Economists say Trump tariff threats, DOGE job cuts are ‘chilling’ the economy
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(WASHINGTON) — Economists say the uncertainty from President Donald Trump’s tariff threats and mass layoffs of government workers are starting to have a “chilling” effect on the U.S. economy.
“It’s a very difficult business environment, because they can’t plan for what their cost structure is going to be,” said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security. “It’s adding to investment uncertainty, and some people are holding back on investments.”
Trump has so far imposed 10% tariffs on Chinese imports and says he’ll impose additional 10%, plus 25% tariffs on Canada and Mexico on March 4. Trump also says he will impose “reciprocal tariffs” that match the duties other countries levy on the U.S. That comes on top of tariff plans on cars, semiconductors, steel and aluminum. Even if Trump doesn’t ultimately move forward with all his tariff threats, the mere uncertainty has a chilling effect.
“If one of the inputs of your factory goes up by 25%, you might cut your production and say maybe we’ll have to fire some people,” Ziemba added.
Meanwhile, the Department of Government Efficiency’s slashing of the federal workforce across the country “also impacts consumption, because people are losing their jobs or are afraid of losing their jobs, so that might cause them to save more money,“ Ziemba said.
This week, The Conference Board’s consumer sentiment survey found that it registered the largest monthly decline since August 2021.
“Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a 10-month high,” said Stephanie Guichard, senior economist for global indicators at The Conference Board.
“Average 12-month inflation expectations surged from 5.2% to 6% in February. This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs,” Guichard said.
The Canada and Mexico tariffs would have a sweeping effect, since those are America’s two biggest trading partners. It could raise prices at the grocery store and the gas pump. Ziemba also noted that the cost of cars could increase by several thousand dollars.
“Every time a car part crosses the border, 25% tariffs could be very onerous,” Ziemba said. “We could see the cost of building a house go up quite substantially.”
(NEW YORK) — Inflation held steady in February compared to a year ago, according to a release from the Federal Reserve’s preferred gauge of price increases.
The reading matched economists’ expectations.
Consumer prices climbed 2.5% in February compared to a year ago, registering at a level slightly higher than the Fed’s target rate of 2%, Commerce Department data on Friday showed.
Core inflation — a closely watched measure that strips out volatile food and energy prices — increased 2.8% over the year ending in February, ticking lower from the previous month, data showed.
The fresh data arrives little more than a week after the Fed opted to leave interest rates unchanged.
Speaking at a press conference after the rate decision, Fed Chair Jerome Powell faulted President Donald Trump’s tariffs for a “good part” of recent inflation. The central bank predicted weaker year-end economic growth and higher inflation than it had in a December forecast.
Consumer surveys show rising fears about inflation as Trump imposes tariffs on top trading partners and key industries.
Economists widely expect tariffs to raise prices because importers typically pass along a share of the tax burden to consumers in the form of higher costs.
Trump announced this week plans to slap 25% tariffs on all imported cars, escalating a global trade war and eliciting criticism from leaders in Canada and Europe. The duties came on the heels of tariffs on steel and aluminum, as well as levies on goods from China, Canada and Mexico.
The Commerce Department data for February covers a period that largely precedes Trump’s tariffs, though the reading arrives amid a bout of accelerating inflation that stretches back to the final months of the Biden administration.
Prince increases fell dramatically from a peak of more than 9% in 2022, but sped up slightly at the end of last year.
This is a developing story. Please check back for updates.
(NEW YORK) — Cryptocurrencies affiliated with President Donald Trump and first lady Melania Trump plummeted in the initial hours after Trump was sworn into office Monday.
“Official Trump,” a recently launched crypto token, plunged more than 20% in value over a 24-hour stretch ending Tuesday morning, according to crypto tracking site CoinGecko. After the drop, Official Trump stood at $38.
The decline for Trump’s meme coin reverses some of the gains enjoyed in an initial surge after it hit crypto markets last week. The coin’s price climbed from about $10 on Saturday morning to a high of about $74.59 before it began to slide.
“Melania Meme,” which also launched last week, dropped in value by more than half over a 24-hour timespan ending on Tuesday morning, CoinGecko data showed. The price of the Melania Meme was $4.19 on Tuesday morning.
