Powell, Jerome H

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Trump’s Tariffs Bump Into Reality as Economic Strategy Wavers

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After weeks of bluster and escalation, President Trump blinked. Then he blinked again. And again.He backed off his threat to fire the Federal Reserve chairman. His Treasury secretary, acutely aware that the S&P 500 was down 10 percent since Mr. Trump was inaugurated, signaled he was looking for an offramp to avoid an intensifying trade war with China.And now Mr. Trump has acknowledged that the 145 percent tariffs on Chinese goods that he announced just two weeks ago are not sustainable. He was prompted in part by the warnings of senior executives from Target and Walmart and other large American retailers that consumers would see price surges and empty shelves for some imported goods within a few weeks.Mr. Trump’s encounter with reality amounted to a vivid case study in the political and economic costs of striking the hardest of hard lines. He entered this trade war imagining a simpler era in which imposing punishing tariffs would force companies around the world to build factories in the United States.He ends the month discovering that the world of modern supply chains is far more complex than he bargained for, and that it is far from clear his “beautiful” tariffs will have the effects he predicted.This is not, of course, the explanation of the events of the past few days that the White House is putting out. Mr. Trump’s aides insist that his maximalist demands have been an act of strategic brilliance, forcing 90 countries to line up to deal with the president. It may take months, they acknowledge, to see the concessions that will result. But bending the global trade system to American will, they say, takes time.“Have some patience and you will see,” the president’s press secretary, Karoline Leavitt, told reporters on Wednesday.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 Fed Chair Jerome Powell’s ‘Termination Cannot Come Fast Enough’

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    President Trump lashed out on Thursday at Jerome H. Powell, the chair of the Federal Reserve, saying, “Powell’s termination cannot come fast enough!”Mr. Trump’s ire followed remarks by Mr. Powell on Wednesday, when he warned in a speech that the president’s tariffs could create a “challenging scenario” for the central bank by putting its two main goals — stable inflation and a healthy labor market — in tension.Mr. Powell reiterated that the Fed could afford to be patient with its interest rate decisions until it had more clarity about Mr. Trump’s policies. The Fed chair’s emphasis on the need to ensure that a temporary rise in inflation from tariffs did not become a more persistent problem suggested that the bar for further rate cuts was high.The president has been pushing for Mr. Powell to cut rate since returning to the White House. On Thursday, he referred to expectations that the European Central Bank would lower borrowing costs, saying the Fed should do the same.“The ECB is expected to cut interest rates for the 7th time, and yet, ‘Too Late’ Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’,” Mr. Trump wrote on his Truth Social platform. “Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!”The Fed seeks to operate independent of political influence, something that Mr. Powell on Wednesday said was a “matter of law.” He also said the Fed’s independence was “very widely understood and supported in Washington and in Congress where it really matters.”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

  • 113 Shares140 Views

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    What Is a Bear Market? Are We in One?

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    President Trump’s global tariffs have sent stock markets worldwide into a tailspin, and the S&P 500 on Monday briefly entered bear market territory for the first time since 2022.Mr. Trump has seemed unmoved by the decline. He signaled on Monday that he had no plans to back off on tariffs, insisting that they would bring in “billions of dollars” in revenue and that other countries had been “abusing” the United States with their trade policies.Here is what to know about a bear market.What is a bear market?A bear market is a Wall Street term for a sustained market downturn, when a stock index closes 20 percent from its last peak.The 20 percent threshold signals investor pessimism about the future of the economy.Are we in a bear market now?The S&P 500, the benchmark U.S. stock index, opened lower on Monday. The index was already down 17.4 percent from its last high, on Feb. 19, and if it closes Monday’s trading with a loss of at least 3.1 percent, that would tip it into a bear market. More

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    Fed Holds Interest Rates Steady, but Trump’s Tariffs Could Slow Inflation Progress

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    The Federal Reserve left interest rates unchanged on Wednesday for a second straight meeting. The March meeting was the central bank’s most direct acknowledgment to date that President Trump’s policies are set to have a real impact on the economy, stoking significant uncertainty about where inflation, growth and — ultimately — interest rates are headed. Here are the takeaways:Tariffs took center stage during the news conference with Jerome H. Powell. The Fed chair went as far as saying that tariffs likely mean “further progress may be delayed” on getting inflation back to the central bank’s 2 percent target. That recognition materialized in the higher inflation forecasts that officials penciled into new economic projections. By the end of the year, officials estimate that core inflation, which strips out volatile food and energy prices, will stay stuck at 2.8 percent, before declining to 2.2 percent in 2027.Fed officials paired their higher inflation forecast with lower estimates for economic growth, even as they stuck with previous projections that they would be able to lower interest rates by a half point this year, delivering two quarter-point cuts. The range of possible outcomes was wide, however, with eight policymakers forecasting either no additional cuts or just one this year. Only two thought the Fed would lower rates by 0.75 percentage points, or three cuts of a quarter point this year.In recent months, Mr. Powell has been adamant that the Fed is well positioned to respond to sharp shifts in the trajectory for the economy and could afford to be patient about making rate decisions given the solid foundation of the labor market. He reiterated that point, pushing back on the souring of consumer expectations about inflation and economy that has shown up in recent survey data.While the path forward for interest rates and the economy was the main focus of the March meeting, the Fed’s decision to slow the pace at which it is reducing its balance sheet drew some attention. Mr. Powell said the idea was to reduce the possibility of market ructions in funding markets. More

