Economy

Former President Donald J. Trump’s costly tax agenda undermines the changes he signed into law in 2017. Some Republicans are wary.When former President Donald J. Trump started proposing new tax cuts on the campaign trail, pledging “no taxes on tips” in June, Republicans rallied around his idea. Even Vice President Kamala Harris, his Democratic rival, copied it.Four months and half a dozen proposed tax cuts later, Republican lawmakers and aides on Capitol Hill, as well as some economists in touch with Mr. Trump’s campaign, are taking a more circumspect approach. Asked whether they supported Mr. Trump’s proposals, a typical response was: Let’s see after the election.“I’ll decide what my position is on it once we see what the whole picture is next year,” Senator Michael D. Crapo, an Idaho Republican who could lead the chamber’s tax-writing committee if his party regains control of the Senate, said last month.The caution is a sign that Mr. Trump’s ideas may be too expensive and outlandish for Republicans in Congress to embrace. The rest of the party had been focused on extending the 2017 tax cuts that Mr. Trump signed into law. Some of Mr. Trump’s recent proposals undercut changes that were made as part of that tax package.Even if Mr. Trump and his party control Washington next year, Republicans will be in a far different place on tax policy than they were in 2017. Back then, Republicans on Capitol Hill spent years making plans for a tax overhaul, with a focus on cutting the corporate tax rate and simplifying elements of the code.Once they were in office, they put those plans into motion. Mr. Trump’s general desire to cut taxes fit in with the party’s pre-existing agenda, and conservatives achieved many of their goals with the 2017 Tax Cuts and Jobs Act.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 increased a seasonally adjusted 0.4% on the month, up from the unrevised 0.1% gain in August and better than the 0.3% Dow Jones forecast.
Initial unemployment claim filings totaled a seasonally adjusted 241,000, a decline of 19,000 and lower than the estimate for 260,000.

Consumer spending held up in September, underscoring a resilient economy that is now getting a boost from the Federal Reserve, the Commerce Department reported Thursday.
Retail sales increased a seasonally adjusted 0.4% on the month, up from the unrevised 0.1% gain in August and better than the 0.3% Dow Jones forecast, according to the advanced report.

Excluding autos, sales accelerated 0.5%, better than the forecast for just a 0.1% rise. The numbers are adjusted for seasonal factors but not inflation, which rose 0.2% on the month as measured by the consumer price index.
In other economic news Thursday, initial unemployment claim filings totaled a seasonally adjusted 241,000, a decline of 19,000 and lower than the estimate for 260,000, the Labor Department reported.
Claims declined even following hurricanes Helene and Milton, which tore through the Southeast in recent weeks exacting tens of billions of dollars in damages. Filings in both Florida and North Carolina declined after jumping the previous week, according to unadjusted data.
Stock market futures were higher after the reports while Treasury yields also rose.
Together, the reports show that consumers, who power about two-thirds of all economic activity in the U.S., are still spending and the labor market is holding up after signs of weakening through the summer.

On the retail side, spending grew at miscellaneous store retailers, which showed an increase of 4%, as well as at clothing stores (1.5%) and bars and restaurants (1%). Those increases offset a 1.6% drop at gas stations as fuel prices fell, along with declines at electronics and appliances stores (-3.3%) and furniture and home furnishing businesses (-1.4%).
Sales increased 1.7% from a year ago, compared to the CPI rate of 2.4% for the same period.
The data comes from a month where the Fed cut its benchmark borrowing rate by a half percentage point and indicated more moves lower are likely this year and through 2025.
Policymakers have expressed confidence that inflation is on a glide path back to the Fed’s 2% target. However, they have expressed concern that the labor market is softening even with strong September payrolls growth and weekly claims that have stayed fairly in line after jumping due to the storm effects.
The European Central Bank on Thursday cut its key deposit rate by a quarter point, also expressing confidence in inflation along with concerns about a broader economic slowdown.
Despite the decline in initial filings, continuing claims, which run a week behind, edged higher to 1.867 million. Along with the declines in storm-ravaged Florida and North Carolina, claims decreased by an unadjusted 7,812 in Michigan, which had been hit by the Boeing strike.
The Philadelphia Fed also reported Thursday that its index of manufacturing activity rose to 10.3 for October, representing the difference between companies seeing expansion against contraction. The reading, up from September’s 1.3, was better than the estimate for 3.0. More

