Category: Business

(NEW YORK) — With new tariffs taking effect Tuesday on furniture and lumber, an analysis released by Goldman Sachs finds American consumers are paying for more than half of the cost of the levies imposed by President Donald Trump.

In a research note to its clients, the global investment and banking giant said U.S. consumers will absorb 55% of tariff costs by the end of this year. American businesses would pay 22% of the costs, foreign exporters would absorb 18% and 5% would be evaded, according to the Goldman Sachs analysis.

Consumers could end up paying 70% of the cost by the end of next year, the report said.

“At the moment, however, U.S. businesses are likely bearing a larger share of the costs because some tariffs have just gone into effect and it takes time to raise prices on consumers and negotiate lower import prices with foreign suppliers,” the analysis adds.

In a statement to ABC News, White House spokesperson Kush Desai said, “Americans may face a transition period from tariffs,” but insisted “the cost of tariffs will ultimately be borne by foreign exporters.”

“Companies are already shifting and diversifying their supply chains in response to tariffs, including by onshoring production to the United States,” Desai said. “Americans can rest assured that the Administration will continue to deliver economic relief from Joe Biden’s inflation crisis while laying the groundwork for a long-term restoration of American Greatness.”

The Yale Budget Lab reported on Sept. 26 that U.S. consumers face an overall average effective tariff rate of 17.9% – the highest since 1934.

In August, Trump blasted Goldman Sachs’ CEO David Solomon and the firm’s economists after they put out a report saying consumers will absorb tariff costs.

The new Goldman analysis, which was released on Sunday, does not take into account Trump’s latest threat to impose additional 100% tariffs on Chinese imports set to take effect on Nov. 1.

And on Tuesday, new tariffs kick in at midnight. Timber and lumber imports will face an additional 10% tariff.

Home-building costs have also been soaring and are expected to climb higher with the new tariffs on lumber. A UBS report said the new tariffs on wood products could add another $1,000 to the average cost of building a home, on top of the $8,000 in tariff costs home builders have already seen this year.

Kitchen cabinets and upholstered furniture will face new 25% tariffs. Homebuilders and some furniture companies have warned that those higher costs could mean higher prices for consumers.

Other domestic furniture makers have celebrated the new tariffs.

“These factories are the most likely to see increased demand for their domestically-produced products, because imported upholstered furniture that was previously in the same price range now will be subject to the new tariffs,” the American Home Furnishings Alliance said in a statement to ABC News.

The U.S. imported $25.5 billion in furniture in 2024, up 7% from the previous year, according to trade outlet Furniture Today. Vietnam and China accounted for roughly 60% of the imports, the report found.

In recent months, Trump has placed country-specific tariffs on the top furniture exporters. Products from Vietnam face a 20% tariff, for instance, while Chinese imports encounter a 30% levy.

The overall price of furniture has gone up 4.7% since August 2024, according to the Bureau of Labor Statistics. Prices for living room and dining room furniture have climbed 9.5%, according to the Bureau of Labor Statistics.

Furniture prices soared 1.4% over three months ending in June, when compared to the previous three-month period, the government’s personal consumption expenditure index shows.

“This is a big jump,” Jason Miller, a professor of supply chain management at Michigan State University, told ABC News in an August interview, noting the index had largely declined between the mid-1990s and the mid-2010s. “It’s difficult to see many positives from a consumer standpoint at the moment.”

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(NEW YORK) — Consumer sentiment soured in October as a government shutdown threatens to weaken a wobbly economy beset by an uptick in inflation and a sharp slowdown of hiring, fresh data on Friday showed. The reading marked a decrease from the previous month but it came in higher than economists expected.

Shopper attitudes have worsened for three consecutive months, resuming a decline that took hold after President Donald Trump took office, University of Michigan Survey data showed.

At its low point this year, consumer sentiment fell close to its worst level since an acute bout of inflation three years ago. The measure remains well below where it stood in December, before Trump took office.

Year-ahead inflation expectations ticked down from 4.7% in September to 4.6% in October, the data showed. The outcome anticipated by respondents would put inflation well above its current level of 2.9%. Long-run inflation expectations held steady from the previous month, data showed.

