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Business Insider
2 days ago
- Business
- Business Insider
CEOs haven't felt this gloomy about the economy since the pandemic
The Business Roundtable CEO index dropped 15 points in the second quarter, its lowest since 2020. The decline was driven by plans for reduced spending, sales expectations, and employment. CEOs cited trade policy uncertainty as the driving reason behind a declining index. CEOs aren't feeling too hot about the economy. The Business Roundtable's CEO Economic Outlook Index dropped by 15 points in the second quarter to 69, marking its lowest level since 2020 and well below its historic average of 83. A total of 169 CEOs participated in the survey, which was conducted between June 2 and June 13. "The quarter's survey results signal that Business Roundtable CEOs are approaching the next six months with caution," Cisco CEO and Business Roundtable chair Chuck Robbins said in a release accompanying the results. The survey assesses three categories: capital spending plans, hiring intentions, and sales expectations. Hiring plans saw the steepest decline this quarter, dropping 19 points. Capital investment plans followed with a 15-point decrease, and sales expectations fell by 11 points. The survey indicates that 41% of CEOs surveyed expect their company to decrease employment in the next six months, compared to 29% last quarter. The percentage of CEOs surveyed who expected hiring to increase in the next six months also dropped quarter over quarter, from 33% to 26%. It's the latest indication of a challenging job market, as many companies have made moves to flatten their org charts and slow hiring. A number of major companies have conducted layoffs this year, including Meta, Microsoft, BlackRock, and Intel. Other companies, like Salesforce, have announced a pause on hiring engineers. Business Roundtable CEO Joshua Bolten said the quarterly decline was driven by "broad-based uncertainty," stemming from an "unpredictable trade policy environment." The CEO said expanding tax reform is important but will not solve the issue on its own. "American businesses also need the Administration rapidly to secure deals with our trading partners that open markets, remove harmful tariffs and provide certainty for investment," Bolten said. President Donald Trump's tariff threats have taken consumers and businesses on a roller coaster ride over the last few months. While some tariffs were enacted in April, the bulk of new tariffs have been paused until July to allow time for negotiations. The ups and downs have resulted in sharp stock market swings, led some companies to make tweaks to their supply chains, and impacted retail and food service sales as well as the outlook on home sales. Uncertainty around tariffs has made long-term planning difficult for many companies. The Federal Reserve's Beige Book, released this month, indicated that half of the districts saw "slight to moderate" declines in economic activity, while three reported no growth at all. The Trump administration has said that tariff policies are in the best interest of the US, even if they create some short-term pain. While the report paints a largely gloomy picture of CEO sentiment, it's not at levels previously seen during the last recession. The Business Roundtable states that "readings at 50 or above indicate economic expansion," while readings below indicate a recession. In the second quarter of 2020, the economic outlook plummeted to an overall Index of 34.3, and quickly rebounded to 64 in the next quarter. However, the survey adds to a growing chorus of CEOs who are voicing concern for the near future as they navigate a choppy economic environment.
Yahoo
13-06-2025
- Business
- Yahoo
Cleveland Fed: Tariffs are raising some prices in Ohio, Pennsylvania, West Virginia, and Kentucky
President Donald Trump holds up a chart while speaking during a 'Make America Wealthy Again' trade announcement event in the Rose Garden at the White House on April 2, 2025 in Washington, D.C. (Photo by) Tariffs — and uncertainty over them — are forcing up costs for businesses in Ohio and parts of three other states, according to market surveillance published last week by the Federal Reserve Bank of Cleveland. At last some of those costs are being passed on to customers, the report said. The news comes as recent polls show that voters strongly disapprove of the way President Donald Trump, the author of huge new tariffs, is handling the economy. The Cleveland Fed represents the Federal Reserve System's Fourth District — a region that covers all of Ohio and parts of Pennsylvania, Kentucky and West Virginia. Eight times a year, it conducts interviews and online questionnaires with businesses, community organizations, economists and other sources. The Beige Book report released last week said those sources 'continued to suggest flat business activity in the Fourth District in recent weeks, and they expected activity to remain flat in the months ahead. Retailers noted a pullback in consumer spending, and manufacturers said that ongoing economic and trade policy uncertainty continued to dampen demand for their goods. Demand for professional and business services increased driven by higher demand for consultations amid the shifting regulatory environment.' A tariff is a tax on imports that is sometimes imposed to foster domestic industry. Sometimes they're imposed in retaliation against perceived unfair practices by trading partners, such as China. Since taking office, Trump has announced a bewildering array of on-again, off-again tariffs, including 50% ones on steel and aluminum that took effect last week. The Consumer Price Index grew at a relatively moderate 2.4% in May, but the New York Times pointed out that it reflects only the initial impacts of the tariffs. While many of Trump's tariffs have been delayed or are just beginning to take effect, the Cleveland Fed report said their effects are being felt. 