Traders work on the floor of the New York Stock Exchange (NYSE) on Nov. 7, 2025 in New York City. (Spencer Platt/Getty Images)
(NEW YORK) — Stocks rose in early trading on Monday after the Senate voted hours earlier to advance a potential deal on the government shutdown, which has weighed on economic output and cast uncertainty over markets for well over a month.
The Dow Jones Industrial Average jumped 240 points, or 0.5%, while the S&P 500 climbed 1%. The tech-heavy Nasdaq increased 1.6%.
Lawmakers in a rare Sunday session cleared a key hurdle toward potentially reopening the government by advancing a short-term funding bill by a razor-thin vote of 60-40, just meeting the threshold for it to pass.
Stocks rebounded on Monday after major indices registered a loss over the previous week, a rare blemish that hadn’t happened in four weeks prior.
The economy has shown some signs of strain during the shutdown.
The Senate is scheduled on Monday to reconvene at 11 a.m. ET to continue working toward ending the federal government shutdown, which is now in its 41st day.
There are still some procedural measures necessary for the Senate to pass a deal on the government shutdown and send it for potential approval in the Republican-controlled House.
A potential resolution of the government shutdown would restore jobs and backpay for thousands of federal employees, which is expected to provide a jolt for the U.S. economy.
The federal government would also resume the collection and release of key government day in the event of shutdown deal, allowing investors to observe monthly inflation and hiring reports.
The Federal Reserve is set to issue a decision on the level of interest rates early next month. The central bank has slashed interest rates a quarter of a percentage point at each of its last two meetings.
Tesla shareholders awarded CEO Elon Musk a pay package on Thursday that could grant the tech entrepreneur nearly $1 trillion in compensation over the next decade.
The pay package would make Musk the best-compensated CEO ever recorded. According to a securities filing in September, Musk would rake in roughly $900 billion over the duration of the agreement.
The full compensation would only be delivered if Musk vaults the company from its present value of $1.1 trillion to $8.5 trillion, a figure that exceeds the current combined market values of Meta, Microsoft and Google-parent Alphabet, the filing says.
The compensation package also includes a set of production goals, including one million Robotaxis in commercial operation and the delivery of one million humanoid robots over the next 10 years, according to the securities filing.
Before Tesla released the results of the shareholder vote, some major shareholders said they had voted down the proposal. Norway’s $2 trillion sovereign wealth fund said Tuesday that it had voted against the pay package, raising concerns about its scale and potential risks.
“While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk consistent with our views on executive compensation,” Norges Bank Investment Management, the manager of the fund, said in a statement.
(NEW YORK) — Musk, considered the world’s richest person, currently boasts a net worth of about $504 billion, according to Forbes. If he were to receive the full pay package, Musk would become the world’s first-ever trillionaire.
The pay package could also increase Musk’s ownership stake in Tesla to as much as 29%. Musk has long pursued a larger ownership stake.
“We are at a pivotal juncture in Tesla’s history, and the proposals the Special Committee has carefully designed and the Board has put forward will help determine Tesla’s future,” the company’s website said earlier this week. “If you believe, like us, that Elon is the CEO that can make our ambitious vision a reality, vote NOW.”
Online voting among shareholders closed at 11:59 a.m. ET on Wednesday.
The company’s new compensation package arrives as Musk’s previous payment plan remains in legal limbo.
Last year, a Delaware judge twice struck down a $50 billion pay package for Musk put forward by the company in 2018.
Chancellor Kathaleen McCormick of the Court of Chancery, which litigates corporate governance litigation for companies incorporated in Delaware, initially declared that the negotiations surrounding the package had been inappropriate, due to a lack of independence among board members and problematic influence by Musk over those negotiations.
In a second ruling, McCormick decided that an additional shareholder vote on the compensation package — even if made with full knowledge of the initial problems surrounding the negotiation of the agreement — could not undo those problems. Musk has appealed the ruling.
Tesla announced a 12% jump in revenue over the third quarter in October, snapping a streak of two consecutive quarters of falling sales.
