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U.S. Infrastructure Improves, but Cuts May Imperil Progress, Report Says

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A report card from an engineering group found that American roads, ports and other infrastructure got better last year but could be hurt if federal funding is reduced.Increased federal spending in recent years has helped to improve U.S. ports, roads, parks, public transit and levees, according to a report released on Tuesday by the American Society of Civil Engineers.But that progress could stagnate if those investments, some of which were put on hold after President Trump took office in January, aren’t sustained.Overall, the group gave the nation’s infrastructure a C grade, a mediocre rating but the best the country has received since the group’s first report card in 1998. Most infrastructure, including aviation, waterways and schools, earned a C or D grade; ports and rail did better. The group also projected a $3.7 trillion infrastructure funding shortfall over the next decade.“The report card demonstrates the crucial need for the new administration and Congress to continue sustained investment in infrastructure,” Darren Olson, the chairman of the society’s committee on America’s infrastructure, said on a call with reporters. “Better infrastructure is an efficient investment of taxpayer dollars that results in a stronger economy and prioritizes American jobs.”The report, which is now released every four years, has long noted that the United States spends too little on infrastructure. But that started to change in 2021, the group said, thanks to the Infrastructure Investment and Jobs Act, which authorized $1.2 trillion in funding under President Joseph R. Biden Jr. That investment is showing results, with grades having improved since the last report, in 2021, for nearly half the 18 categories that the group tracks.But in January, Mr. Trump froze much of the funding under that law and another aimed at addressing climate change, pending a review by his agencies. That halted a variety of programs, including those intended to help schools, farmers and small businesses.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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    U.S. Could Run Out of Cash by July, Analysis Finds

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    The Bipartisan Policy Center estimates that the so-called X-date could fall between mid-July and early October if Congress does not lift or suspend the nation’s debt limit.The United States could run out of cash to continue paying its bills by mid-July if Congress does not take action to raise or suspend the nation’s debt limit, according to an analysis on Monday by the Bipartisan Policy Center.That deadline, known as the “X-date” — the moment when the United States is unable to meet its financial obligations and might default on its debt — is a fiscal milestone that’s among the most closely watched in Washington and on Wall Street.The date is subject to considerable uncertainty. It relies on estimates of how much wiggle room the Treasury has to use accounting maneuvers — known as “extraordinary measures” — to keep paying the government’s bills by shifting money around. The Bipartisan Policy Center, a think tank, provided estimates suggesting that the X-date could come as late as the beginning of October.Efforts to address the debt limit will likely consume Congress and the Trump administration later this year as Republicans race to enact trillions of dollars of tax cuts.The debt limit is a cap on the total amount of money that the United States is authorized to borrow to fund the government and meet its financial obligations.Because the federal government runs budget deficits — meaning it spends more than it brings in through taxes and other revenue — it must borrow huge sums of money to pay its bills. Those obligations include funding for social safety net programs, salaries for members of the armed forces and paying investors who have bought U.S. government debt in exchange for interest payments.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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    Trump Says a Recession Would Be Worth It, but Economists Are Skeptical

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    President Trump and his advisers say his policies may cause short-term pain but will produce big gains over time. Many economists are skeptical of those arguments.Presidents usually do all they can to avoid recessions, so much so that they avoid even saying the word.But President Trump and his advisers in recent weeks have offered a very different message. Yes, a recession is possible, they have said. Maybe one wouldn’t even be that bad.Howard Lutnick, the commerce secretary, has said Mr. Trump’s policies are “worth it” even if they cause a recession. Scott Bessent, the Treasury secretary, has said the economy may need a “detox period” after becoming dependent on government spending. And Mr. Trump has said there will be a “period of transition” as his policies take effect.Such comments may partly reflect an effort to align political statements with economic reality. Mr. Trump promised to end inflation “starting on Day 1” and declared, in his inaugural address, that “the golden age of America begins right now.”Instead, inflation has remained stubborn, and while Mr. Trump has been in office less than two months, economists warn that his tariffs are likely to make it worse. Measures of consumer and business confidence have plummeted and stock prices have tumbled, attributable in large part to Mr. Trump’s policies and the uncertainty they have caused.“It’s the kind of language that you use when your policy isn’t going great and you can see that it’s actively harming people,” said Sean Vanatta, a financial historian at the University of Glasgow in Scotland.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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    Trump and DOGE Create Anxiety but Opportunity for Federal Contractors

