American products, and the United States sold fewer cars, car parts and industrial supplies, like raw materials and machinery, to the world.Competition from automakers in China and strikes in the U.S. auto industry weighed on exports of vehicles, parts and engines, which fell $10.8 billion compared with the year before.Mark Zandi, the chief economist at Moody’s Analytics, said Chinese electric vehicle sales had taken off in 2024, in China and elsewhere, and were siphoning market share from other producers. Companies like General Motors have been under pressure in China, where more than four-fifths of the electric and plug-in hybrid cars sold are now Chinese brands.“The Chinese auto industry has really come on and is very competitive in the E.V. space,” Mr. Zandi said. “And that’s a real problem for U.S. manufacturers that are producing and exporting to the rest of the world.”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

ADP said companies created a net 183,000 jobs on the month, slightly more than the 176,000 in December.
Pay for workers who stayed in their jobs grew at a 4.7% annual rate, or 0.1 percentage point more than in December.
All of the job creation came from service providers, who added 190,000 positions while goods producers lost 6,000.

Maplewood, Minnesota. Metro Transit hiring drivers with the possibility to make $30.00 an hour. (Photo by: Michael Siluk/UCG/Universal Images Group via Getty Images)
Ucg | Universal Images Group | Getty Images

Private sector companies added more jobs than expected in January, furthering the case for a stable labor market that allows the Federal Reserve time as it contemplates its next policy move, ADP reported Wednesday.
The payrolls processing firm said companies created a net 183,000 jobs on the month, slightly more than the 176,000 in December, a number that was revised sharply upward from the initial figure of 122,000. Economists surveyed by Dow Jones had been looking for a gain of 150,000.

Pay for workers who stayed in their jobs grew at a 4.7% annual rate, or 0.1 percentage point more than in December.
Though the headline ADP number topped expectations, the internals showed an unbalanced picture.
All of the job creation came from service providers, who added 190,000 positions while goods producers lost 6,000. (The numbers don’t add up to the 183,000 due to rounding.)
“We had a strong start to 2025 but it masked a dichotomy in the labor market,” APD chief economist Nela Richardson said. “Consumer-facing industries drove hiring, while job growth was weaker in business services and production.”
Trade, transportation and utilities topped sectors with 56,000 new jobs, with leisure and hospitality close behind at 54,000 and education and health services adding 20,000. However, manufacturing lost 13,000 positions.

Job creation was spread fairly evenly across business size, with companies that employ workers leading with 92,000.
Fed officials are watching the jobs picture closely as they consider whether to continue lowering interest rates. The Fed last year cut 1 percentage point off its key borrowing rate in an effort to support a labor market that had showed signs of slowing. Recently, policymakers have stressed the importance of staying patient as they watch the tariff battle in Washington as well as the impact from the rate reductions.
The ADP report serves as a run-up to the more closely watched nonfarm payrolls report, due Friday from the Bureau of Labor Statistics, which unlike ADP includes government workers. The consensus view for the BLS report is a gain of 169,000 in payrolls in January, with the unemployment rate holding at 4.1%.
The two reports sometimes differ significantly. However, ADP said it continues to expand its sample size for the pay measure portion, which is now at 14.8 million compared to nearly 10 million when it launched. More

The trade deficit has long drawn the president’s ire. Now, he’s preparing to take it on again.To President Trump, one economic number represents everything that is wrong with the global economy: America’s trade deficit.That deficit is the total value of what the United States imports from other nations, minus its exports to other countries. The fact that America runs a trade deficit reflects how the nation’s appetite for foreign goods now far outpaces what U.S. factories and farms send abroad.Official data set for release on Wednesday morning is expected to show that the U.S. trade deficit widened to nearly $1.2 trillion in 2024. For Mr. Trump, the fact that the United States imports more goods than it exports is a sign of economic weakness and evidence that the world is taking advantage of America. While the country’s trade deficit has been widening for years, that gap could end up being a key reason Mr. Trump decides to impose tariffs on Europe, China, Canada, Mexico and other governments.Mr. Trump rolled out a dramatic series of trade actions against Canada, Mexico and China in recent days, signing executive orders to put tariffs on all three nations in what he said was an effort to stem the flow of drugs and migrants to the United States.But he also cited the trade deficit as he talked about tariffs writ large, making clear that the gap between what America sells and what it buys remains top of mind for Mr. Trump.

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America’s Trade Deficits and Surpluses With Other Countries
Note: Data is adjusted for inflation and shows 2023 trade in goods, the latest available full year of data.Source: Census BureauBy 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

Fed Vice Chair Philip Jefferson said Tuesday the central bank should be careful how it adjusts interest rates amid an uncertain policy environment.
“I do not think we need to be in a hurry to change our stance,” he said.

Philip Jefferson speaks during a Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Washington, D.C., U.S., on Feb. 3, 2022. The U.S. Senate on Wednesday voted overwhelmingly to confirm Philip Jefferson, an economist and Davidson College’s dean of faculty, to the Federal Reserve Board.
Ken Cedeno | Bloomberg | Getty Images

EASTON, Pa. — Federal Reserve Vice Chair Philip Jefferson said Tuesday the central bank should be careful how it adjusts interest rates amid an uncertain policy environment.
In broad terms, the Fed governor said he sees the economy strong with inflation easing back on a “bumpy” road to the central bank’s 2% goal and a labor market in a “solid position.”

However, Jefferson echoed recent statements from other officials that it’s in the Fed’s best interest to move slowly as it evaluates evolving conditions.
“As long as the economy and labor market remain strong, I see it as appropriate for the [Federal Open Market] Committee to be cautious in making further adjustments,” he said in remarks for a speech at Lafayette College.
“Over the medium term, I continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as we move toward a more neutral stance as the most likely outcome,” Jefferson added. “That said, I do not think we need to be in a hurry to change our stance.”
The remarks come less than a week after the FOMC voted to hold its policy rate steady in a range between 4.25% to 4.5%, a decision with which Jefferson concurred. At the previous three meetings, the committee had cut the federal funds rate by a total 1 percentage point after hiking it rapidly to combat a surge in inflation.
Fed officials have refrained from commenting directly on policy clashes in Washington, but have expressed a level of trepidation about trying to prejudge events.

Principal among the current level of uncertainty is the impact that tariff negotiations between the U.S. and its primary trading partners will have. President Donald Trump has paused on duties against products from Canada and Mexico, but is locked in a tense battle with China.
“There is always a great deal of uncertainty around any economic forecast, and currently we face additional uncertainties about the exact shape of government policies, as well as their economic implications,” Jefferson said.
Over the past year, the Fed’s favored inflation gauge — the personal consumption expenditures price index — has edged lower. The rate increased 2.6% in December on a year-over-year basis, well off its peak but still ahead of the central bank’s 2% goal.
Jefferson said he expects inflation to continue to move lower, but hedged his outlook.
“In the current environment, I attach a high degree of uncertainty to my projections,” he said.
The policymaker added that he “could envision a range of scenarios for future policy” where “we can maintain policy restraint for longer” if inflation stays elevated, or one where the Fed could ease more if the labor market weakens. More