Still, earnings fell short of analysts’ expectations, causing a drop in the stock price. Overall, shares of Tesla have climbed about 16% this year, putting them roughly in line with a jump in the S&P 500 over that period.
Musk’s work as a “special government employee” with the Trump administration, which ended in May, set off demonstrations at Tesla dealerships worldwide in protest of his effort to slash government spending as leader of the Department of Government Efficiency.
On an earnings call in June, Musk fielded a question about his control of the company, which a Morgan Stanley analyst said was 13%.
“As I mentioned before, I think my control of Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” Musk said in jest.
(NEW YORK) — Exercise equipment company Peloton is voluntarily recalling approximately 833,000 exercise bikes due to a potential issue specific to the bike’s seat post, the company announced Thursday.
According to the company announcement, the recall affects “certain Original Series Bike+ models manufactured from December 2019 through July 2022 for sale in the U.S. and Canada.”
“The Original Series Bike+ seat post can break during use, posing a potential fall and injury risk to consumers,” the company stated.
Peloton said it has so far received three reports of Original Series Bike+ seat posts breaking “out of approximately 833,000 units sold in the U.S.”
“Peloton has received no reports of a seat post breaking, out of 44,800 units sold in Canada,” it added.
According to a recall announcement on the U.S. Consumer Product Safety Commission website, the affected bikes were sold at Peloton and Dick’s Sporting Goods stores nationwide, as well as online at Peloton, Dick’s, Amazon and eBay from January 2020 to April 2025. The bikes retailed for approximately $2,495, according to the agency.
The CPSC also stated that of the three broken seat post reports Peloton received, two included “reports of injuries due to a fall.”
Peloton said Thursday that impacted users should stop using the recalled bikes and contact Peloton for a replacement seat post.
The replacement seat post is a CPSC-approved solution, a Peloton spokesperson told ABC News.
Both the company and the CPSC noted the new seat posts can be self-installed.
The affected bikes bear the model number PL02 and serial numbers beginning with the letter “T,” according to Peloton. The serial number can be found “inside the front fork, behind the front fork, or behind the flywheel,” the company said.
In a statement to ABC News, the Peloton spokesperson said, “The integrity of our products and our Members’ well-being are our top priorities. We are taking this opportunity to make replacement seat posts available to all affected Bike+ users and we encourage them to contact us to receive the redesigned seat post as soon as possible.”
Peloton previously voluntarily recalled over 2 million bikes, Bike Model PL01, in 2023, warning that the bike seat post assembly could break and cause users to fall.
(NEW YORK) — Travelers with plans to fly amid the government shutdown are searching for refund policies related to flight delays or cancellations, as well as information on what resources are available to them if a booking is significantly impacted by the continued ripple effects and possible airspace closures.
Here’s what travelers facing potential snafus need to know in order to rebook or get a refund with ease.
Refund policies for flight delays or cancellations
The Department of Transportation set out new rules regarding refunds last year, which are required by law for purchased airline tickets and fees for related services, making them automatic, prompt, in the form of the original payment and for the full amount.
According to the policy, travelers also have the option to accept alternative arrangements or travel credits if their original travel is impacted.
“If you chose to take a significantly delayed/changed flight or an alternative flight offered by the airline, you are not entitled to a refund under DOT rules,” the department’s website notes.
Canceled flights
A ticketed passenger is “entitled to a refund if the airline cancelled a flight, regardless of the reason, and the consumer chooses not to travel,” the DOT website states.
Experts say travel insurance is crucial: Here’s how it actually works
Clear disruption definitions
The DOT website currently states that consumers are also “entitled to a refund if the airline significantly delays a flight or significantly changes a flight and the consumer chooses not to travel.”
“Significant disruptions” are clearly defined across all airlines as a delay of three hours or more for domestic flights and six hours or more for international flights.
Previously, the duration that constituted a significant delay varied across most airlines. Some considered 90 minutes to be significant, while others considered it to be upward of four hours.
Baggage delay refunds
If a bag is delayed for more than 12 hours (or 15-30 hours for international flights), travelers are eligible for refunds on bag fees.
