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Trump’s Delay on Mexico and Canada Tariffs Came in Response to Market Revolt

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With prices still high, the Trump administration is heeding the risks of fanning inflation with import duties.A month ago, President Trump announced that he would impose sweeping tariffs on imports from Canada and Mexico before reaching a last-minute deal to delay them for 30 days.This week, after markets revolted when the tariffs were put in place, Mr. Trump watered them down with a monthlong reprieve for automakers.And then on Thursday, he opened up even broader exemptions for many other products that are imported from America’s neighbors to the north and south after intense lobbying from business groups that warned of rising prices.Mr. Trump has spent the last month or so bouncing between imposing sweeping tariffs on imports from Canada and Mexico and delaying them because of last-minute deals.“There will,” he said, “always be changes and adjustments.”Despite Mr. Trump’s insistence that “tariff” is among his favorite words, the waffling over import duties reflects the reality that steep import taxes are not an antidote for every policy problem facing the nation.Mr. Trump’s economic advisers continue to contend that the tariffs are part of a broader agenda that will not damage the economy. However, the delays and loopholes reveal that they are beginning to see the risks of taking tariffs too far at a time when the economy is showing signs of strain and consumers are still reeling from inflation.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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    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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    U.S. Economy Grew 2.3 Percent in Fourth Quarter

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    Gross domestic product grew by 2.3 percent in the fourth quarter, capping a more robust year than expected. Policy uncertainty clouds the outlook.Growth slowed but remained resilient at the end of 2024, leaving the U.S. economy on solid footing heading into a new year — and a new presidential administration — that is full of uncertainty.U.S. gross domestic product, adjusted for inflation, grew at a 2.3 percent annual rate in the fourth quarter of last year, the Commerce Department reported on Thursday. That was down from 3.1 percent in the third quarter but nonetheless represented an encouraging end to a year in which the economy again defied expectations.Robust consumer spending, underpinned by low unemployment and steady wage growth, helped keep the economy on track despite high interest rates, stubborn inflation and political turmoil at home and abroad. For the year as a whole, measured from the end of 2023 to the end of 2024, G.D.P. increased 2.5 percent, far ahead of forecasters’ expectations when the year began.“We ended on a pretty strong note,” said Diane Swonk, chief economist for the accounting firm KPMG. “It’s stunning how resilient and strong the economy has been.”The figures are preliminary and will be revised at least twice as more data becomes available.But the economy entered the new year facing a new set of challenges. The whirlwind start to President Trump’s second term — including sweeping changes to immigration policy, a spending freeze that was announced and then rescinded and steep tariffs that could take effect as early as this weekend — has increased uncertainty for households and businesses. Economists warn that his proposals on trade and immigration, in particular, could lead to faster inflation, slower growth or both.“You really have all the right ingredients to support sustainable growth, but the question is, where will it be in 12 months’ time?” said Gregory Daco, chief economist for the consulting firm EY-Parthenon. “The risk is you break the economy.”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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    How a Government Shutdown Could Affect the Economy

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    A federal government shutdown probably wouldn’t be enough to derail the solid U.S. economy. But it could inject more uncertainty into an already murky economic outlook.Funding for the federal government will lapse at the end of Friday if Congress doesn’t reach a deal to extend it. It is still possible that legislators will act in time to prevent a shutdown, or will restore funding quickly enough to avoid significant disruptions and minimize any economic impact.But if the standoff lasts beyond the weekend, most federal offices will not open Monday, and hundreds of thousands of government employees will be told not to work. Others will be required to work without pay until the government reopens.For those workers and their families, the consequences could be serious, especially if the impasse drags on. Federal law guarantees that government workers will eventually receive back pay, but that may not come in time for those living paycheck to paycheck. And the back-pay provisions don’t apply to consultants or contractors. During the last government shutdown — a partial lapse in funding in late 2018 and early 2019 — federal workers lined up at food pantries after going weeks without pay.For the economy as a whole, the effects of a shutdown are likely to be more modest. Many of the most important government programs, like Social Security and Medicare, would not be affected, and government services that are deemed “essential,” such as air traffic control and aviation security, can continue at least temporarily. Federal workers who put off purchases are likely to make them once their paychecks restart.Forecasters at Goldman Sachs estimate that a shutdown would exert a small but measurable drag on the economy, reducing quarterly economic growth by about 0.15 percentage points for every week the lapse in funding continues. Most of that toll, though not all, would reverse in the next quarter. Other forecasters have released similar estimates.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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    GDP Report Shows US Economy Grew at 2.8% Rate

