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    Eurozone economy expands 0.1% despite global trade tensions

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    U.S. economy grew at a 3% rate in Q2, a better-than-expected pace even as Trump’s tariffs hit

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    Gross domestic product jumped 3% for the second quarter, better than the 2.3% estimate and reversing a 0.5% decline in the prior period.
    Consumer spending rose 1.4% in the second quarter, better than the 0.5% in the prior period.
    While exports declined 1.8% during the period, imports fell 30.3%, reversing a 37.9% surge in Q1.
    President Donald Trump responded to the GDP report with a fresh demand for the Federal Reserve to lower interest rates.

    The U.S. economy grew at a much stronger-than-expected pace in the second quarter, powered by a turnaround in the trade balance and renewed consumer strength, the Commerce Department reported Wednesday.
    Gross domestic product, a sum of goods and services activity across the sprawling U.S. economy, jumped 3% for the April through June period, according to figures adjusted for seasonality and inflation.

    That topped the Dow Jones estimate for 2.3% and helped reverse a decline of 0.5% for the first quarter that came largely due to a huge drop in imports, which subtract from the total, as well as weak consumer spending amid tariff concerns.
    Financial markets reacted little to the report, with stock index futures mixed and Treasury yields higher.
    “The word of the summer for the economy is ‘resilient,'” said Heather Long, chief economist at Navy Federal Credit Union. “The consumer is hanging in there, but still on edge until the trade deals are done.”
    The period reported Wednesday includes President Donald Trump’s April 2 “liberation day” tariff announcement. Imports had jumped in the first quarter as companies sought to get ahead of the announcement.
    Over the past three months, Trump has been engaged in multiple rounds of saber-rattling and often intense negotiations with U.S. trading partners that have jangled nerves but nonetheless coincided with a subdued but solid pace of economic growth.

    The talks have largely resulted in tariffs well above where they were at the beginning of the year but not as severe as initially proposed.
    Consumer spending rose 1.4% in the second quarter, better than the 0.5% in the prior period. While exports declined 1.8% during the period, imports fell 30.3%, reversing a 37.9% surge in Q1.
    The GDP tally showed strength across key areas of the economy, as well as evidence that inflation is ebbing though not eradicated.
    The personal consumption expenditures price index, the Federal Reserve’s key inflation metric, showed a gain of 2.1% for the quarter, just above the central bank’s 2% target. Core PCE inflation, which the Fed considers a better gauge for longer-run trends as it excludes volatile food and energy prices, increased 2.5%. The respective numbers for the first quarter were 3.7% and 3.5%.
    The Fed meets later Wednesday and is expected to hold its key overnight borrowing rate steady in a 4.25%-4.5% range, where it has been since December.
    Trump responded to the GDP report with a fresh demand for the Federal Reserve to lower interest rates.
    “2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED!” Trump posted on Truth Social. Using his nickname for Fed Chair Jerome Powell, the president added “‘Too Late’ MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!”
    There were some signs of a slowdown in the report.
    Final sales to private domestic purchasers, a metric that Fed watches closely as a demand indicator, rose just 1.2%, down from the 1.9% increase in Q1 and the slowest gain since the fourth quarter of 2022.
    Trump has been complaining about high mortgage rates, which have held back the housing market. Residential investment fell 4.6% in Q2.

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    Private company hiring bounced back with a 104,000 increase in July, ADP says

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    Private payrolls rose by a seasonally adjusted 104,000 for the month, reversing a loss of 23,000 in June and topping the Dow Jones forecast for an increase of 64,000.
    Wages rose at a 4.4% annual pace for the month, about in line with recent trends.

    Hiring at private companies rebounded at a stronger than expected pace in July, indicating the labor market is holding its ground, ADP reported Wednesday.
    Payrolls rose by a seasonally adjusted 104,000 for the month, reversing a loss of 23,000 in June and topping the Dow Jones forecast from economists for an increase of 64,000. The June number was revised up from an initially reported loss of 33,000.

    Though the pace of hiring is well off where it stood last year, the June total was the best since March and consistent with a slowing but still fairly vibrant jobs picture.
    “Our hiring and pay data are broadly indicative of a healthy economy,” ADP chief economist Nela Richardson said. “Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient.”
    The report follows months of concerns that President Donald Trump’s tariffs would hold back economic growth and stymie consumer spending. However, sentiment surveys show confidence returning even with some apprehension about consumer spending and the impact that the duties will have on U.S. businesses and inflation.
    Leisure and hospitality, seen as a proxy for consumer demand, led sectors with 46,000 new hires. Other areas showing solid growth included financial activities (28,000), trade, transportation and utilities (18,000) and construction (15,000). Medium and large businesses added 46,000 each, while companies with fewer than 50 employees contributed just 12,000.
    On the downside, education and health services showed a loss of 38,000.