BENGALURU (Reuters) – The Bank of Canada will cut its overnight rate by 50 basis points on Oct. 23 as price pressures ease, according to two-thirds of economists polled by Reuters who however failed to reach a consensus on where rates would be two months from now.Headline inflation declined more than expected to 1.6% last month. Along with further signs of a slowing economy, financial market traders and most economists are convinced the BoC, which has already trimmed rates by a cumulative 75 basis points since early June, will go for a bigger 50 basis point cut next week. Governor Tiff Macklem said last month the Bank wants to keep inflation close to the center of the 1%–3% range and economic growth could weaken, raising expectations for faster reductions toward the neutral rate which neither restrains nor stimulates the economy.But persistently high shelter costs, sticky core inflation and an unexpected fall in the unemployment rate last month suggest it still could be a close call.Two-thirds of economists, 19 of 29, in a Oct. 15-17 Reuters poll forecast the Bank would cut rates by one half-percentage point to 3.75%. One expected a 50 basis point cut in an August survey.”There has been a lot of baseless on-and-off speculation around the BoC’s next move but it needed data to justify a call. We now have that. The BoC is likely to cut 50 bps next Wednesday…I’ll also argue while it’s our call, we disagree with upsizing,” said Derek Holt, head of capital markets economics at Scotiabank.”There is still the risk the BoC – which has surprised markets many times in the past – could opt for 25 bps…the Bank is at significant risk of unleashing inflationary forces.”Four of the big five Canadian banks predicted a half-point cut, with only TD expecting a quarter-point reduction.If realised, that would match a 50 bps Federal Reserve rate cut last month. But the U.S. central bank is now widely expected to move in 25 basis point increments as the economy remains resilient. The prospect of a bigger rate cut has led to a roughly 2% decline in the Canadian dollar against its U.S. counterpart since the start of the month.One-third of economists, 10, expected a 25 basis point cut next week.”Core inflation measures have largely evolved in line with the BoC’s projections for Q3, and the 2.3%/2.4% reading for CPI-median/trim will make it easier to look through September’s headline surprise if the Bank wants to continue at a 25 bps per meeting pace,” said Robert Both, Canadian macro strategist at TD Securities. “Still, the risk of a 50 bp cut has risen with inflation falling further below the 2.0% target, and next week’s BoC decision is looking increasingly like a coin toss.”There was no clear consensus what the central bank will do at the following meeting in December, the last of the year.While 10 of 29 economists expected the policy rate at 3.50% by year-end, nine predicted it to be 3.75% and another nine expected 3.25%. Only one said it would be 4.00%.Meanwhile, inflation was forecast to rise slightly over the coming quarters and remain around 2% until 2026, the poll found.The BoC will cut rates by 100 basis points next year, shallower than this year, poll medians showed.The economy likely grew 1.2% on an annualized basis last quarter, compared to 2.8% predicted by the BoC in July projections. It was expected to average 1.1% this year before bouncing back to 1.8% in 2025. The central bank will release updated economic forecasts next week too.(Other stories from the Reuters global economic poll) More