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    In a key economic report released just days before the presidential election, gross economic product rose at a 2.8 percent rate in the third quarter.Consumers are spending. Inflation is cooling. And the U.S. economy looks as strong as ever.Gross domestic product, adjusted for inflation, expanded at a 2.8 percent annual rate in the third quarter, the Commerce Department said on Wednesday. That came close to the 3 percent growth rate in the second quarter and was the latest indication that the surprisingly resilient recovery from the pandemic recession remained on solid footing.“The economy right now is firing on nearly all cylinders,” said Joe Brusuelas, chief economist at the accounting and consulting firm RSM.The report was the first of three crucial indicators on the nation’s economy scheduled for release this week, just days before the presidential election and the next policymaking meeting of the Federal Reserve.The strength in the third quarter was again driven by robust consumer spending, which grew at a 3.7 percent rate, adjusted for inflation. Rising wages and low unemployment meant that Americans continued to earn more, while inflation continued to ease: Consumer prices rose at a 1.5 percent annual rate in the third quarter and were up 2.3 percent from a year earlier.As recently as a few weeks ago, many economists were concerned that spending was about to slow as the job market weakened and household savings dwindled. But revised data released last month showed that incomes and savings were stronger than initially reported, and recent data on the job market has been strong. That suggests that spending could continue to grow — especially because data released by the Conference Board this week showed that consumers were at last feeling more confident in the economy.“Most consumers continue to be working,” said Dana Peterson, chief economist for the Conference Board. “If you’re a consumer and you’re working, then you’re going to spend.”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. Economy Grew at 2.8% Rate in Third Quarter

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    In a key economic report released just days before the presidential election, growth was again driven by robust consumer spending.Consumers are spending. Inflation is cooling. And the U.S. economy looks as strong as ever.Gross domestic product, adjusted for inflation, expanded at a 2.8 percent annual rate in the third quarter, the Commerce Department said on Wednesday. That came close to the 3 percent growth rate in the second quarter and was the latest indication that the surprisingly resilient recovery from the pandemic recession remained on solid footing.“The economy right now is firing on nearly all cylinders,” said Joe Brusuelas, chief economist at the accounting and consulting firm RSM.The report was the first of three crucial indicators on the nation’s economy scheduled for release this week, just days before the presidential election and the next policymaking meeting of the Federal Reserve.The strength in the third quarter was again driven by robust consumer spending, which grew at a 3.7 percent rate, adjusted for inflation. Rising wages and low unemployment meant that Americans continued to earn more, while inflation continued to ease: Consumer prices rose at a 1.5 percent annual rate in the third quarter and were up 2.3 percent from a year earlier.As recently as a few weeks ago, many economists were concerned that spending was about to slow as the job market weakened and household savings dwindled. But revised data released last month showed that incomes and savings were stronger than initially reported, and recent data on the job market has been strong. That suggests that spending could continue to grow — especially because data released by the Conference Board this week showed that consumers were at last feeling more confident in the economy.“Most consumers continue to be working,” said Dana Peterson, chief economist for the Conference Board. “If you’re a consumer and you’re working, then you’re going to spend.”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. Economy Had Stronger Rebound From Pandemic, G.D.P. Data Shows

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    Updated figures show that gross domestic product, adjusted for inflation, grew faster in 2021, 2022 and early 2023 than previously reported.The U.S. economy emerged from the pandemic even more quickly than previously reported, revised data from the federal government shows.The Commerce Department on Thursday released updated estimates of gross domestic product over the past five years, part of a longstanding annual process to incorporate data that isn’t available in time for the agency’s quarterly releases.The new estimates show that G.D.P., adjusted for inflation, grew faster in 2021, 2022 and early 2023 than initially believed. The revisions are relatively small in most quarters, but they suggest that the rebound from the pandemic — already among the fastest recoveries on record — was stronger and more consistent than earlier data showed.