The data on consumer sentiment is likely to garner more attention than usual, since the government shutdown has halted closely watched releases from the federal government, including monthly jobs and inflation reports.

Consumer spending, which accounts for about two-thirds of U.S. economic activity, is a key bellwether for the outlook of the nation’s economy.

A government shutdown typically risks only modest damage for the economy but it can cause a marked decline in consumer sentiment, threatening a later drop in consumer spending, some experts previously told ABC News.

Consumer sentiment fell more than 7 points from December 2018 to January 2019, coinciding with the most recent 35-day government shutdown, according to a Committee for Responsible Federal Budget analysis of University of Michigan survey data. A souring of consumer sentiment, albeit limited, occurred over each of the three most recent shutdowns that preceded 2018.

The government shutdown, which entered its 10th day on Friday, has shown little sign of resolution. The Senate has rejected dueling funding proposals from Democrats and Republicans in seven separate votes.

The shutdown has coincided with a delicate moment for the nation’s economy, as a hiring slowdown stokes recession fears and inflation proves difficult to fully contain.

Federal Reserve Chair Jerome Powell said last month that policymakers face a “challenging situation” while they attempt to navigate the economy through a “turbulent period.”

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(WASHINGTON) — The government shutdown halted the release of key economic data, choking off the flow of information as some experts warn the economy may be slipping toward a recession, some economists told ABC News.

A federal agency postponed the release of a monthly jobs report on Friday, leaving observers in the dark about the status of a sharp hiring slowdown. If the government shutdown stretches into next week, fresh inflation figures will go unreported, masking price levels in the midst of rising costs.

Jim Reid, a research strategist at Deutsche Bank, in a memo to clients on Monday, lamented the “data vacuum.”

The absence of government data heightens uncertainty at a fraught moment for the U.S. economy, potentially hamstringing responses from consumers, businesses and policymakers, some economists told ABC News. The extent of possible shutdown-induced economic damage could also go undetected, they added.

“It adds to risk and uncertainty at a most inopportune time,” Mark Hamrick, senior economic analyst at Bankrate, told ABC News. “Now we’re all essentially looking through a fog.”

The government shutdown entered its sixth day on Monday. The Senate has rejected dueling funding proposals from Democrats and Republicans in four separate votes, most recently on Friday.

The U.S. Department of Labor last week said some data would not be released during the shutdown, including closely watched monthly jobs and inflation reports. The Bureau of Economic Analysis and the Census Bureau — two important sources of additional data — also said they will pause scheduled releases for the duration of a shutdown.

The loss of data has arrived at an uneasy period for the economy. In recent months, the economy has suffered a sharp hiring slowdown alongside a rise in inflation, setting the conditions for what economists call “stagflation.”

The downshift in hiring has proven especially worrisome, stoking concern among some economists about a possible recession.

A jobs report last month showed a sharp decrease in hiring in August, extending a lackluster period for the labor market. Meanwhile, a revision of previous hiring estimates days later revealed the U.S. economy added far fewer jobs in 2024 and early 2025 than previously estimated, deepening concern.

“The job market is the primary area of concern for the U.S. economy,” Hamrick said, adding that the hiring cooldown suggests a 40% risk of a recession over the next 12 months. “That’s an elevated recession risk.”

Without up-to-date government data, businesses may be hesitant to take actions such as major expansions or hiring sprees, while consumers could seek to avoid big-ticket purchases, some experts said.

“In general, the absence of economic data makes the economic trajectory more uncertain as it forces investors and business executives to be more cautious,” Gregory Daco, chief economist at accounting firm EY, told ABC News.

The Federal Reserve is set to announce its next interest rate decision on Oct. 29, following a meeting between members of the FOMC. If the government shutdown remains in place ahead of that meeting, it could leave Fed officials ill-equipped to set the best policy, Hamrick said.

“This is an exceptionally difficult period to read where inflation is going and where growth is going,” Kenneth Rogoff, a professor of economics at Harvard University, told ABC News.