“To calculate how many hours your bag has been delayed, use the time you were given the opportunity to deplane from a flight at your final destination airport as the beginning of the delay and the time you picked up the bag from the arrival airport or the bag was delivered to a location that you and the airline have agreed on as the end of the delay,” the DOT website states.
In order to receive the baggage fee refund, passengers must file a “mishandled baggage report” with their airline, the agency states.
Refunds for unfulfilled ancillary services
If airlines don’t deliver on ancillary services such as Wi-Fi or lounge access, travelers can request refunds for those services.
Airlines are required to provide live customer service communication channels around the clock, whether through live chat or phone support.
Department of Transportation response to travel impacts amid shutdown Transportation Secretary Sean Duffy said Tuesday that his department might be forced to shut down airspace in certain parts of the country if the government shutdown, now in its 35th day, continues into next week.
“You will see mass flight delays. You’ll see mass cancelations, and you may see us close certain parts of the airspace, because we just cannot manage it because we don’t have the air traffic controllers,” he said.
Air traffic controllers are considered essential workers and are exempt from being furloughed during the shutdown. More than 13,000 air traffic controllers are expected to work without pay for the duration of this current shutdown, according to the DOT.
The agency has said it will continue to share operational updates amid the federal shutdown, despite the lapse in funding. Airport updates, including information on delays, closures and ground stops, can be found on the agency’s website.
(WASHINGTON) –The Federal Reserve cut its benchmark interest rate a quarter of a percentage point on Wednesday, opting for its second interest rate cut this year in an effort to jumpstart the flagging labor market.
The widely expected move delivers a lowering of interest rates sought by President Donald Trump, though the size of the cut falls short of the major drawdown called for repeatedly by the president.
The policy marks the first interest rate adjustment since the outset of a weekslong government shutdown that threatens to cool economic activity, all the while sharply restricting the release of gold-standard federal data prized by Fed policymakers.
In a rare exception, the U.S. government issued an inflation report last week showing a continued acceleration of price increases, which may complicate the Fed’s attempt to revive the labor market.
Inflation has picked up in recent months while hiring has slowed, posing a risk of an economic double-whammy known as “stagflation.”
Those economic conditions have put the Federal Reserve in a bind, since the central bank must balance a dual mandate to keep inflation under control and maximize employment.
“Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months,” the Federal Open Market Committee (FOMC), a policymaking body at the Fed, said in a statement on Wednesday.
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.
Last month, the Fed cut its benchmark interest rate a quarter of a percentage point, opting for its first interest rate cut this year. The federal funds rate stands between 3.75% and 4%, preserving much of a sharp increase imposed in response to a pandemic-era bout of inflation.
Last month, the Federal Open Market Committee (FOMC), a policymaking body at the Fed, projected two additional quarter-point rate cuts over the remainder of the year. By contrast, Trump has called for rate cuts totaling as much as 3 percentage points.
Trump has carried out a pressure campaign at the Fed with little precedent.
In recent months, Trump 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 last month’s interest-rate decision, though their status remained uncertain days before the Fed meeting. They both stand poised to cast votes again on Wednesday.
Stephen Miran, a top White House economic advisor who joined the Fed last month, cast the lone vote in favor of a larger half-point rate cut.
Trump attempted 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.
Federal law allows the president to remove a member of the Fed board “for cause,” though no president has attempted such a removal in the 112-year history of the central bank.
Last month, 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.
(WASHINGTON) — The Federal Reserve on Wednesday will set the level of its benchmark interest rate, adjusting a major policy lever for the first time since a government shutdown sharply restricted the release of gold-standard federal data about the economy.
In a rare exception, the U.S. government issued an inflation report last week showing a continued acceleration of price increases, which may complicate the Fed’s effort to revive a flagging labor market.
In recent months, inflation has picked up while hiring has slowed, posing a risk of an economic double-whammy known as “stagflation.”
The economic conditions have put the Federal Reserve 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.
Last month, the Fed cut its benchmark interest rate a quarter of a percentage point, opting for its first interest rate cut this year in an effort to revive the labor market. The federal funds rate stands between 4% and 4.25%, preserving much of a sharp increase imposed in response to a pandemic-era bout of inflation.