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    By cutting federal employees, the Trump administration may increase its reliance on firms that take in billions through government contracts.A contracting firm called Leidos took in more than $16 billion in revenue last year, most of it through contracts with federal agencies like the Department of Veterans Affairs.So when the Trump administration’s budget cutters took aim at the V.A. last month, it seemed like bad news not just for the department’s employees but also for Leidos and dozens of other private-sector firms.“No more paying consultants to do things like make Power Point slides and write meeting minutes!” the department’s secretary, Doug Collins, wrote on X. Overall, the department said, it was canceling more than 850 contracts worth nearly $2 billion.But shortly after Mr. Collins’s announcement, the outlook for some of the V.A.’s contractors seemed to brighten. The department put the cancellations on pause, saying it needed to review the contracts to avoid “eliminating any benefits or services” to veterans or V.A. beneficiaries. It later narrowed the list of canceled contracts by a few hundred.And experts on government contracting said cuts to the agency, which announced last week that it was seeking to trim 80,000 of its roughly 480,000 employees, could even lead to increased spending on federal contracts.These experts noted that cutting employees without reining in a government function — like providing health care and benefits to veterans, work in which Leidos plays a key role — typically means the job will fall more heavily on contractors.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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    Trump Tariffs and Trade Wars Leave Investors, Once Optimistic, Feeling Apprehensive

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    On Tuesday, President Trump sent markets into another tailspin by announcing additional tariffs on Canada, suggesting a falling stock market is no longer the bulwark investors had hoped.President Trump made a lot of promises on the campaign trail last year. Investors and business leaders enthusiastically cheered some, like lower taxes and relaxed regulation, and expressed wariness about others, like tariffs and reduced immigration.But when Mr. Trump won the election, there was little sign of that ambivalence: Stock prices soared, as did measures of business optimism.Investors at the time offered a simple explanation: They believed Mr. Trump, backed by a Republican-controlled Congress, would follow through on the parts of his agenda that they liked and scale back the more disruptive policies like tariffs if financial markets started to get spooked.It is increasingly clear they were wrong.In his first weeks in office, Mr. Trump has made tariffs the central focus of his economic policy, promising, and at times imposing, steep penalties on allies as well as adversaries. He has threatened to curb subsidies that businesses had come to rely on. And he has empowered Elon Musk’s efforts to slash the federal bureaucracy, potentially putting tens of thousands of federal workers out of jobs and cutting off billions of dollars in government grants and contracts.Most surprising, at least to the optimists on Wall Street: Mr. Trump has so far been undeterred by signs of cracks in the economy or by plunging stock prices.“The idea that the administration is going to be held back by a self-imposed market constraint should be discounted,” said Joe Brusuelas, chief economist at the accounting firm RSM.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

  • 138 Shares114 Views

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    Lutnick Remarks on Removing Government Spending in GDP Data Raises Fears

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    Comments from a member of President Trump’s cabinet over the weekend have renewed concerns that the new administration could seek to interfere with federal statistics — especially if they start to show that the economy is slipping into a recession.In an interview on Fox News on Sunday, Howard Lutnick, the commerce secretary, suggested that he planned to change the way the government reports data on gross domestic product in order to remove the impact of government spending.“You know that governments historically have messed with G.D.P.,” he said. “They count government spending as part of G.D.P. So I’m going to separate those two and make it transparent.”It wasn’t immediately clear what Mr. Lutnick meant. The basic definition of gross domestic product is widely accepted internationally and has been unchanged for decades. It tallies consumer spending, private-sector investment, net exports, and government investment and spending to arrive at a broad measure of all goods and services produced in a country.The Bureau of Economic Analysis, which is part of Mr. Lutnick’s department, already produces a detailed breakdown of G.D.P. into its component parts. Many economists focus on a measure — known as “final sales to private domestic purchasers” — that excludes government spending and is often seen as a better indicator of underlying demand in the economy. That measure has generally shown stronger growth in recent quarters than overall G.D.P. figures.In recent weeks, however, there have been mounting signs elsewhere that the economy could be losing momentum. Consumer spending fell unexpectedly in January, applications for unemployment insurance have been creeping upward, and measures of housing construction and home sales have turned down. A forecasting model from the Federal Reserve Bank of Atlanta predicts that G.D.P. could contract sharply in the first quarter of the year, although most private forecasters still expect modest growth.Steady Growth, From Private and Government SpendingGovernment spending has contributed to G.D.P. growth in recent quarters, as private-sector growth has remained solid.