'On balance, contacts indicated that nonlabor input costs rose at a robust pace in recent weeks, continuing an upward trend that began after a period of stability in 2024,' it said. 'Contacts from multiple sectors noted that tariffs were now increasing the costs of materials that they import. Some contacts also noted secondary impacts of tariff-related cost increases from domestic producers. For example, one manufacturer said that their U.S.-based raw materials suppliers raised prices to factor in the overtime needed to meet increased domestic demand.' It added that its sources of food and hospitality information voiced relief over dropping egg prices. But they 'generally expected costs to grow at a strong pace in the coming months.' More of the fed's sources said they increased prices than did in the previous reporting period. Some blamed tariffs. 'Contacts across industries, particularly those in manufacturing and construction, said that they raised prices to cover costs related to tariffs and to elevated prices of materials such as steel,' the report said. 'Auto dealers generally mentioned raising prices of new and used vehicles, and one said that they were offering less discounting because of higher demand.' Some of that demand, the report said, was from consumers trying to buy vehicles now because they anticipate higher prices in the future. The news comes as Ohio has the nation's sixth-highest unemployment, consumer confidence remains relatively low, and Americans disapprove of Trump's handling of the economy. A Quinippiac University poll released on Tuesday said that respondents disapproved of him on the economy by a 16-point margin. The president had an overall approval rating of 38%. SUPPORT: YOU MAKE OUR WORK POSSIBLE SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Miami Herald
11-06-2025
- Business
- Miami Herald
U.S. Inflation Remains Muted, With Limited Effects From Tariffs
EDITORS NOTE: EDS: REPEATING to RECODE as a Page 1 refer and ADD graphic to art note.); (ART ADV: With photo and graphic.); (With: U.S.-CHINA-ASSESS); Joe Rennison contributed reporting. Businesses across the United States have for months warned that they would raise prices on their customers in response to President Donald Trump's tariffs. The latest data show that it is happening only in a limited way so far, helping to keep a lid on inflation. The consumer price index, released Wednesday, rose 2.4% in May from a year earlier, just above April's 2.3% annual increase. "Core" inflation steadied at 2.8%. That measure, which strips out volatile food and energy products, is closely monitored by policymakers as a gauge for underlying price pressures. On a monthly basis, the overall measure rose 0.1%, in line with the core index. Both were below economists' expectations. The latest data, released by the Bureau of Labor Statistics, reflects a mixed picture about the economic impact of Trump's tariffs -- the scope and scale of which have changed repeatedly since the president launched his global trade war. Tariffs are a tax on imports, and economists expect the effect on prices to become more pronounced over the summer as more businesses pass along higher costs to consumers, as many have said they will do. Most of the businesses surveyed in May by the Federal Reserve Bank of New York said they had passed on at least some of the tariffs to their customers. Nearly half of the service-oriented companies passed along all of those higher costs by raising their prices, whereas one-third of manufacturers responding to the survey did the same. A similar phenomenon is taking place across the country. The latest Beige Book, which compiles economic anecdotes from the 12 regional banks across the Federal Reserve System, noted that there were "widespread reports of contacts expecting costs and prices to rise at a faster rate going forward." Those that expected to pass along higher costs planned to do so "within three months," the report said. But the data so far shows that isn't happening in a significant enough way to bid up inflation overall. In categories expected to be most exposed to tariffs, like furniture, prices were down 0.8% in May. That is the weakest reading since December. Clothing costs fell 0.4%, while prices for both new and used cars also declined. A drop in airline fares and energy prices also helped offset an increase in housing-related costs and those related to dining out. Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, described the tariff impact in May's report as "microscopic," but he also said that was "entirely in keeping with past evidence showing that retailers usually take at least three months to pass on cost increases to consumers." One explanation for the delay is that businesses had stockpiled inventories ahead of Trump's levies and were able to lock in lower prices as a result. Americans, under greater financial strain than in the past and with fewer job prospects, have been a bit more reluctant to spend as well. "Retailers and consumers are doing this nervous dance together, where consumers aren't quite sure what they're going to buy and retailers just don't have the nerve to increase prices until they have to," said David Kelly, chief global strategist at JPMorgan Asset Management. "The general sogginess of the economy and the nervousness among retailers is preventing it from coming through very fast." Still, Kelly said that if the current tariffs stay in place, price pressures will start to build up late this summer and peak in the fourth quarter of the year, pushing inflation to an annual rate of around 4%. Tariffs are still the biggest wild card for the central bank's outlook for inflation, growth and the labor market for this year. Heading into Trump's