Policymakers are widely expected to make an additional quarter-point cut on Wednesday, according to CME FedWatch Tool, a measure of market sentiment.
“It’s a challenging situation when our goals are in tension like this,” Powell said last month, but he added that the balance of risks had shifted toward greater concern over sluggish hiring.
The posture delivers a policy shift long-sought by President Donald Trump, though the size of the anticipated rate cut will all but certainly fall short of Trump’s desired outcome.
Last month, the Federal Open Market Committee (FOMC), a policymaking body at the Fed, projected two additional quarter-point rate cuts over the remainder of the year. By contrast, Trump has called for rate cuts totaling as much as 3 percentage points.
Trump has carried out a pressure campaign at the Fed with little precedent.
In recent months, Trump 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 last month’s interest-rate decision, though their status remained uncertain days before the Fed meeting. They both stand poised to cast votes again on Wednesday.
Stephen Miran, a top White House economic advisor who joined the Fed last month, cast the lone vote in favor of a larger half-point rate cut.
Trump attempted 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.
Federal law allows the president to remove a member of the Fed board “for cause,” though no president has attempted such a removal in the 112-year history of the central bank.
Last month, 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.
Amazon CEO Andy Jassy speaks during a keynote address at AWS re:Invent 2024, a conference hosted by Amazon Web Services, at The Venetian Las Vegas, Dec. 3, 2024, in Las Vegas. (Noah Berger/Getty Images)
(NEW YORK) — Amazon is set to lay off thousands of corporate workers, despite billions in profits and lucrative lines of business spanning from e-commerce to cloud computing. The reason is artificial intelligence, the company said in a memo to employees on Tuesday.
“Some may ask why we’re reducing roles when the company is performing well,” wrote Beth Galetti, Senior Vice President of People Experience and Technology at Amazon.
“What we need to remember is that the world is changing quickly. This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before,” Galetti added.
The extensive job cuts at a high-profile tech giant mark the latest in a series of layoffs top executives have attributed to AI, citing efficiency gains and shifting company priorities, some experts told ABC News.
Such job losses underscore the threat posed by AI, especially for some white-collar corporate positions, but the ultimate business impact of the technology remains uncertain and other factors like a slowing economy may be to blame for some of the corporate downsizing, they added.
“This is a wake-up call. And if Amazon does it, other companies might do it too,” Harry Holzer, a professor of public policy at Georgetown University and a former chief economist at the U.S. Department of Labor, told ABC News.
But, he added: “AI will affect a lot of different workers and businesses in ways we can’t anticipate. We have to keep monitoring it and help them adapt when changes occur.”
The fresh round of layoffs at Amazon follows other high-profile job cuts attributed to AI. Software company Salesforce cut 4,000 customer service jobs in September, just months after the company said AI could perform up to 50% of its work. Airline Lufthansa slashed 4,000 positions that same month, citing the “increased use of artificial intelligence.”
Online learning company Chegg said on Monday it had cut 45% of its global workforce — which amounts to 388 jobs — because new AI tools had significantly reduced web traffic previously generated by Google searches. Chegg slashed employees as it made its own investment in AI in an effort to deliver services with a “substantially lower cost structure,” the company said.
The World Economic Forum this year surveyed 1,000 large companies worldwide, estimating 92 million jobs lost over the next five years as a result of AI adoption, but anticipating the creation of 170 million jobs.
The AI-related layoffs at Amazon and some other firms reflect a “hollowing out of middle-skilled workers,” Lynn Wu, a professor of operations, information and decisions at the University of Pennsylvania, told ABC News.
“Amazon is not cutting warehouse workers. Robots can’t do what hands do yet,” Wu said. “And very high-skill workers — people developing robots and building AI — are still in high demand.”
The fresh round of layoffs affect a fraction of Amazon’s worldwide workforce, which amounted to 1.56 million people at the end of last year.
Amazon CEO Andy Jassy said in June that the company plans to revamp its positions as it adopts AI, telling employees in a memo that Amazon would need “fewer people doing some of the jobs that are being done today, and more people doing other types of jobs.”