To be sure, an interruption of data releases could leave investors unaware of possible improvement in the economy. Some experts noted the continued availability of private sector data sources, though observers typically view such data as inferior to government statistics.

A government shutdown typically risks only modest damage to the U.S. economy, stemming mainly from furloughed public workers, who temporarily lose out on pay and put a dent in U.S. consumer spending.

Each week of a potential government shutdown would reduce annualized real gross domestic product growth in the quarter by about 0.1%, Mark Zandi, chief economist at Moody’s Analytics, told ABC News in a statement.

For reference, the economy grew by an average annualized rate of 1.6% over the first half of 2025, meaning it would take several weeks of a government shutdown for notable damage to be incurred.

An absence of economic data could make it more difficult for observers to identify the economic impact of the shutdown, some experts said.

“Typically, shutdowns are not major events, but nothing is typical about the current environment,” Rogoff said.

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(NEW YORK) — Stocks closed higher on Wednesday, just hours after a government shutdown began, defying fears among some observers about the economic risk posed by a potentially prolonged impasse.

The Dow Jones Industrial Average jumped 43 points, or 0.09%, while the S&P 500 climbed 0.34%. The tech-heavy Nasdaq increased 0.42%.

The Dow and S&P 500 each closed at record highs on Wednesday.

The uptick extended a period of resilient performance for markets, which shrugged off the looming impasse a day earlier. Each of the major indexes ticked up on Tuesday.

The shutdown coincides with a rough patch for the U.S. economy, at least by some key metrics. A recent hiring slowdown has stoked recession fears, while inflation has proven difficult to fully contain.

Fresh hiring data on Wednesday morning deepened concern about the labor market. Private sector employment declined by 32,000 jobs in September, registering well short of economists’ expectations of 45,000 jobs added, according to data firm ADP research.

A government shutdown typically risks only modest damage for the U.S. economy, stemming mainly from furloughed public workers, who temporarily lose out on pay and put a dent in U.S. consumer spending, analysts previously told ABC News.

The impact of a shutdown could be more significant this time around, however, since the wobbly economy may strain under the weight of a potentially prolonged interruption, while a halt in the release of key economic data could make it more difficult for policymakers to steer the economy, they added.

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(NEW YORK) — Stocks ticked higher in midday trading on Wednesday, just hours after a government shutdown began, defying fears among some observers about the economic risk posed by a potentially prolonged impasse.

The Dow Jones Industrial Average jumped 71 points, or 0.15%, while the S&P 500 jumped 0.1%. The tech-heavy Nasdaq increased 0.1%.

The uptick extended a period of resilient performance for markets, which shrugged off the looming impasse a day earlier. Each of the major indexes ticked up on Tuesday, including a record high for the Dow.

The shutdown coincides with a rough patch for the U.S. economy, at least by some key metrics. A recent hiring slowdown has stoked recession fears, while inflation has proven difficult to fully contain.

Fresh hiring data on Wednesday morning deepened concern about the labor market. Private sector employment declined by 32,000 jobs in September, registering well short of economists’ expectations of 45,000 jobs added, according to data firm ADP research.

A government shutdown typically risks only modest damage for the U.S. economy, stemming mainly from furloughed public workers, who temporarily lose out on pay and put a dent in U.S. consumer spending, analysts previously told ABC News.

The impact of a shutdown could be more significant this time around, however, since the wobbly economy may strain under the weight of a potentially prolonged interruption, while a halt in the release of key economic data could make it more difficult for policymakers to steer the economy, they added.

This is a developing story. Please check back for updates.

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(NEW YORK) — Stocks dropped in early trading on Wednesday, just hours after a government shutdown began, shuttering some government services and complicating a delicate moment for the nation’s economy.

The Dow Jones Industrial Average fell 87 points, or 0.1%, while the S&P 500 slid 0.4%. The tech-heavy Nasdaq declined 0.6%.

The selloff marked the first sign of shutdown-related strain for markets, which shrugged off the looming impasse a day earlier. Each of the major indexes ticked up on Tuesday, including a record high for the Dow.

