Inflation increased in January, posing obstacle for Trump tariff plans
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(NEW YORK) — Consumer prices rose 3% in January compared to a year ago, ticking up from the previous month and posing an obstacle for Trump administration tariff policies that many economists expect to raise some prices, government data on Wednesday showed. The inflation reading came in higher than economists had predicted.
The fresh data extends a bout of resurgent inflation that stretches back to last year. Two weeks ago, the Federal Reserve opted to hold interest rates steady in part out of concern regarding the stubborn price increases.
Egg prices, a closely watched symbol of rising costs, soared 53% in January compared to a year ago. An avian flu has decimated the egg supply, lifting prices higher.
Beef prices climbed 5% and bacon prices jumped 6% in January compared to a year ago, data showed. By contrast, prices dropped over that same period for bread, rice and tomatoes.
Core inflation — a measure that strips out volatile food and energy prices — increased 3.3% over the year ending in December, ticking lower than the previous month, the data showed. That gauge also sped up from the previous month.
Inflation has slowed dramatically from a peak in June 2022, but price increases remain a percentage point higher than the Fed’s target rate.
Since Trump took office on Jan. 20, he has announced a series of tariffs, which economists say could push prices higher. Tariffs on steel and aluminum announced by Trump this week could raise prices for a set of products that includes refrigerators, beer and automobiles, experts previously told ABC News.
In a post on Truth Social on Wednesday morning, Trump appeared to fault former President Joe Biden for the uptick in inflation, writing: “BIDEN INFLATION UP!”
Biden served during more than half of the month of January, leaving office on Jan. 20. Trump, however, said during the presidential campaign earlier this year that he would bring down prices “starting on day one.”
This is a developing story. Please check back for updates.
(NEW YORK) — In a letter to shareholders, Warren Buffett revealed that he would be donating more than $1.1 billion of Berkshire Hathaway stock to four of his family’s foundations. In addition, he detailed plans for distributing his wealth after his death.
Buffett, the CEO and Chairman of Berkshire Hathaway, reflected in the letter released Monday on his life and how long he has lived.
“Father time always wins. But he can be fickle – indeed unfair and even cruel – sometimes ending life at birth or soon thereafter while, at other times, waiting a century or so before paying a visit,” Buffett said. “To date, I’ve been very lucky, but, before long, he will get around to me.”
Buffet, 94, said he and his late wife, Susan Buffett, always expected she would outlive him and be the one to distribute his fortune.
But when Susan died in 2004, with a fortune of $3 billion and 96% of that going to the foundation, she left $10 million to each of their three children.
That was the largest gift they had given them, Buffet said.
Buffett believes that parents should support their children but do so in a meaningful way.
“Our belief that hugely wealthy parents should leave their children enough so they can do anything but not enough that they can do nothing,” Buffett wrote in his letter to shareholders.
Buffett explains that he “never wished to create a dynasty or pursue any plan that extended beyond the children.” He also admits that while he and Susan encouraged the children to get involved in philanthropy, that the children weren’t ready to handle the wealth Berkshire stocks had generated in light of their mother’s death.
Since the 2006 lifetime pledge Buffett made and later expanded, the children have dramatically increased their philanthropic activities, Buffet said. And now Buffett is entrusting them fully.
“The children have now more than justified our hopes and, upon my death, will have full responsibility for gradually distributing all of my Berkshire holdings,” Buffet said. “These now account for 99 1⁄2% of my wealth.”
Buffett has described his wealth and age as “lucky” but he also sees a downside to it, he said.
“There is, however, a downside to my good fortune in avoiding his notice. The expected life span of my children has materially diminished since the 2006 pledge. They are now 71, 69 and 66.”
With his children getting older, the family has also designated three potential successors, Buffett said.
“Each is well known to my children and makes sense to all of us. They are also somewhat younger than my children,” Buffett said.
