Economy

Party lawmakers proposed changes to the tax code that could offer the greatest benefit to businesses.Two weeks after the House adopted a sprawling package of tax cuts, Senate Republicans on Monday unveiled their legislative vision proposing a series of tweaks that would primarily enhance the benefits provided to businesses.The legislative text released by the Senate Finance Committee mirrors in broad strokes the effort the House adopted. Both aim to extend a set of tax cuts on individuals and corporations that will soon expire, which President Trump signed into law during his first term and has pushed to expand in his second.But the Senate tax proposal — just one piece of a much larger domestic policy bill — is not identical to the approach that House Republicans clinched late last month. In short, the Senate measure offers bigger tax benefits for corporations as well as older Americans. It would also change the way that party lawmakers aim to deliver on Mr. Trump’s promises to end taxes on tips and overtime.The tweaks could carry vast implications for millions of families and business owners, as Republicans continue to calibrate a costly bill that could alter the trajectory of the economy and shape the nation’s financial health for generations.Here are some of the changes to individuals’ and businesses’ taxes under consideration in the Senate.More generous corporate tax breaksIn a major win for businesses, Senate Republicans proposed to make permanent a set of generous deductions for research and development and other expenses, including machinery purchases. The House proposed to extend these measures, which were set to expire at the end of the year, but only on a temporary basis, as Republicans in the chamber looked for ways to shave costs from their already expensive legislation.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

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Retail sales declined 0.9%, even more than the 0.6% drop expected from the Dow Jones consensus.
However, excluding a series of items such as auto dealers, building materials suppliers, gas stations and others, sales increased 0.4%.
The pullback in retail sales came despite surveys showing that consumer sentiment actually increased in May.

Shoppers try on shoes at a Footlocker store in New York City, U.S., May 16, 2025.
Jeenah Moon | Reuters

Consumers spending pulled back sharply in May, weighed down by declining gas sales and looming unease over where the economy is headed, the Commerce Department reported Tuesday.
Retail sales declined 0.9%, even more than the 0.6% drop expected from the Dow Jones consensus, according to numbers adjusted for seasonality but not inflation. The decline followed a 0.1% loss in April and came at a time of unease over tariffs and geopolitical tensions.

Excluding autos, sales fell 0.3%, also worse than the estimate for a gain of 0.1%.
However, excluding a series of items such as auto dealers, building materials suppliers, gas stations and others, sales increased 0.4%. That reading, known as the control group, is what the department uses when calculating gross domestic product.
Building materials and garden stores saw sales fall 2.7%, while sliding energy prices pushed gasoline station receipts down 2%. Motor vehicles and parts retailers were off 3.5%, while bars and restaurants saw sales decline 0.9%.
On the plus side, miscellaneous retailers gained 2.9%, while online sales rose 0.9% and furniture stores increased sales by 1.2%.
Stock market futures held negative after the release while Treasury yields also fell.

“Americans bought cars in March ahead of tariffs and stayed away from car dealerships in May. Families are wary of higher prices and are being a lot more selective with where they spend their money,” said Heather Long, chief economist at Navy Federal Credit Union. “People are hunting for deals and aren’t eager to buy unless they see a good one.”
The pullback in retail sales came despite surveys showing that consumer sentiment actually improved in May, though compared with levels that had been falling through the year. The ongoing trade war ignited by President Donald Trump’s tariffs had dented consumer and business optimism, though an easing in some of the rhetoric amid a 90-day negotiating period has led to better readings.
GDP declined at a 0.2% annualized pace in the first quarter but is projected to rebound. Second-quarter growth heading into the retail sales release was pegged at 3.8%, according to the Atlanta Federal Reserve’s GDPNow tracker of rolling data. The gauge will be updated later Tuesday.
In other economic news Tuesday, import prices were flat against a forecast for a 0.1% decline, according to the Bureau of Labor Statistics. Export prices fell 0.9%.
Correction: Retail sales fell 0.1% in April. An earlier version mischaracterized the figure.