SINGAPORE/LONDON (Reuters) -The euro was pinned at an 11-week low on Thursday after the ECB cut rates by 25 basis points as expected, while European shares held onto gains on the back of better earnings both at home and from Taiwanese chipmaking giant TSMC. Also in the mix, U.S. retail sales beat expectations, providing a further boost to U.S. stocks and the dollar. The European Central Bank made its first back-to-back rate cut in 13 years, a tacit acknowledgement that inflation, now below 2%, could settle around its 2% target quicker than previously thought. With markets pricing another cut in December, the tone and guidance in the press conference will be closely watched. “In our view, this is unlikely to be the last cut from the ECB this year. Another cut is likely in December, and we expect this will be followed by a series of cuts at every meeting through to June next year,” said Dean Turner, chief euro zone economist, UBS Global Wealth ManagementThe euro was last down 0.2% at $1.0842, flat after the ECB decision, but falling after the U.S retail sales data. Germany’s 10-year government bond yield, the benchmark for the bloc, was last up 3 basis points at 2.21%, likewise little moved by the ECB and rising after the U.S. numbers. [GVD/EUR] Also weighing on the euro is the U.S. presidential election, which remains on a knife edge, according to the latest opinion polls. Republican Donald Trump’s tariff, tax and immigration policies are seen as inflationary, and thus negative for bonds and positive for the dollar, which was at an over two-month high on major peers. [FRX/] The U.S. 10-year Treasury yield was last up 2 bps at 4.04%. [US/] In share markets, Europe’s broad Stoxx 600 index was last up 0.8%, as a number of well-received earning updates helped the index to bounce back following a poor start to the week on disappointment over results from heavyweights ASML (AS:ASML) and LVMH. (EU) The impact of ASML’s earnings in particular were also tempered by results from Taiwan’s TSMC which beat market expectations, and said it expects revenue to rise sharply in the fourth quarter.That helped Nasdaq futures outperform. They were up 0.9%, outpacing a 0.5% gain in S&P 500 futures, and extending gains after U.S. retail sales data. The S&P 500 finished a whisker away from another closing record high on Wednesday. [.N] CHINA REAL ESTATEEarlier on Thursday, blue-chip share indexes in Hong Kong and mainland China each fell 1.1%, and are both now around 14% below their most recent peaks, as investors move aside to wait for more Chinese government spending and signs it is helping the economy. [.SS] Chinese real estate stocks fell 7.8%, reversing two days of gains. China’s housing minister on Thursday promised to improve builders’ access to funding for finishing thousands of projects.But there was no new gesture to excite markets about a meaningful revival for a sector where a crackdown on developers’ borrowing has set off a wave of defaults, while declining prices have shaken households’ faith in the asset class.”The briefing is mainly about implementing previously-announced policies, including some already in operation,” said Shi Jiangwei, analyst at Shanghai Minority Asset Management, disappointing investors expecting fresh stimulus. Australian shares also eased from a record high as mining stocks slipped and iron ore prices fell in Singapore. That also weighed on the Australian dollar which struggled to hold its gains from data showing net employment blew past forecasts. [AUD/]In commodity trading, Brent crude futures steadied at $74.35 a barrel after four sessions of losses. Industry data showed an unexpected drop in U.S. crude stockpiles last week. [O/R]Gold last traded at $2,680 an ounce. [GOL/] More