second term in the White House, inflation appeared on track to return to the Fed's long-standing 2% target after years of running well above that level in the aftermath of the pandemic. The Fed is now grappling with how significantly Trump's policies, which also include curbing immigration, cutting taxes and slashing government spending, will raise prices for Americans, and for how long any resulting period of higher inflation will last as growth slows. In minutes from the Fed's last meeting in May, the central bank's staff members penciled in a forecast that carried the whiff of stagflation. They said a recession was "almost as likely" as its forecast for subdued growth and higher unemployment. Tariffs, they said, were expected to boost inflation "markedly this year" and continue to add price pressures in 2026 before inflation trended back to the 2% target by 2027. The May meeting took place just before some of the most aggressive tariffs against China were temporarily rolled back. Trump on Wednesday said a fresh deal with Beijing was "done," but the full details have not yet been released. In response to the latest inflation data, Trump reiterated his call for the Fed to lower interest rates by a full percentage point, a move that would be far larger than the typical quarter-point cadence by which the Fed cuts rates. "WOULD PAY MUCH LESS INTEREST ON DEBT COMING DUE. SO IMPORTANT!!!," he wrote. Officials at the Fed are most worried that tariffs could ignite a sustained period of price increases rather than a one-off jump. The risk is that Americans start to expect higher inflation over the long term to a degree that ends up becoming self-fulfilling. Such persistent inflation would hamstring the Fed's ability to support the economy -- by lowering interest rates -- if growth slows and the labor market weakens. For now, the labor market is cooling, but it has not yet cracked. That has reinforced the Fed's view that it can take its time before making any big decisions about interest rates. After lowering borrowing costs by a percentage point last year, the central bank has kept interest rates steady since January, at a range of 4.25% to 4.5%. Fed officials are widely expected to extend that pause when they gather next Tuesday and Wednesday and maintain the view that they can afford to be patient on cuts. With inflation risks still elevated, the central bank has made clear that before lowering interest rates again, it will need to see clearer signs that the labor market is deteriorating. Government bond yields fell Wednesday, a sign that investors see inflation as less of an obstacle to the Fed lowering interest rates. The 10-year Treasury yield dropped almost 0.1 percentage points, a large move in that market, to just above 4.4%. Traders in federal funds futures are still wagering that the central bank will cut rates at least once this year, with bets rising that they may move twice. This article originally appeared in The New York Times. Copyright 2025
Business Insider
11-06-2025
- Business
- Business Insider
Inflation ticked up less than expected in May, considering fear around Trump's tariffs
The year-over-year inflation rate ticked up in May to 2.4% from 2.3%, less than expected and reversing this year's cooling trend. Economists expected the consumer price index to surge 2.5% in May from a year earlier. Morgan Stanley expected the new consumer price index report to show evidence of "tariff-driven inflation," given reports and surveys have shown recent and expected changes to prices. The Federal Reserve's Beige Book, which collected information from businesses and others on or before May 23, said all 12 Federal Reserve Districts "indicated that higher tariff rates were putting upward pressure on costs and prices." President Donald Trump said the administration is "working to rapidly defeat inflation" and has repeatedly pushed the Fed to lower interest rates. Federal Open Market Committee members will meet next week to decide on their next rate move. CME FedWatch shows based on market trades, that there's a strong chance rates will remain unchanged. "If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment," said Federal Reserve chair Jerome Powell at a May 7 press conference following the announcement that the Fed held interest rates steady. Powell added that tariffs' effects on inflation could be either short-lived or more persistent, depending on how high they are and how long it takes for the effects to show up in prices. Tariff decisions have already affected business strategies and sales. Small-business owner Michael Salvatore told Business Insider that the legal whiplash with tariffs means more uncertainty. While there have been "serious discussions" about increasing prices at his business locations in Chicago, he said, "there's only so much our customers can reasonably be expected to absorb," and he doesn't want to have to go back and forth on prices. "As a small business owner, uncertainty is just as damaging as the tariffs themselves," Salvatore said. "I can't make clear purchasing decisions or long-term plans when I don't know what rules I'm playing by." Hard economic data has stayed strong, including better-than-expected job growth, and even soft data is starting to improve. Changes to trade deals in May, such as the 90-day pause on many tariffs with China, could be playing a role. On Monday, the Survey of Consumer Expectations from the Federal Reserve Bank of New York showed inflation expectations declined. New National Federation of Independent Business data showed small businesses were more optimistic in May after the index dropped the previous two months. "Although optimism recovered slightly in May, uncertainty is still high among small business owners," Bill Dunkelberg, NFIB's chief economist, said. "While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth."