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    Quarterly change in inflation-adjusted gross domestic product
    Notes: Change shown as seasonally adjusted annual rate. Private sector is total gross domestic product excluding government spending and investment. Government spending excludes transfer payments, including stimulus checks during the Covid-19 pandemic.”Source: Bureau of Economic AnalysisBy 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

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    Markets and Corporate America Are Unfazed by Washington Chaos, for Now

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    The federal budget debate has big implications for the economy. Businesses are betting that tax cuts will be extended and the math will work out.Even by Washington standards, the second Trump presidency has begun in frenetic fashion: mass firings at federal agencies, tariff threats against allies and foes alike, and haggling over how to get a Republican budget through a narrowly divided Congress.Business leaders and corporate investors are confident that things will turn out fine, at least for them. “Markets aren’t showing all that much concern,” Jason Pride, chief of investment strategy and research at the Glenmede Trust Company, noted.But that could change, with high-stakes implications for the markets and the U.S. economic outlook.Investors fully expect the tax cuts from President Trump’s first term, which mostly benefited businesses and the wealthy, to be fully extended before the end of the year. Trade groups including the Business Roundtable and the National Association of Wholesaler-Distributors are confident the extension will be taken care of — especially since not doing so “would impose, effectively, a tax increase,” Mr. Pride added.Still, the arithmetic remains tenuous. The cost of extending the tax cuts may total $4 trillion over 10 years. That means Congress is being left to barter over what else can save or raise money, and whose federal benefits might be cut.The bond market — where traders price the risk of both inflation and an economic downturn — has, for its part, shimmied off moments of worry brought on by Mr. Trump’s boomeranging style of negotiation over tariffs. The bet is that the threats of an import tax are more a geopolitical tool than a key revenue raiser, as the administration has portrayed the tariffs in budget discussions.Some of the underlying calm stems from Wall Street’s confidence in Treasury Secretary Scott Bessent. A billionaire hedge fund manager before assuming his new position, he has convinced many analysts that the ultimate suite of policies coming from the White House will be beneficial once it coalesces, and he “has also added to some optimism around lower deficits” in future budgets, according to Matt Luzzetti, the chief economist at Deutsche Bank.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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    Federal Debt Is Now Worrying Even Progressives

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    Long a focus of conservatives, the level of public borrowing is starting to concern left-leaning economists. Proposed remedies still differ radically.The 119th Congress began, as it so often has in recent years, with calls from Republican politicians for wrestling down the national debt, which is near a record level relative to the size of the economy.But this time, the G.O.P. had company: Progressive economists and budget wonks, who have often dismissed finger-wagging about debt levels as a pretext for slashing spending on programs for the poor, are starting to ring alarm bells as well.What’s changed? In large part, long-term interest rates look unlikely to recede as quickly as had been hoped, forcing the federal government to make larger interest payments. And the Trump administration has promised to extend and expand its 2017 tax cuts, which will cost trillions if not matched by spending reductions.“I find it easier to stay calm about this threat when I think the interest rate is low and steady, and I think in the past year or so that steadiness has been dented,” said Jared Bernstein, who led the Council of Economic Advisers in the Biden administration. “If one party refuses to raise revenues, and the Democrats go along more than is fiscally healthy, that’s also a big part of the problem.”To be clear, conservative warnings on the debt have generally been met with little action over the past two decades. A paper by two political scientists and an economist recently concluded that after at least trying to constrain borrowing in the 1980s and 1990s, Republicans have “given up the pretense” of meaningful deficit reduction. Democrats and Republicans alike tend to express more concerns about fiscal responsibility when their party is out of power.Historically, the stock of debt as a share of the economy has risen sharply during wars and recessions. It peaked during World War II. In the 21st century, Congress has not managed to bring the debt back down during times of peace and economic growth.Revenues Are Not Keeping Up With Projected SpendingIf not addressed, debt will probably mount to unprecedented levels.

    Source: Congressional Budget OfficeBy The New York TimesSpending Has Been Creeping UpAs a share of economic output, mandatory outlays — mostly Medicare, Medicaid, and Social Security — are growing fastest. But as debt rises, so do interest costs.

    Source: Office of Management and BudgetBy 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

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    Trump Chose 8 Economic Experts Who Will Defend Tariffs and Lower Taxes

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    President-elect Donald J. Trump has moved beyond the team-of-rivals approach from his first term and chosen economic aides who will defend tariffs and tax cuts.Alan RappeportAna Swanson and President-elect Donald J. Trump put economic policy at the center of his campaign and, in assembling his economic team, has turned to a group of Wall Street executives, economists, lawyers and academics to help carry out his plans to cut taxes, impose tariffs and slash regulations.In contrast to his first term, when Mr. Trump installed advisers who had disparate views about areas like free trade and tariffs, the men the president-elect has selected this time around have, at least for now, professed to be in sync with his agenda.Still, it remains to be seen how well his advisers work together and whether those with more traditionally conservative views will be willing to go along with Mr. Trump’s unconventional approach to economic policy.Scott BessentTreasury SecretaryStefani Reynolds/BloombergWe 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