Buffett also reflects on his “lucky streak” dating back to 1930 when he was born as white male in the United States. He mentions his two sisters being promised by the 19th Amendment to be treated equally with males. And he admits to growing in a country that has not yet fulfilled its promises elsewhere.
“In 1930, however, I emerged in a country that hadn’t yet gotten around to fulfilling its earlier aspirations,” Buffett said. “Aided by Billie Jean King, Sandra Day O’Connor, Ruth Bader Ginsberg, and countless others, things began changing in the 1970s.”
Favored by male status, Buffet said he had confidence he would become rich one day. But he never expected it to be the way it is, he said.
“But in no way did I, or anyone else, dream of the fortunes that have become attainable in America during the last few decades,” Buffett said. “Billions became the new millions.”
(NEW YORK) — The stock market climbed to record highs in 2024, extending banner gains achieved the previous year.
The S&P 500 — the index that most people’s 401(k)’s track — climbed nearly 28% this year, as of Monday.
The tech-heavy Nasdaq leapt a staggering 34% over that period; while the Dow Jones Industrial Average climbed 16%.
Consecutive years of strong stock market performance have posed a quandary for forecasters: Will high stock prices scare off would-be investors in 2025, or will momentum push shares even higher?
Experts have attributed the rise of share prices this year to a set of favorable trends: Solid economic growth, enthusiasm about artificial intelligence and the long-awaited start of interest rate cuts at the Federal Reserve.
Those tail winds are expected to keep pushing stocks skyward in 2025, experts said, but they cautioned about more-than-usual uncertainty that could prevent further gains or even amplify them. The biggest unknown for stocks in 2025, they said: President-elect Donald Trump.
“As we close the books on 2024 and peer into 2025, perhaps the uncertainties this time are of a magnitude beyond the norm,” Kevin Gordon and Liz Ann Sonders, a pair of investment strategists at Charles Schwab, said last week. “Good luck figuring this one out.”
Good news abounded for the stock market this year, in part because the economy defied doomsayers.
The economy continued to grow at a solid clip in 2024, while inflation fell. That performance kept the U.S. on track for a “soft landing,” in which the economy averts a recession while inflation returns to normal.
Gross domestic product grew at a robust 2.8% annualized rate over three months ending in September, the most recent period for which data is available.
“U.S. strength remains undiminished,” Seema Shah, chief global strategist at Principal Asset Management, told ABC News in a statement.
Inflation has slowed dramatically from a peak of more than 9% in June 2022. A months-long stretch of progress earlier this year helped nudge the Federal Reserve toward its first interest rate cuts in four years.
In recent months, the Fed has cut its benchmark rate three-quarters of a percentage point, dialing back its fight against inflation and delivering some relief for borrowers saddled with high costs.
Over time, rate cuts ease the burden on borrowers for everything from home mortgages to credit cards to cars, making it cheaper to get a loan or refinance one. The cuts also boost company valuations, potentially helping fuel returns for stockholders.
The Fed is expected to continue cutting interest rates next year, though a recent bout of stubborn inflation could slow, or even pause, the lowering of rates, experts previously told ABC News.
“Markets expect gradual rate cuts next year, which would imply inflation stays under control, the job market hums along at an acceptable pace, stocks rise, and everybody is happy,” Callie Cox, chief market strategist at Ritholtz Wealth Management, said in a statement to ABC News.
“Reality isn’t that cut and dry, though,” Cox added.
Some analysts pointed to Trump’s policies as a major source of uncertainty for the nation’s economic performance and, in turn, the stock market.
Trump has vowed to cut taxes for individuals and corporations, which could spur economic growth and raise stock prices, some experts said. However, they added, Trump’s proposed tariffs could hurt some U.S. producers and retailers that depend on imported raw materials, and may cause a resurgence of inflation. As a result, some stocks could suffer.
“The most significant wild card on the table for 2025 will be the potential implementation of tariffs,” David Sekera, chief U.S. market strategist for Morningstar, said earlier this month.
