Consumer worries grew over inflation, unemployment and the stock market as the global trade war heated up in March, according to a Federal Reserve Bank of New York survey released Monday. The central bank’s monthly Survey of Consumer Expectations showed that respondents saw inflation a year from now at 3.6%, an increase of half a percentage point from February and the highest reading since October 2023. Along with concerns over a higher cost of living came a surge in worries over the labor market: The probability that the unemployment rate would be higher a year from now surged to 44%, a move up of 4.6 percentage points and the highest level going back to the early Covid pandemic days of April 2020.The survey also showed angst about the uncertainty translating into problems for stock market prices. The expectation that the market will be higher a year from low slid to 33.8%, a decline of 3.2 percentage points to the lowest reading going back to June 2022. While the expectations for equities pulled back, respondents said they figure gold to rise by 5.2%, the highest since April 2022. The survey reflects other readings, such as the University of Michigan consumer sentiment survey, which showed one-year expectations in mid-April at their highest since November 1981. In the case of the New York Fed measure, the survey took place ahead of President Donald Trump’s April 2 “liberation day” tariff announcement, as well as the 90-day suspension of the order a week later. However, it is largely consistent with other measures reflecting consumer concern over the impact tariffs will have, even as market-based measures show inflation worries are low among traders. Expectations for inflation at the five-year horizon actually edged lower to 2.9%, down 0.1 percentage point, and were unchanged for the three-year outlook at 3%. The outlook for food prices a year from now nudged up to 5.2%, its highest since May 2024, and was at 7.2% for rent, an increase of half a point. The outlook for medical care costs also jumped to an expected 7.9% increase, the most since August 2024. Respondents expect gasoline to rise by 3.2%, a 0.5 percentage point drop from the February outlook.
Consumer price growth cooled in March as the White House prepared far-reaching global tariffs, with a key inflation measure falling to its lowest level since March 2021. The consumer price index slowed to an annual rate of 2.4%, less than expected and below the 2.8% notched the month before, the Bureau of Labor Statistics reported Thursday. Inflation rose just 0.1% between February and March, in line with forecasts and below the 0.2% monthly reading seen in February. A 12-month measure of price growth that excludes volatile food and energy prices climbed 2.8%, the smallest annual increase for that so-called core reading since March 2021. The pace of price hikes for airfare, car insurance, used vehicles and recreation all eased in March. Despite the favorable reading, concerns remain widespread that President Donald Trump’s unprecedented and ever-changing tariff agenda — which he abruptly softened Wednesday — will bring rising prices in the coming months. “Today’s softer than expected CPI release feels backward looking given the large changes to trade policy seen in recent days,” Goldman Sachs analysts said Thursday morning. The bank warned that “tariff driven price increases [will] start to feed through to the inflation data” before long. Even before Trump’s sweeping tariff rollout on April 2, many investors were predicting some run-up in consumer costs. U.S. businesses “appear eager to pass on cost increases to consumers,” analysts with BNP Paribas wrote in a note to clients this week. They cited a February Federal Reserve survey that found 80% of respondents would raise prices following higher input costs, with 60% stating the increase would at least equal the amount of the cost hike. “These findings indicate both widespread impact and a strong likelihood that a majority of affected firms will pass cost increases through to consumers,” the analysts wrote. While the pause announced Wednesday means the economic fallout from Trump’s plan may not be as severe as feared, Wall Street firms continue to predict a dramatic slowdown in the economy as a result of the entire episode. In a note to clients following Trump’s tariff pause Wednesday afternoon, Goldman Sachs said it still predicted a 45% chance of a recession, with economic growth in 2025 slowing to 0.5% and 12-month inflation rising to as much as 3.5%. Trump has put his own spin on the situation, writing on his Truth Social platform this week that there was “no inflation” as oil prices and food prices were falling.