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    Quarterly change in gross domestic product, adjusted for inflation
    Quarterly changes shown as seasonally adjusted annual ratesSource: Bureau of Economic AnalysisBy The New York TimesPerhaps most notably, the government now says G.D.P. grew slightly in the second quarter of 2022, rather than contracting as previously believed. As a result, government statistics no longer show the U.S. economy as experiencing two consecutive quarters of declining G.D.P. in early 2022 — a common definition of a recession, though not the one used in the United States. (The revised data still shows that G.D.P. declined in the first quarter of 2022, but more modestly than previously reported.)The official arbiter of recession in the United States is the National Bureau of Economic Research, a nonprofit research organization made up of academic economists. The group defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months,” and it bases its decisions on a variety of indicators including employment, income and spending.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. Economy Grew Faster Than Expected in Second Quarter, at 2.8% Rate

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    Gross domestic product rose at a 2.8 percent annual rate in the second quarter, new evidence of the economy’s resilience despite high interest rates.Economic growth picked up more than expected in the spring, as cooling inflation and a strong labor market allowed consumers to keep spending even as high interest rates weighed on their finances.Gross domestic product, adjusted for inflation, increased at a 2.8 percent annual rate in the second quarter, the Commerce Department said on Thursday. That was faster than the 1.4 percent rate recorded in the first quarter, but shy of the unexpectedly strong growth in the second half of last year.Consumer spending, the backbone of the U.S. economy, rose at a 2.3 percent annual rate in the second quarter — a solid pace, albeit much slower than in 2021, when businesses were reopening after pandemic-induced closings. Business investment in equipment rose at its fastest pace in more than two years. Inflation, which picked up unexpectedly at the start of the year, eased in the quarter.The data is preliminary and will be revised at least twice.Taken together, the findings suggest that the economy remains on track for a rare “soft landing,” in which inflation eases without triggering a recession. That is something few forecasters considered likely when the Federal Reserve began raising interest rates two years ago to combat inflation.“It’s the perfect landing,” said Sam Coffin, an economist at Morgan Stanley.Recession fears re-emerged in recent months, first when inflation briefly surged and then when the previously rock-solid job market showed signs of cracking in the spring. But recent data, including the surprisingly strong second-quarter growth figures, indicate that the expansion is on firm footing.“The economy is in a transition, but it’s in a good place,” said Ryan Sweet, chief U.S. economist at Oxford Economics. “The economy is slowing from very strong growth in the second half of last year. We’re just settling down into something that’s a little more sustainable.” More

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    U.S. Economy Grew at 2.8% Rate in Latest Quarter

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    The report on gross domestic product offered new evidence of the economy’s resilience in the face of high interest rates.Economic growth remained solid in the spring, as cooling inflation and a strong labor market allowed consumers to keep spending even as high interest rates weighed on their finances.Gross domestic product, adjusted for inflation, increased at a 2.8 percent annual rate in the second quarter, the Commerce Department said on Thursday. That was faster than both the 1.4 percent rate recorded in the first quarter and than forecasters’ expectations, but down from the unexpectedly strong growth in the second half of last year.Consumer spending, the backbone of the U.S. economy, rose at a 2.3 percent annual rate in the second quarter — a solid pace, albeit much slower than in 2021, when businesses were reopening after pandemic-induced closings. Inflation, which picked up unexpectedly at the start of the year, eased in the second quarter.The data is preliminary and will be revised at least twice.Taken together, the data suggested that the economy remains on track for a rare “soft landing,” in which inflation cools without triggering a recession. That is something few forecasters considered likely when the Federal Reserve began raising interest rates to combat inflation two years ago.“The economy is in a transition, but it’s in a good place,” said Ryan Sweet, chief U.S. economist at Oxford Economics. “The economy is slowing from very strong growth in the second half of last year. We’re just settling down into something that’s a little more sustainable.”Fed officials will meet next week to weigh when to begin lowering interest rates, which they have held at their current level, the highest in decades, for the past year. Hardly anyone expects policymakers to cut rates next week, but they could signal that such a move could come as soon as September if inflation continues to cool.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