Hindustan Times
09-06-2025
- Business
- Hindustan Times
Take Five: It's TACO time
June 6 - Uncertainty from Washington's tariff tactics remains rife, but investors realise that whatever U.S. President Donald Trump threatens doesn't tend to last long before he delays or backs down, meaning recent volatility has ebbed. This tendency to U-turn, dubbed the TACO trade - "Trump Always Chickens Out" - has caught on but it's also given investors something to bank on so they can focus on upcoming reads on inflation and trade. Here's a look at what's coming up for world markets from Kevin Buckland in Tokyo, Naomi Rovnick and Amanda Cooper in London and Alden Bentley in New York. 1/ TACOS FOR BREAKFAST The high-voltage volatility that shook markets in April and through May has subsided, with investors becoming accustomed to Trump's on-again-off-again approach to anything from tariffs to personal relationships - the meltdown with erstwhile DOGE chief and Tesla Chief Executive Elon Musk being the latest. Wall Street's fear-gauge, the VIX index, has slipped back below the 20-line that many view as a watermark. Since Trump became the 47th president on January 20, the index has topped 20 on 47 occasions. In the five months prior to that, it breached that level 18 times. In the last month, there have been just seven days when the VIX has popped above 20, compared with every day from April 2 "Liberation Day" to early May. If anything, the TACO trade is taking some spice out of the market. 2/ INFLATION HIDE AND SEEK Investors are hoping any rise in Wednesday's May consumer inflation report won't be as severe as feared, given Trump's erratic trade tactics. Recent data shows inflation falling close to the Federal Reserve's 2% target. Price pressures in manufacturing and services sectors are picking up, however. A good gauge of markets' long-term inflation view indicates only moderate concern. The inflation breakeven rate on five-year Treasury Inflation Protected Securities suggests investors believe the rate will average less than 0.3 percentage points above the target for the next five years. The Fed's most recent Beige Book showed economic activity is weakening, while costs and prices are rising across the different regions - a combination policymakers do not want to see. Traders expect the Fed to make no rate change at its June 18 meeting. 3/ A RARE DISPUTE Washington and Beijing's trade spat has brought a familiar issue back to the surface. China has a stranglehold on global supply of so-called rare earths, critical ingredients in almost every high-tech device out there, from cars to cruise missiles. When China cuts off supply, everything withers. The auto industry is feeling it. Suzuki suspended production of the Swift subcompact, weeks after Ford did the same for its Explorer SUV. The White House has blasted Beijing for reneging on tariff rollbacks agreed in Geneva last month, but China is doing the same, lambasting the U.S. over revoked student visas and cutting-edge chip curbs. Chinese trade data on Monday will illuminate what's at stake, while inflation figures that day will show if Beijing's efforts to stoke domestic demand are working. U.S. and Chinese officials are due to meet in London on Monday to discuss trade and defuse the high-stakes dispute. 4/ A NICE BALANCE April trade data for the European Union on June 13 could offer a reasonably clean read on where things stood as Trump's on-off tariffs began to roll out. The EU is firmly in the U.S. president's crosshairs. Trump has said more than once the sole purpose of the EU is to "take advantage" of America, on the grounds that his country boasts a $200 billion trade deficit with the bloc in goods alone, making the EU its second-biggest goods trade partner behind China. EU sales of cars, steel, pharmaceuticals and luxury goods and apparel among other things are big business. Trump on May 23 said he would impose a 50% tariff on all EU imports, only to back down two days later by delaying the duties by a month after a "very nice call" with European Commission President Ursula von der Leyen. 5/ TAX OR OFFEND Britain, often a prime target for bond vigilantes that attack indebted governments for financial mismanagement, has been pushed into these traders' peripheral vision by U.S. budget concerns. The Labour government's first spending review on Wednesday could bring the UK back into the spotlight. Even if finance minister Rachel Reeves manages to slash departmental spending, this will merely highlight how few cost-cutting options she has left, Bank of America says. UK public debt has swelled, leaving Reeves minimal headroom to avoid breaking self-imposed fiscal rules and less able to resist tax hikes. Still, businesses and borrowers still scarred by the gilt market riot after then Prime Minister Liz Truss' 2022 mini-budget may prefer higher taxes if that lowers the odds of bond vigilantes showing up.