The euro initially rose following the rate decision, but fell back following stronger-than-expected U.S. data. It was last trading 0.25% lower on the day at $1.0836, compared with $1.0863 just before the ECB announcement (EUR=EBS).Europe’s broad STOXX 600 index was last up 0.8% , while Germany’s 10-year government bond yield, the benchmark for the bloc, was last up 3 basis points at 2.21%, versus 2.197% previously. Yields move inversely to prices. COMMENTS: ROBERT FARAGO, HEAD OF STRATEGIC ASSET ALLOCATION AT HARGREAVES LANDSDOWN, UK:”Growth is so slow in Europe and inflation is back at target, it would be a surprise if they (the ECB) didn’t continue to cut.””I think in practice for European stocks, what matters more is what’s happening in the U.S., because in the U.S., the rate decision is more difficult, given that the economy remains very strong and core inflation remains potentially pretty sticky.””The U.S. is where we look for a surprise. I think the case for European rate cuts is pretty clear cut.””During the (ECB chief Christine Lagarde’s) speech, we’ll be focused on the stickiness of wage inflation, core inflation, service inflation.”DEAN TURNER, CHIEF EUROZONE ECONOMIST, UBS GLOBAL WEALTH MANAGEMENT, LONDON:”In our view, this is unlikely to be the last cut from the ECB this year. Another cut is likely in December, and we expect this will be followed by a series of cuts at every meeting through to June next year, with the deposit rate hitting 2% before the ECB reaches for the pause button.””In the equity market, small and mid-caps in the euro zone offer attractive value and should be one of the main beneficiaries of ECB rate cuts, in our view.””We expect the lower rates environment, together with the ongoing resilience in the U.S. economy to support cyclical currencies like the euro, which we expect to perform well against the U.S. dollar in the coming months.”ROBERTO MIALICH, FOREX STRATEGIST, UNICREDIT, MILAN:”The message is exactly what we had in mind. ECB cut rates and made it clear that they are still dependent on data.” SEEMA SHAH, CHIEF GLOBAL STRATEGIST, PRINCIPAL ASSET MANAGEMENT, LONDON:”It has become increasingly evident that gradual ECB monetary easing is insufficient and that back-to-back rate cuts are necessary.” “While the ECB has resisted providing forward guidance and President Lagarde will emphasise data dependence, it is unlikely that there will be such a turnaround in the data in the next month that the central bank can afford to stand pat in December.””And while inflation pressures may continue to trouble the Governing Council, the troubling state of the euro area economy suggests that the path forward is fairly clear.”CARSTEN BRZESKI, GLOBAL HEAD OF MACRO, ING, FRANKFURT:”The decision to cut rates only five weeks after the last cut and with only very few pieces of economic data since then, suggests that the ECB must have become much more concerned about the euro zone’s growth outlook and the risk of inflation undershooting the target. Interestingly, the official language in the ECB’s decision was almost unchanged from the September meeting.”MATTHEW LANDON, GLOBAL MARKET STRATEGIST, JPMORGAN PRIVATE BANK, LONDON:”The European Central Bank abandoned their quarterly cadence of cuts with a second consecutive 25 bps rate reduction. This appears to send a clear signal to the market that concerns within the Governing Council are shifting from inflation to growth. It is hard to disagree.””They didn’t give much away in terms of what to expect going forward. We expect to see sequential cuts into 2025 towards a terminal rate around 2%.””Faster cuts and slower growth should keep pressure on European assets. The euro in particular feels vulnerable, and has been one of our preferred shorts into the U.S. election. We’ve been anchoring on a $1.07-1.11 range on euro/dollar, but that could skew 3-4% lower if higher tariffs become a real possibility post-election.”MARK WALL, CHIEF EUROPEAN ECONOMIST, DEUTSCHE BANK, LONDON: “The cut is still significant in the sense that the ECB has accelerated the easing cycle with the back-to-back cut. At the same time, the ECB continues to avoid guidance and is not committing to a particular path for policy. This is sensible given the uncertainties that lie ahead.””Chances are that today’s decision represents a pivot point into a faster normalisation of monetary policy.”ARNE PETIMEZAS, DIRECTOR RESEARCH, AFS GROUP, AMSTERDAM:”ECB cuts rates by 25 bps expected. Inflation and economic assessment is stating the obvious, and contains no surprises.””However, I had expected the ECB would drop the ‘not on a particular rate path’ language from the statement and instead, acknowledge that we’re now in an easing cycle. After all, this is the third cut in four months.”MARCHEL ALEXANDROVICH, ECONOMIST, SALTMARSH ECONOMICS, LONDON:”The ECB lowers interest rates at consecutive meetings for the first time since 2011 and looks set to cut again in December.” “Even after today’s move, policy remains in restrictive territory. And with inflationary pressures easing, the Governing Council feels comfortable to nudge interest rates lower toward their neutral level.” More

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