Since 1990, there have been 12 years in which the S&P 500 has gained 20% or more, Cox said. The stock market crossed that threshold last year, and is almost certain to do so when 2024 comes to an end. It will be difficult for the stock market to achieve that feat for a third consecutive year, Cox added.
“If you’re expecting a repeat of 2024, you’re asking a lot of the market gods,” Cox said.
Still, the enticing possibility of another rally will draw investor interest as observers watch for any early signs of sputtering.
“The opportunities for investors are plenty, but so are the obstacles,” Shah said.
(NEW YORK) — Thousands of Starbucks baristas are set to walk off the job on Tuesday, expanding the dayslong holiday strike to 300 stores in dozens of cities and towns nationwide, according to the union Starbucks Workers United.
In all, 5,000 Starbucks employees will go on strike in more than 25 states on Tuesday, spanning from Maryland to Montana to California, Workers United said.
Workers in Columbus, Ohio, Cheyenne, Wyoming, Buffalo, New York, and a host of other locations are set to join the strikes, the union said.
The work stoppages on Christmas Eve mark the final wave of a five-day strike meant to disrupt Starbucks during one of the busiest times of the year for the coffeehouse giant.
“These strikes are an initial show of strength, and we’re just getting started,” Lauren Hollingsworth, a Starbucks barista in Ashland, Oregon, told ABC News in a statement.
Starbucks Workers United and Starbucks announced earlier this year that they would work on a “foundational framework” to reach a collective bargaining agreement for stores, something the union says has not come to fruition.
“We were ready to bring the foundational framework home this year, but Starbucks wasn’t,” Lynne Fox, President of Workers United, told ABC News in a statement.
The strike began on Friday and has escalated each day since. On Monday, about 60 stores were forced to close as result of work stoppages, the union said.
In response to ABC News’ request for comment, Starbucks Spokesperson Jay Go Guasch said the strikes had impacted a fraction of its U.S. stores.
“Only around 170 Starbucks stores did not open as planned. With over 10,000 company operated stores, 98% of our stores and over 200,000 green apron partners continuing to operate and serve customers during the holidays,” Go-Guasch said.
Sara Kelly, Starbucks’ executive vice president and chief partner officer, downplayed the impact of the strikes in a public letter to employees late Monday.
“The overwhelming majority of Starbucks stores across the country have opened as planned and are busy with customers enjoying the holidays,” Kelly said, noting that the company operates 10,000 stores and employs 200,000 people nationwide.
Anticipating the expansion of the strike on Tuesday, Kelly said work stoppages in hundreds of stores would cause “very limited impact to our overall operations.”
“The union chose to walk away from bargaining last week,” Kelly said. “We are ready to continue negotiations when the union comes back to the bargaining table.”
The union and the company remain far apart on the key issue of potential wage increases, according to statements from both sides about the other’s proposal.
Workers United told ABC News in a statement that Starbucks had proposed no immediate wage increases for most baristas and a guarantee of only 1.5% wage increases in future years.
Meanwhile, Starbucks said in a statement that the union had proposed an immediate increase in the minimum wage of hourly partners by 64%, as well as an overall 77% raise over the duration of a three-year contract. “This is not sustainable,” a Starbucks spokesperson told ABC News.
Starbucks United contests those figures as a disingenuous characterization of its proposal, the union told ABC News.
Baristas have unionized more than 100 Starbucks stores this year, expanding a union campaign that has spread to hundreds of stores across 45 states since an initial victory three years ago at a location in Buffalo, New York, the union said.
The union has filed hundreds of charges with the National Labor Relations Board alleging illegal anti-union activities carried out by Starbucks, including alleged bad-faith negotiations over a potential union contract setting terms at the unionized locations.
Starbucks has denied wrongdoing and faulted the union for breaking off negotiations. The company offers better pay and benefits than its competitors, Starbucks said.