    Wages rose at a 4.4% annual pace for the month, about in line with recent trends.
    The ADP report serves as a precursor to the nonfarm payrolls count that the Bureau of Labor Statistics will release Friday, but the two often differ, sometimes dramatically. The BLS report in June showed private payrolls growth of 74,000, and 147,000 including government jobs.
    Economists surveyed by Dow Jones expect the economy added 100,000 jobs in July, with the unemployment rate expected to nudge higher to 4.2%. More

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    in Economy

    Companies from Stanley Black & Decker to Conagra are saying tariffs will cost them hundreds of millions

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    Companies ranging from Stanley Black & Decker to Conagra to Tesla have told analysts on earnings calls that higher tariffs will raise costs.
    The management remarks come as economists doubt that importers will continue absorbing cost increases tied to tariffs, and say they’re likely to pass them on to consumers instead.

    DeWalt power tools are displayed at a Home Depot on May 2, 2025 in New York City.
    Michael M. Santiago | Getty Images

    Companies behind some of America’s best-known brands are warning that tariffs will raise costs by hundreds of millions of dollars as Friday’s key deadline nears.
    Firms are gearing up for the long-awaited Friday deadline, when the White House says it will start imposing higher import taxes on foreign countries. Now businesses in a range of industries are saying this shakeup in global trading practices will cost them.

    Tool maker Stanley Black & Decker said Tuesday it expects an $800 million annualized hit from policy changes tied to tariffs. That doesn’t include costs in connection with steps the company is taking to mitigate the effects of the levies, according to finance chief Patrick Hallinan.
    For Marie Callender’s and Slim Jim parent Conagra Brands, higher tariffs are expected to raise its costs of goods sold by 3%, equivalent to an annual increase of more than $200 million, CEO Sean Connolly said earlier this month.
    Most of the Chicago-based company’s production is in the U.S., but management says it still has to contend with steel and aluminum tariffs that will raise the cost of packaging.
    Tesla, led by President Trump’s erstwhile ally Elon Musk, said that costs tied to tariffs have increased by about $300 million. Roughly two-thirds of that is tied to the electric vehicle maker’s auto business, while the rest is from the energy arm.
    “While we are doing our best to manage these impacts, we are in an unpredictable environment on the tariff front,” finance chief Vaibhav Taneja told analysts and investors on Tesla’s earnings call last week.

    Those pressures extend throughout the auto industry. General Motors said earnings before interest and taxes in the latest quarter suffered a $1.1 billion hit that the Detroit-based automaker chalked up to the net effect of tariffs.

    Whirlpool washing and drying machines for sale at a Howard’s Appliances store in Torrance, Calif.
    Patrick T. Fallon | Bloomberg | Getty Images

    Air conditioner maker Carrier Global said Tuesday that it now expects to spend about $200 million to offset the impact of tariffs. The same day, appliance maker Whirlpool said North American sales and earnings were hurt in the second quarter as Asian competitors rushed to export goods to the U.S. in advance of higher tariffs.
    Also on Tuesday, Proctor & Gamble gave 2026 financial guidance showing $1 billion in higher pretax costs as a result of tariffs on goods from China, Canada and the rest of the world. The maker of Tide detergent and Gillette razor blades expects a headwind of 39 cents per share in fiscal 2026 ending next June — equal to 6% decline in core earnings per share growth — from tariffs and other factors.
    Inflation focus
    Still, U.S. consumers haven’t yet experienced meaningful bumps to inflation as a result of higher tariffs. That can be attributed to domestic companies currently absorbing cost hikes, although many economists warn that business may soon start passing the increases on to shoppers after this week’s trade talk deadline passes.
    As a result, the “core” consumer price index, which excludes volatile food and energy prices, should rise at an annual rate of 3.2% in the third quarter, up from 2.1% in the second quarter, according to Nancy Lazar, Piper Sandler’s chief global economist.
    Foreign exporters have been covering “very little” of the tariffs and have been “getting off easy,” Lazar said in a recent note to clients.
    Still, not every American company is taking a hands-off approach and swallowing the higher costs.
    Paul De Cock, operations chief at carpet manufacturer Mohawk Industries, said last week that it is implementing 8% price increases. There may be need for further price hikes in the sector if tariffs further raise costs, he said.
    “We continue to work with customers and suppliers to manage the impact of tariff costs as the situation evolves,” De Cock said on the Georgia-based company’s earnings call.
    Mohawk is encouraging consumers to look at domestically produced alternatives, he said. The company is also expanding capacity for quartz countertops made in Tennessee, which will increase the supply of goods not subject to tariffs, de Cock added.

    For its part, the White House is aiming to soothe companies’ concerns about the looming deadline for tariffs, which were a core tenet of Trump’s campaign last year. Treasury Secretary Scott Bessent, for example, told CNBC on Tuesday that countries facing high tariff rates can lower them by negotiating a deal with the U.S.
    “I would think that it’s not the end of the world if these snapback tariffs are on for anywhere from a few days to a few weeks, as long as the countries are moving forward and trying to negotiate in good faith,” he said.
    — CNBC’s Ali McCadden and Kevin Breuninger conttibuted to this report. More