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Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldSir Keir Starmer will send his top business adviser to Washington next week in a bid to resolve the outstanding trade issues surrounding steel and pharmaceuticals between the two countries, with hopes in London of an agreement in early July.Varun Chandra will join UK embassy trade experts in Washington for talks on steel, aluminium and medical drugs, after Donald Trump decided on Monday to sign off tariff cuts for British carmakers and aerospace firms under the US-UK trade deal.While Trump’s close relationship with Starmer has been instrumental to progress, British officials say that a key interlocutor on the details has been Howard Lutnick, the billionaire businessman and US commerce secretary.“Lutnick has come under some criticism in the US, but we have found him reasonable, engaged and a constructive counterpart in negotiations,” said one UK official. “He has worked at pace.”However, the toughest part of the talks lies ahead, with details to be agreed on steel and pharma tariffs.On Monday, Trump described the US-UK relationship as “fantastic” before brandishing a document confirming at the G7 summit in Canada that a deal on cars and aircraft parts had been concluded. Starmer had to pick up the document as a gust of wind blew it out of Trump’s folder, in an appearance that showed the unlikely chemistry between the two leaders. “He’s slightly more liberal than I am, to put it mildly,” Trump quipped. Asked if he could guarantee that the UK would be protected from future tariffs Trump replied: “The UK is very well protected. You know why? Because I like them.”Sir Keir Starmer picked up the document as a gust of wind blew it out of Donald Trump’s folder on Monday More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is president and chief executive of Scotiabank The late Canadian prime minister Pierre Trudeau once said that the Canada-US relationship resembled “sleeping with an elephant. No matter how friendly . . . one is affected by every twitch and grunt.” Now the elephant has tossed and turned, and Canada has finally woken up. This could be the watershed year in which we redefine our role in the global economy.For much of its history, Canada has earned a global reputation for being a peaceful nation and trusted ally — but more recently a place where productivity falls, per capita GDP stagnates and investment is made difficult. The country’s potential has always been there, thanks to one of the most highly educated workforces in the world, a strong and stable financial system and vast and untapped resources. Adding to this is Canada’s enviable place within the North American trade corridor, which provides access to the largest economy in the world via the world’s longest land border.There is no question that the obstacles to being a natural resources powerhouse — a goal long characterised by more talk than action — have very much been of our own making. However, recent US tariff threats have galvanised Canada to act with urgency.At a time when polarisation is increasing in many nations, Canadians are doing the opposite, coalescing and seeking to unlock the country’s economic potential. Government leaders from across the political spectrum are working together to safeguard Canada’s long-term prosperity, so it never again feels cornered, economically or existentially. Whether it is agreements to tear down internal barriers to trade that add 8-15 per cent to the cost of goods, reductions in red tape that have stood in the way of unlocking Canada’s natural resources or concerted efforts to reverse the recent decline in GDP per capita, Canadians are increasingly unified. My conversations with clients and business leaders from Canada’s largest companies reveal a renewed optimism; these leaders are ready to invest in the future.Canada’s new prime minister, Mark Carney, was elected on a mandate to create growth and he is moving forward decisively. Carney calls it Canada’s “hinge moment”. His newly proposed legislation, known as the One Canadian Economy Act, will streamline approvals and speed the construction of major infrastructure projects, including critical mineral mines, pipelines, ports, highways, nuclear facilities, wind farms and carbon capture facilities. The bill furthers the removal of long-standing interprovincial trade barriers, with provincial governments equally aligned in their ambition to get resources out of the ground and goods moving across the country. Indigenous rights holders will also be key partners through increased involvement in the development, stewardship and ownership of major projects. At last, Canada is creating the conditions to build big infrastructure faster and more efficiently, and in a way that is sustainable and future-proof.Canada’s natural gas is produced in one of the most secure and stable jurisdictions in the world. As many countries rapidly shift away from a reliance on authoritarian trade partners like Russia, and markets look to diversify their critical mineral supply away from less reliable producers, Canada’s rich endowments of critical minerals are waiting to be unleashed. And within our own borders, sectors like electricity, transportation and clean technology are rife with opportunity for investment.A stronger Canada will make for an even stronger North America, which represents the second largest economic bloc globally. The next year will be critical as the country reorients its economy. A new economic trajectory for Canada will open doors for global trade and investment. The real hinge moment will be when investors wake up to this opportunity.  More