The benchmark 10-year Treasury yield climbed back above the 4% level on Monday, even as President Donald Trump’s tariffs sparked fears of an economic slowdown. The yield on the 10-year Treasury gained around 18 basis points at 4.166%. The 2-year Treasury yield advanced 8 points at 3.753%. One basis point equals 0.01%. Yields and prices move in opposite directions. The 10-year Treasury yield’s move higher comes even as traders raised their expectations for lower Federal Reserve rates on expectations for a weaker economy. Fed funds futures pricing is now indicating around a 50% chance that the central bank will lower rates by a quarter-percentage point at its May meeting and now sees the central bank cutting rates at least five times in 2025. “Given the situation, I’m not sure international investors look at the U.S. as the safe haven as they have before, which is going to cause Treasury prices to fall and yields to go up,” said Clark Bellin, chief investment officer at Bellwether Wealth. Trump, along with his cabinet officials, have repeatedly highlighted their desires to bring down Treasury yields, which they said would reduce the cost of borrowing. Even on Monday, Trump wrote in a post on Truth Social that “interest rates are down” when yields were sharply lower early morning and called for the Fed to cut rates. Investors are reeling from the effects of the Trump tariffs unveiled last week, which hit more than 180 countries and set a baseline tariff of 10% across the board. Major trading partners of the U.S. took some of the steepest tariffs, with China facing a total tariff rate of 54%. The tariffs have stoked fears of a global trade war, as countries respond with their own tariffs on the U.S. China retaliated Friday by slapping 34% tariffs on U.S. goods, and the European Union has vowed to impose countermeasures if negotiations fail. Trump continued to downplay the effects of tariffs, saying on Sunday evening, “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
At the core of President Donald Trump’s decision to impose sweeping tariffs on U.S. trading partners is a fixation on closing, if not reversing, America’s trade deficit with nearly all of them. But most economists say Trump appears to demonstrate a fundamental misunderstanding of what having a trade deficit with another country actually means — a fact that is at the heart of the stunning market meltdown over the past several days. A trade deficit simply means a country is importing more goods and services from a given country than it is exporting to them. Maintaining a deficit usually says little about the state of a country’s economy. The U.S. trade deficit instead simply reflects the fact that the U.S. is a consumption-based economy. Even with the deficit, the U.S. has maintained strong domestic growth. Whether it is sourcing goods that the U.S. no longer produces, or which can be produced more cheaply elsewhere, large American import levels reflect strong demand for goods — and the U.S. economy as a whole generally benefits from this arrangement, said Vance Ginn, an economist and adviser in Trump’s first term. “Trade helps us to be better off,” Ginn told NBC News. As the Congressional Research Service reported in 2018, Trump’s fixation on reversing the deficit “contrasts with the views of most economists.”
The U.S. added 228,000 jobs in March, far more than the 140,000 economists had expected. Unemployment ticked up slightly to 4.2% from 4.1% the month before. Last month’s gains far outnumber the 117,000 roles added in February, according to data released Friday by the Bureau of Labor Statistics. Health care, transportation and warehousing were among the sectors that added roles in March. Federal hiring declined amid sweeping cuts to the government’s workforce, though many of those layoffs aren’t showing up yet in official figures due to leave and severance policies and routine lags in data gathering. The March report shows a resilient U.S. economy, though it’s already a snapshot in time. After President Donald Trump’s sweeping tariffs announcement Wednesday slammed into global markets, analysts say the labor market is likely to enter more uncertain terrain. “This report isn’t likely to be seen as more important than the trade war,” Kathy Jones, chief fixed income strategist at Charles Schwab, wrote on X Friday morning following the release. Goldman Sachs analysts offered much the same take. “Today’s better than expected jobs report will help ease fears of an immediate softening in the US labor market. However, this number has become a side dish with the market just focusing on the entrée: tariffs,” they wrote Friday. Stock futures continued to plummet before U.S. markets opened Friday morning, after notching their worst single trading day since the depths of the pandemic on Thursday. The slight rise in unemployment last month likely reflects people heading back into the workforce in search of jobs. The labor force participation rate ticked up slightly as well, to 62.5%. But the March numbers also showed average hourly wage growth slowed, and temporary layoffs eased while permanent job losses inched higher. Private-sector hiring continued to chug along, according to figures released this week by payroll processor ADP. But they, too, showed a slowdown in pay growth, with the average raises earned by people changing jobs hitting a low not seen since September. And a separate BLS release this week found that while layoffs have remained subdued, so has hiring. “Next month is when hard data is likely to start showing signs of what soft data has already been signalling,” Seema Shah, chief global strategist at Principal Asset Management, wrote in a note to clients Friday morning. Data published Thursday by the jobs and career consultancy Challenger, Gray & Christmas singled out Elon Musk’s Department of Government Efficiency as responsible for over 216,000 announced reductions in the federal workforce in March. “The market needed today’s number,” Shah wrote. “Everyone knows that economic weakness is coming, but at least we can be reassured that the labor market was robust coming into this policy-driven shock.