Amazon said on Tuesday that it plans to “continue hiring in key strategic areas while also finding additional places we can remove layers, increase ownership, and realize efficiency gains.”
United Parcel Service (UPS) said Tuesday the company had cut 14,000 management positions this year, while slashing an additional 34,000 operational roles.
UPS sought to “create a more efficient operating model that was more responsive to market dynamics,” the company said, but its announcement did not mention AI.
To be sure, some experts downplayed the impact of AI, saying the productivity benefits of the technology remain uncertain and recent layoffs may owe to a host of other factors, including a wider economic slowdown. Many economists expect AI to add new job opportunities, even as it eliminates others, they noted.
In August, a report issued by MIT’s Media Lab found 95% of corporate AI initiatives generate zero return. The study examined more than 300 publicly disclosed AI ventures, drawing on over 150 surveys of executives.
“AI is an extremely useful, transformative technology, but I think we still need to work on it more to realize its full effects,” Isabella Loaiza, a researcher at MIT who studies AI and the workforce, told ABC News. “The role AI is playing in job losses is perhaps being overstated.”
“Companies really, really want to make AI work,” Loaiza added, but the ultimate implications of their initiatives for the labor market remains unclear. “It’s hard to know,” she added.
(NEW YORK) — Prices for home appliances, cars and auto parts could be impacted by President Donald Trump’s decision overnight to end trade talks between the U.S. and Canada, some trade experts told ABC News.
Trump said he’s terminating trade negotiations with Canada in response to a negative TV advertisement about tariffs rolled out earlier this month by the Canadian province of Ontario.
“TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A. Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED,” Trump posted on his social media platform.
The ad features audio with excerpts of a 1987 address by then-President Ronald Reagan that came as he imposed some duties on Japanese products but cautioned about the long-term economic risks of high tariffs and the threat of a trade war.
Trump claimed, without evidence, that the ad aimed to sway the outcome of a U.S. Supreme Court case over the tariffs, which is set to come before justices next month. In a post on X, Ontario Premier Doug Ford urged cooperation between the two countries.
“Canada and the United States are friends, neighbours and allies. President Ronald Reagan knew that we are stronger together. God bless Canada and God bless the United States,” Ford said.
Canadian goods currently face steep 35% tariffs, though many of those exports to the U.S. remain duty-free because the policy excludes products compliant with the United States-Mexico-Canada Agreement, or USMCA, a free trade agreement.
A separate swathe of Canadian products is subject to sector-specific tariffs, such as 50% levies on steel and aluminum.
In trade negotiations, Canada sought to reduce or lift the steel and aluminum tariffs, but a halt to discussions could keep those in place for an extended period, experts said. Canada is the top exporter of steel and aluminum to the U.S.
Steel and aluminum are found in a host of goods, including home appliances, food packaging, cars and auto parts, some experts added.
“Trade talks could’ve resulted in the lowering of existing tariffs,” Michael Sposi, a professor of economics at Southern Methodist University, told ABC News.
Steel is the top material by weight in a car, accounting for about 60% of its weight, according to the American Iron and Steel Institute.
When steel imports face stiff taxes, the price of steel paid by U.S. manufacturers rises, meaning higher input costs for automakers, experts previously told ABC News. Those companies, they added, are likely to hike prices for consumers as a means of offsetting some of those costs.
Major home appliances — such as refrigerators, dishwashers and washing machines — rely in part on steel, making them vulnerable to elevated prices due to tariffs.
In June, Trump suspended talks over Canada’s plans for a Digital Service Tax, which would have imposed a 3% levy on U.S. technology companies. Talks resumed days later after Canada abandoned plans for the tax.
Last year, the U.S. ran a trade deficit with Canada of $63 billion, which marked a slight decrease from the previous year, according to the Office of the U.S. Trade Representative. By comparison, the U.S. ran a larger trade deficit last year with its other top trading partners: A $295 billion deficit with China and a $171 billion deficit with Mexico.