The central bank is set to hold interest rates steady for its fourth straight meeting, a pause that could be extended through the summer.Through all the twists and turns of President Trump’s tariffs, a widespread immigration crackdown and the scuffles surrounding the Republican tax and spending bill, the Federal Reserve has stayed steady in its stance that it can go slow in taking action on interest rates.That message holds as officials gather on Tuesday for a two-day meeting, at which they are set to extend a pause in rate cuts that has been in place since January. It is also likely to endure throughout the summer, giving the Fed at least a couple more months before it must make a difficult decision about when and by how much to lower borrowing costs.“As long as the labor market continues to look solid but inflation continues to mainly move sideways, it’s going to be a ‘wait-and-see’ situation,” said Jon Faust, a fellow at the Center for Financial Economics at Johns Hopkins University and a former senior adviser to Jerome H. Powell, the Fed chair.When the central bank sets monetary policy, it has two goals in mind: keep inflation at 2 percent and ensure that the labor market is healthy. Currently, both aims are in sync.Inflation has stayed remarkably stable in recent months. The latest Consumer Price Index report, released last week, showed price pressures remain well contained. Employers are hiring less than they once did and fewer workers are entering the labor force, but layoffs have yet to rise in a meaningful enough way to lift the unemployment rate.The economy has all the makings of a soft landing, a rare feat in which the central bank tames inflation without pushing the economy into a recession. But such an outcome is not guaranteed. Mr. Trump’s policies have stoked fears that inflation will eventually re-accelerate, growth will slow and the labor market will weaken, forcing officials to make a tough decision about which of their goals to prioritize.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