A surge in federal government job cuts contributed to a near record-setting pace for announced layoffs in March, exceeded only by when the country shut down in 2020 for the Covid pandemic, according to a report Thursday from job placement firm Challenger, Gray & Christmas. Furloughs in the federal government totaled 216,215 for the month, part of a total 275,240 reductions overall in the labor force. Some 280,253 layoffs across 27 agencies in the past two months have been linked to the Elon Musk-led so-called Department of Government Efficiency and its efforts to pare down the federal workforce. The monthly total was surpassed only by April and May of 2020 in the early days of the pandemic when employers announced combined reductions of more than 1 million, according to Challenger records going back to 1989. It also was the highest March on record. “Job cut announcements were dominated last month by Department of Government Efficiency [DOGE] plans to eliminate positions in the federal government,” said Andrew Challenger, senior vice president and workplace expert at the firm. “It would have otherwise been a fairly quiet month for layoffs.” However, DOGE has continued to cut aggressively across the government. Various reports have indicated that the Veterans Affairs Department could lose 80,000 jobs, the IRS is in line for some 18,000 reductions and The Treasury is expected to drop a “substantial” level of workers as well, according to a court filing. The year-to-date tally for federal government announced layoffs represents a 672% increase from the same period in 2024, according to Challenger. Recommended Business News A man once sued by the SEC wins Trump crypto contest to have dinner with the president Autos Cadillac's EVs are attracting new buyers, including more customers trading in Teslas To be sure, the outsized layoff plans haven’t made their way into other jobs data. Weekly unemployment claims have held in a fairly tight range since President Donald Trump took office. Payroll growth has slowed a bit from its pace in 2024 but is still positive, while job openings have receded but only to around their pre-pandemic levels. However, the Washington, D.C., area has been hit particularly hard by the announced layoffs, which have totaled 278,711 year to date for the city, according to the report.
DETROIT — Stellantis is pausing production at two assembly plants in Canada and Mexico as the company attempts to navigate President Donald Trump’s new round of 25% automotive tariffs, the company confirmed Thursday. The actions are the swiftest and most drastic by an automaker regarding the new tariffs, which took effect Thursday and are imposed on all vehicles imported to the U.S., including from Canada and Mexico. The downtime starts Monday and is set for two weeks at the automaker’s Windsor Assembly Plant in Ontario, Canada, and the entire month of April at its Toluca Assembly Plant in Mexico. As a result of the pause in production, about 900 U.S.-represented employees at supporting plants will be temporarily laid off in addition to about 4,500 hourly workers at the Canadian plant, according to a company spokeswoman. Workers at the plant in Mexico will still report to the facility but not produce vehicles due to their contract terms, the spokeswoman said
A 50% reciprocal trade tariff on Lesotho, the highest levy on U.S. President Donald Trump’s long list of target economies, will kill the tiny Southern African kingdom that Trump ridiculed last month, an economic analyst there said on Thursday. Lesotho, which Trump described in March as a country “nobody has ever heard of,” is one of the world’s poorest nations with a gross domestic product of just over $2 billion. It has a large trade surplus with the United States, mostly made up of diamonds and textiles, including Levi’s jeans. Its exports to the United States, which in 2024 totalled $237 million, account for more than 10% of its GDP. Oxford Economics said the textile sector, with some 40,000 workers, was Lesotho’s biggest private employer and accounted for roughly 90% of manufacturing employment and exports. “Then you are having retailers who are selling food. And then you have residential property owners who are renting houses for the workers. So this means if the closure of factories were to happen, the industry is going to die and there will be multiplier effects,” Lesotho Private Sector Foundation CEO Thabo Qhesi said. “So Lesotho will be dead, so to say.” Ridiculed for imposing trade tariffs on frozen islands largely inhabited by penguins, Donald Trump’s formula for calculating those levies has a serious side: it is also hitting some of the world’s poorest nations hardest.The math is simple: take the U.S. goods trade deficit with a country, divide it by that country’s exports to the U.S. and turn it into a percentage figure; then cut that figure in half to produce the U.S. “reciprocal” tariff, with a floor of 10%. That’s how the volcanic Australian territory of Heard Island and McDonald Islands in the Antarctic ended up with a 10% tariff. The penguins got off lightly, you might say.
The Federal Reserve’s key inflation measure rose more than expected in February while consumer spending also posted a smaller-than-projected increase, the Commerce Department reported Friday. The core personal consumption expenditures price index showed a 0.4% increase for the month, the biggest monthly gain since January 2024, putting the 12-month inflation rate at 2.8%. Economists surveyed by Dow Jones had been looking for respective numbers of 0.3% and and 2.7%. Core inflation excludes volatile food and energy prices and is generally considered a better indicator of long-term inflation trends. In the all-items measure, the price index rose 0.3% on the month and 2.5% from a year ago, both in line with forecasts. At the same time, the Bureau of Economic Analysis report showed that consumer spending accelerated 0.4% for the month, below the 0.5% forecast. That came as personal income posted a 0.8% rise, against the estimate for 0.4%. Stock market futures briefly moved lower following the release, as did Treasury yields. Federal Reserve officials focus on the PCE inflation reading as they consider it a broader measure that also adjusts for changes in consumer behavior and places less of an emphasis on housing than the Labor Department’s consumer price index. Shelter costs have been one of the stickier elements of inflation and rose 0.3% in the PCE measure. “It looks like a ‘wait-and-see’ Fed still has more waiting to do,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Today’s higher-than-expected inflation reading wasn’t exceptionally hot, but it isn’t going to speed up the Fed’s timeline for cutting interest rates, especially given the uncertainty surrounding tariffs.” Recommended