The U.S. makes up the destination for roughly three-quarters of Canadian exports, while such products make up about 11% of U.S. imports.
The list of major Canadian exports to the U.S. also includes crude oil, natural gas and motor vehicles, though many of those goods remain tariff-free on account of their compliance with the USMCA.
The USMCA is up for a joint review next year, giving the countries an opportunity to amend the agreement. If Trump’s renewed frustrations affect the outcome of those negotiations, it could impact the price of some additional imported products such as cars, Tyler Schipper, a professor of economics at the University of St. Thomas, told ABC News.
“The breakdown of these talks about current tariffs probably doesn’t bode well for those negotiations,” Schipper said.
Stock image of a social security card alongside US dollars. (Tetra Images/STOCK PHOTO/Getty Images)
(NEW YORK) — Social security benefits will rise 2.8% starting in January, amounting to an additional $56 per month for 75 million recipients, the Social Security Administration (SSA) said on Friday.
The cost-of-living adjustment for 2026, known as COLA, came in slightly higher than the prior year’s hike of 2.5%. Over the past decade, the average COLA clocked in at 3.1%.
The announcement on Friday came after inflation data for September showed a slight acceleration of price increases, sending inflation to its highest level since January. The fresh reading marked the final piece of data necessary for SSA to calculate COLA for 2026.
“Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security,” SSA Commissioner Frank J. Bisignano said in a statement.
The agency will also hike the maximum amount of earnings subject to the Social Security tax, elevating taxable income from $176,100 to $184,500.
SSA will start notifying recipients about their new benefit amount by mail starting in early December, the agency said.
Vegetables on display in a grocery store, August 15, 2025 in Delray Beach, Florida. (Joe Raedle/Getty Images)
(NEW YORK) — Consumer prices rose 3% in September compared to a year ago, extending a monthslong uptick that has sent inflation to its highest level since January, government data on Friday showed. The reading came in lower than economists’ expectations.
The fresh data marked a slight increase from a 2.9% year-over-year increase recorded a month prior. An acceleration of price increases over recent months has coincided with a flurry of tariffs issued by President Donald Trump.
Beef prices soared nearly 15% over the year ending in September, data showed. Trump has set off outcry among some ranchers over a plan to import beef from Argentina in an effort to reduce U.S. prices.
Egg prices, a longtime symbol of rising costs, fell almost 5% in September. The price of eggs stands about 1% lower than where it was a year ago. The price of coffee has surged 19% over the past year, the data showed.
The White House touted the September inflation numbers coming in below economists’ expectations on Friday, with Press Secretary Karoline Leavitt posting on social media that they were “good news” for American families.
Leavitt also said on Xthat the ongoing government shutdown would likely result in no inflation report for October, “which will leave businesses, markets, families, and the Federal Reserve in disarray.”
The data arrived more than a week later than originally planned, since the government shutdown has severely hamstrung the release of information about the economy.
The latest acceleration of price increases comes at a wobbly moment for the nation’s economy. In recent months, inflation has picked up while hiring has slowed, posing a risk of an economic double-whammy known as “stagflation.”
The economic conditions have put the Federal Reserve 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.
Last month, the Fed cut its benchmark interest rate a quarter of a percentage point, opting for its first interest rate cut this year in an effort to revive the labor market.
“It’s a challenging situation when our goals are in tension like this,” Powell said, but he added that the balance of risks had shifted toward greater concern over sluggish hiring.
Policymakers are widely expected to make an additional quarter-point cut when they meet next week, according to CME FedWatch Tool, a measure of market sentiment.
But an elevated inflation reading on Friday could give Fed officials pause, since a rate cut would increase the likelihood of a spike in demand that further drives up prices.
In recent months, tariffs modestly contributed to the uptick in overall inflation, analysts previously told ABC News, but overall price increases owed largely to a rise in housing and food products with little connection to Trump’s levies.
Last week, President Donald Trump threatened 100% tariffs on all China-made goods starting Nov. 1 in response to restrictions placed on rare earth minerals. Beijing has publicly stood firm on the policy, leaving the two sides at an impasse with massive implications for the price of consumer goods imported from China.