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    The Fed’s Projections: How to Read Them Like a Pro

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    Federal Reserve officials are scheduled to release their first set of economic projections this year, alongside their interest rate decision, on Wednesday. Those forecasts will offer a fresh glimpse of the trajectory for monetary policy at a highly uncertain moment for the central bank.Policymakers paused interest rate cuts in January after reducing borrowing costs by a percentage point in the latter half of last year. They are expected to again stand pat on Wednesday as they await greater clarity on how far President Trump will push his global trade war and to what extent he will follow through on other central aspects of his agenda, including slashing government spending and deporting migrants.The big question now is when — and to some extent whether — the Fed will be able to restart cuts this year.When the Fed last released quarterly economic projections in December, officials penciled in two rate cuts that would reduce borrowing costs by half a percentage point in 2025. But economists now expect Mr. Trump’s policies to lead to more intense price pressures and slower growth, a tough dynamic for the central bank and one that could prompt policymakers to scale back how many cuts they project going forward.Here’s what could change and how to interpret those updates.The dot plot, decodedWhen the central bank releases its Summary of Economic Projections each quarter, Fed watchers focus on one part in particular: the dot plot.The dot plot will show Fed policymakers’ estimates for interest rates through 2027 and over the longer run. The forecasts are represented by dots arranged along a vertical scale — one dot for each of the central bank’s 19 officials.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

  • 125 Shares99 Views

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    Trump Primed to Clash With Fed After Key Rate Decision

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    President Trump has never been shy about criticizing the Federal Reserve, frequently seeking to pressure the nation’s central bank into reducing interest rates more swiftly.“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!,” Mr. Trump posted on Truth Social last month, adding: “Lets Rock and Roll, America!!!”But the Fed is expected to see things differently on Wednesday — choosing to hold rates steady in the face of rising prices and slowing growth — in a move that seems destined to stoke Mr. Trump’s anger.At the heart of the tension are Mr. Trump’s tariffs, which he has promised to apply more expansively beginning April 2. The White House contends its protectionist policies can rejuvenate American manufacturing and reduce the country’s reliance on imports, but economists believe that Mr. Trump risks touching off a protracted global trade war that will badly harm the U.S. economy.The latest dour projection arrived Tuesday, when Fitch Ratings cut its U.S. growth forecast for this year to 1.7 percent from 2.1 percent. It explicitly pointed to Mr. Trump’s tariffs — and the “huge uncertainty” around them — as two of the drivers behind a potential economic slowdown and short-term rise in prices.The uncertainty is likely to freeze any rate cutting at the Fed, perhaps straining an already tortured relationship between Mr. Trump and Jerome H. Powell, the man he handpicked to serve as chair of the central bank in 2017.In his first term, the president described Mr. Powell as the “enemy,” and blasted his colleagues as “boneheads,” in a bid to browbeat the Fed into slashing interest rates. Mr. Trump at one point even considered firing Mr. Powell, raising fears that the White House might try to undermine the Fed’s political independence.Soon after returning to the White House, the president revived his attacks: He said, again, that he would “demand that interest rates drop immediately,” and one of his leading advisers — the tech billionaire Elon Musk — signaled support for an audit of the central bank. When the Fed chose to hold rates steady at its last meeting, Mr. Trump charged anew that Mr. Powell and the Fed had “failed to stop the problem they created with inflation.”“If the Fed had spent less time on DEI, gender ideology, ‘green’ energy, and fake climate change, Inflation would never have been a problem,” Mr. Trump wrote in a post on Truth Social. More

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    U.S. Inflation Eased More Than Expected in February

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    Inflation eased more than expected in February, a welcome sign for the Federal Reserve as it grapples with the prospect of higher prices and slower growth as a result of President Trump’s trade war.The Consumer Price Index was up 2.8 percent from a year earlier, after rising another 0.2 percent on a monthly basis. That was a step down from January’s surprisingly large 0.5 percent increase and came in below economists’ expectations.The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, also ticked lower. The index rose 0.2 percent from the previous month, or 3.1 percent from a year earlier. Both percentages were below January’s increases.The data from the Bureau of Labor Statistics underscored the bumpy nature of the Fed’s progress toward its 2 percent goal. Prices for consumer staples, such as eggs and other grocery items, are rising steeply again, but costs for other categories like gasoline fell. A 4 percent drop in airfares in February was a primary driver of the better-than-expected data.Egg prices rose another 10.4 percent in February, as an outbreak of avian influenza continued to exacerbate a nationwide egg shortage. Prices for eggs are up nearly 60 percent since last year. Food prices more broadly rose 0.2 percent, or 2.8 percent from a year earlier.The cost of used cars also rose 0.9 percent in February, although new vehicle prices declined slightly. Car insurance, which was a huge driver of the index’s unexpectedly large increase in January, rose again, but at a much slower pace of 0.3 percent. It is up just over 11 percent over the past year. More