The shutdown coincides with a rough patch for the U.S. economy, at least by some key metrics. A recent hiring slowdown has stoked recession fears, while inflation has proven difficult to fully contain.

Fresh hiring data on Wednesday morning deepened concern about the labor market. Private sector employment declined by 32,000 jobs in September, registering well short of economists’ expectations of 45,000 jobs added, according to data firm ADP research.

A government shutdown typically risks only modest damage for the U.S. economy, stemming mainly from furloughed public workers, who temporarily lose out on pay and put a dent in U.S. consumer spending, analysts previously told ABC News.

The impact of a shutdown could be more significant this time around, however, since the wobbly economy may strain under the weight of a potentially prolonged interruption, while a halt in the release of key economic data could make it more difficult for policymakers to steer the economy, they added.

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(WASHINGTON) — President Donald Trump on Thursday announced an agreement that will pave the way for social media giant TikTok to come under the control of a group of U.S. investors.

The move comes months after a ban on the China-based app was set to take effect at the outset of this year. Instead, Trump delayed the ban multiple times and appears poised to secure the popular platform for domestic ownership.

Scrutiny has centered on the fate of TikTok’s algorithm, a proprietary formula that fuels the attention-grabbing social media platform. Vice President J.D. Vance, who stood alongside Trump during the Oval Office announcement, said the agreement would bring the algorithm “under the control of American investors,” adding that further details would be unveiled over the coming days.

“This deal really does mean Americans can use TikTok but actually use it with more confidence than they had in the past because their data is secure and it won’t be used as a propaganda weapon like it has in the past,” Vance said.

The U.S.-based version of TikTok will be valued at $14 billion, Vance said.

The agreement received approval from Chinese President Xi Jinping, Trump said. As of Thursday afternoon, China had not publicly confirmed the terms issued by the Trump administration.

Trump said tech giant Oracle would be among the U.S. investors in TikTok, but he did not disclose the full roster of new owners.

Congress passed the ban last spring with overwhelming bipartisan support, granting TikTok a 270-day window to cut its ties with China-based parent company ByteDance or face a ban.

Instead of initiating a sale, TikTok pursued a legal challenge on First Amendment grounds that failed in the Supreme Court.

The unanimous ruling from the nation’s highest court found merit in national security concerns regarding potential user data collection or content manipulation that the Chinese government might undertake.

The app became temporarily unavailable in January, before the Trump administration assured app store owners Google and Apple that law enforcement would not pursue potential violations of the law.

This is a developing story. Please check back for updates.

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(NEW YORK) — The U.S. economy expanded significantly more than initially estimated over a recent three-month period, suggesting robust growth despite uncertainty set off by President Donald Trump’s tariff policy, federal government data on Thursday showed.

The U.S. economy grew at an annualized rate of 3.8% in the second quarter in the government’s final estimate, besting a 3.3% rate issued in its second estimate and far exceeding a 3% initial estimate.

The figure marked a sharp acceleration from an annualized contraction of -0.5% over the first three months of 2025. Still, taken together, the data indicates an economic slowdown over the first half of 2025.

A boost in consumer spending helped propel the economic surge over three months ending in June, the U.S. Commerce Department said. Consumer spending, which accounts for about two-thirds of U.S. economic activity, is a key bellwether for the outlook of the nation’s economy.

To some degree, however, Trump’s levies have blurred the GDP findings.

The government’s GDP formula subtracts imports in an effort to exclude foreign production from the calculation of total goods and services. Changes in the reading on this account reveal neither underlying economic weakness nor strength.

The measure of the GDP fell over the first three months of the year, largely due to a surge of imports as firms stockpiled inventory to avoid far-reaching tariffs. Conversely, a drop-off in imports over the second quarter may have inflated the second-quarter GDP figure.

The GDP growth “primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP,” the U.S. Commerce Department said on Thursday.

The fresh data arrives at a wobbly moment for the nation’s economy.

A jobs report earlier this month showed a sharp decrease in hiring in August, extending a lackluster period for the labor market. Meanwhile, a revision of previous hiring estimates days later revealed the U.S. economy added far fewer jobs in 2024 and early 2025 than previously estimated, deepening concern about the health of the U.S. job market.