This article is an on-site version of our Chris Giles on Central Banks newsletter. Premium subscribers can sign up here to get the newsletter delivered every Tuesday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersThis has been a cruel month for statisticians. On June 3, the US Bureau of Labor Statistics admitted it had messed up the weights for its Current Population Survey, affecting the employment, unemployment and labour market participation figures for April. The following day, the UK’s Office for National Statistics came clean with its own weighting disaster, in which it had overstated April’s inflation statistics.The question for users of those statistics is: what should we do? The problem is especially acute for central banks, which make decisions that they boast are “data dependent” and which respond to specific, fine details in economies’ cycles. Bogus Labour SnapshotThe BLS has been in the wars recently because of increasing concerns about the quality of its data. Although the US statistical agency said its weighting error in the employment figures was minimal and would be corrected in the May data, it was far from its first embarrassment in recent weeks.The following day, the BLS announced that staff shortages had reduced the quality of the official US CPI inflation data, causing a suspension of price collection in some locations and more data than usual being imputed. The effects would be small, but could “increase the volatility of subnational or item-specific indexes”, it said. Last month it said it would stop collecting and publishing many items in its producer price index. Given the sudden interest in the “taco trade”, the suspension of tortilla manufacturing price indices will hurt.Painful as these errors and omissions have been for the BLS, its price and employment survey data are still highly regarded. The same should not be said for perhaps its flagship labour market product: non-farm payrolls. Each month analysts predict the gain in jobs numbers to the nearest thousand. The Federal Reserve also watches the figures extremely closely. Then everyone reacts positively or negatively depending on whether these expectations were met or not. By the following month, those figures are forgotten and the process starts again. The problem is that the BLS’s preliminary estimate for the change in non-farm payrolls is poor. Since 2023, for example, non-farm payroll growth has almost always been revised down. This happens in the following two months after the initial figures are released, and again some time later when the data is benchmarked against a more accurate survey, the Quarterly Census of Employment and Wages. This uses administrative data from US states’ unemployment insurance programmes. The revisions are large, at almost 50,000 a month between the latest data and the first estimate. That is more than a 20 per cent average downward revision to date.Some content could not load. Check your internet connection or browser settings.The latest QCEW has again shown jobs growth to be slower in the period between April and December 2024 than in the original non-farm payroll figures, so the downward revisions will grow. Analysts at Barclays reckon that once the latest benchmarking process has been completed early next year, the monthly job gains for the latest year will be revised down from about 150,000 a month to 80,000. Some content could not load. Check your internet connection or browser settings.Had those figures been published as a contemporary record last year, there would probably have been even more misplaced concern about rising unemployment and a coming US recession. Barclays says that the most likely cause is a fall in immigration reducing the sustainable pace of jobs growth. Of course, that judgment is for the Fed to make. But it would benefit from better data in doing so. Obviously Not SoundAcross the Atlantic, the UK’s Office for National Statistics would love to have the BLS’s problems. With a review into its culture and leadership pending, its chief statistician Ian Diamond quit suddenly in May. This has not stopped errors and unreliable survey data. The most embarrassing came in the inflation figures for April. Data on vehicle taxation was incorrectly weighted when given to the ONS, but no one appeared to check whether the figures passed the sniff test. Outside observers quickly said they did not and the statistical agency only confessed after the FT highlighted these concerns.This error will be corrected in the May inflation figures, published on Wednesday. As the chart shows, they are far from trivial. Some content could not load. Check your internet connection or browser settings.The surprise about the price data blunder was that it came from the part of the ONS thought to be reasonably well functioning. The known disaster area is the jobs data, where the ONS is battling with a broken Labour Force Survey. This prevents the Bank of England from knowing what is happening to participation in the labour market, where the LFS is the only source of information.The ONS has recently been boasting that there have been “clear improvements” in the data and survey response rates, shown in the chart below. I’ll leave you to judge whether a 35 per cent response rate for the first wave of interviews, falling to less than 14 per cent by the fifth, is good enough. Some content could not load. Check your internet connection or browser settings.If the ONS wants to avoid getting known as “Only Nearly Statistics”, its suggestion to its regulator last week that a badge of quality be removed from another of its products, the Wealth and Assets Survey, didn’t help. The WAS is used to assess how much wealth there is in the UK and who holds it. Dirty laundry The UK and the US’s statistical agencies should be praised for airing their dirty laundry so publicly. Economic statistics are getting harder to collect and, as UBS chief economist Paul Donovan says: “Just because some statistical agencies do not publicly admit their errors does not mean the errors do not exist.” China regularly deletes data series it finds uncomfortable, for example. While not an error, EU statistics can give mad results. The latest GDP growth figures for the first quarter doubled from 0.3 per cent to 0.6 per cent after the first revision. Most of this surprise jump came from Ireland, whose quarterly growth rate was first estimated at 3.2 per cent but then jumped to 9.7 per cent. Yes, you read those figures correctly. And, for US readers, these are not annualised. Some content could not load. Check your internet connection or browser settings.It’s all about front running tariffs, particularly in the pharmaceutical sector, alongside the regular problem of Ireland acting as something of a tax haven for US companies “locating” business activity there. The latter does not reflect genuine economic activity in Europe. And as Ireland’s Central Statistics Office highlights, a better measure of underlying activity called “modified domestic demand” grew only 0.8 per cent. What can we do?I’ll come back and look at some specific suggestions in future articles, but here is a quick guide to navigating the more difficult world of data we now confront.Do not get excited by or rely solely on a single statistic to make important decisions. In a world of dodgy data, you need to see corroborating evidence and broad trends to take decisions. In monetary policy, that might make you late.Governments should not skimp on funding statistical agencies, which are extremely cheap relative to the costs of data errors. They should also change laws and bang heads together so that the vast quantities of quality administrative data they hold can be used more easily for economic statistics.Do not use one source of data, but seek to extract a common signal from multiple sources. All central banks are now doing this. The models required will differ, depending on the problem that needs addressing, but modern econometrics helps generate unbiased indicators because humans are always prone to cherry-picking from a menu of competing statistics. Examples of this include the FT core inflation indices and the Chicago Fed’s new unemployment nowcast, “Churn”.What I’ve been reading and watchingA chart that mattersThe US CPI inflation figures for May were benign, with little sign of tariffs driving prices higher. The Fed will find this encouraging, but is still likely to think that it is too early to declare that tariffs’ effects will disappear somewhere in the supply chain. The monthly annualised change in banana prices shot up, as did prices of major appliances and toys. This is far from an inflationary surge in overall prices, but this early sign of aggressive pricing behaviour in a few areas should make us cautious. Some content could not load. Check your internet connection or browser settings.Central Banks is edited by Harvey NriapiaRecommended newsletters for you Free Lunch — Your guide to the global economic policy debate. Sign up hereThe Lex Newsletter — Lex, our investment column, breaks down the week’s key themes, with analysis by award-winning writers. Sign up here More