The weak jobs data has raised alarm among some analysts who told ABC News the U.S. economy may be slipping toward a recession, though the economy has largely averted the type of widespread job losses that often accompany a downturn.

The Federal Reserve cut interest rates last week in an effort to boost hiring. The Federal Open Market Committee (FOMC), a policymaking body at the Fed, projected two additional quarter-point rate cuts over the remainder of 2025.

Five meetings and nine months had elapsed since the Fed last cut interest rates.

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(NEW YORK) — Coffee giant Starbucks will lay off workers and close stores as part of a $1 billion restructuring plan, CEO Brian Niccol said in a memo to employees on Thursday.

The company will slash 900 employees at its stores in North America, Niccol said. The store closures will amount to a roughly 1% decline in the total number of Starbucks locations in North America in this fiscal year, after accounting for some store openings, Niccol added.

“While we’re making good progress, there is much more to do to build a better, stronger, and more resilient Starbucks,” Niccol said.

Shares of Starbucks ticked slightly higher in pre-market trading after the announcement early Thursday morning.

Starbucks weathered sluggish sales in recent years as customers weathered a years-long bout of elevated inflation, analysts previously told ABC News.

This is a developing story. Please check back for updates.

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(WASHINGTON) — Federal Reserve Chair Jerome Powell warned a recent uptick of inflation, alongside a hiring slowdown, poses a “challenging situation” for central bankers as they aim to steer the U.S. economy through a “turbulent period.”

The Fed, which opted to cut interest rates last week, is guided by a dual mandate to keep inflation under control and maximize employment. Speaking at the Greater Providence Chamber of Commerce, in Providence, Rhode Island, on Tuesday, Powell said a sharp cooldown of hiring over the summer had shifted the balance of risks toward greater concern over the labor market.

“The downside risks to employment have risen,” Powell said.

The remarks came days after the Fed cut interest rates for the first time this year in an effort to boost hiring. ​​The Federal Open Market Committee (FOMC), a policymaking body at the Fed, projected two additional quarter-point rate cuts over the remainder of 2025.

Still, Powell voiced concern about the trajectory for prices, saying “uncertainty around the path of inflation remains high.”

“Two-sided risk mean there is no-risk free path,” Powell added.

The central bank last week delivered a policy long-sought by President Donald Trump, though the size of the rate cut fell short of a larger reduction preferred by Trump.

The announcement marked a flashpoint in the monthslong pressure campaign directed at the Fed by Trump.

In recent weeks, Trump has moved to fire one member of the Fed’s board of governors and secure Senate confirmation for another. Both officials were among the 12 policymakers who cast votes on the interest-rate decision, though their status remained uncertain days before the Fed meeting.

The race to reshape the Fed comes after Trump railed for months against the central bank and Powell for declining to heed his call for lower interest rates. Last week, Powell said the Fed remains “strongly committed to maintaining our independence.”

Stephen Miran, a top White House economic advisor who joined the Fed board last week, cast the lone dissenting vote. Miran voted in favor of a larger half-point rate cut.

Trump recently moved to fire board member Lisa Cook, who sued Trump over her attempted ouster, saying the decision violated her legal protections as an employee at the independent federal agency. Trump said he removed Cook over mortgage fraud allegations against her, which Cook has denied.

Last week, a federal judge issued a preliminary injunction requiring the Fed to let Cook continue serving in her role as a governor of the Federal Reserve System as her lawsuit moves through the courts. The Trump administration appealed the ruling to the Supreme Court.

In recent months, the economy has suffered a sharp hiring slowdown alongside a rise of inflation, setting the conditions for what economists call “stagflation.”

The economic conditions have put Fed policymakers in a bind. If the Fed raises interest rates as a means of protecting against tariff-induced inflation, it risks tipping the economy into a downturn. On the other hand, if the Fed lowers rates to stimulate the economy in the face of a hiring slowdown, it threatens to boost spending and worsen inflation.

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