The recent decline for the coins associated with Trump and Melania coincided with a slight drop for bitcoin, the world’s largest cryptocurrency. In early trading on Tuesday, bitcoin fell nearly one percentage point, putting its price at $102,853.
Many digital assets have climbed since Trump won the November election, indicating investor enthusiasm about declarations Trump made in support of cryptocurrency.
In July, Trump told the audience at a cryptocurrency conference in Nashville, Tennessee, that he wanted to turn the U.S. into the “crypto capital of the planet.”
Trump also has promised to ease regulations for the sector and establish the federal government’s first National Strategic Bitcoin Reserve.
On Monday, Securities and Exchange Commission Chair Gary Gensler officially resigned from his position, marking the departure long-sought by some crypto boosters who viewed Gensler as overly restrictive toward digital assets.
There have been reports that Trump would sign an executive action that would prioritize cryptocurrency policy. However, no such order was among the dozens of actions Trump signed
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(NEW YORK) — With more high-rise buildings than anywhere else in the U.S., New York City has long been a place where millions of people hope to achieve the American dream through careers in the construction industry.
While scores of construction workers are spending hours each day building the city’s newest apartment buildings, office towers and restaurants from the ground up, these properties have also become the locations of the city’s latest fraud scheme, according to some representatives of the construction and insurance industries.
“It isn’t a victimless crime,” Don Orlando of Tradesman Program Managers, which represents property owners and construction contractors, told ABC News. “These are small businesses that are getting victimized.”
Orlando alleges that hundreds of construction site incidents involving reported injuries were actually staged as part of a widespread conspiracy — and he said surveillance cameras are capturing some of these alleged fraudulent falls.
He pointed to a video that he says shows a man who “didn’t fall” and “just sat down” while an ambulance was on its way. The man filed a lawsuit claiming head and limb injuries, according to Orlando.
“That $200 or $300 investment in that camera saved that employer millions of dollars,” Orlando said.
Others said these claims are being blown out of proportion.
“If there was this rampant fraud going on, these cases would be dismissed by a judge or a jury,” New York personal injury attorney Nicholas Warywoda told ABC News. “That’s just not happening.”
‘The cost of doing work skyrockets’
Steve Katz has worked in the construction industry in the New York metropolitan area for more than 50 years, but said the last few years have been unlike anything he has ever experienced.
According to Katz, his concerns over fraud started eight years ago when one of his employees claimed to have fallen from a fire escape. After doctors said the employee was fine and could return to work, the man never came back, according to Katz, adding that his insurance company settled for $3.6 million.
“That’s when I went crazy,” Katz said. “I found out that I wasn’t the only one. My competitors told me they were all getting hit with these fake falls.”
Two years later, Katz said another construction worker sued him, alleging a fall on one of the properties where Katz’s crews were working. However, Katz said the employee’s colleagues told him that the employee told them that he was planning the fall in advance and was willing to teach them how to fake falls as well.
“Since then, I’ve had a total of eight of these phony lawsuits,” Katz said, adding that the extensive costs associated with fraudulent claims are being passed along to customers.
“We just raise our rates. The insurance companies raise their rates, and the cost of doing work skyrockets.”
Orlando explained that fraudulent construction accident cases can have financial implications for insurance customers throughout the U.S., even outside the nation’s largest city.
“If this was true, then why are the insurance companies not showing the proof that it’s actually lawsuits that are raising premiums and insurance costs?” Warywoda, whose firm frequently represents construction workers injured on construction sites in New York, said.
“One could say if the owners of the construction sites would just provide the appropriate safety measures that they’re required to, there wouldn’t be as many lawsuits,” he added.
One address, multiple lawsuits
Allegations of widespread fraud have caused increased scrutiny on lawsuits being filed by people claiming to be construction workers who were hurt on job sites.
In New York City’s outer boroughs, miles from the high-rise towers of Midtown Manhattan, reporting by ABC station WABC-TV found some claims coming from multiple people living at the same address.
One apartment building in the Bronx was home to 30 plaintiffs, while a two-story building nearby was listed as the home of 21 plaintiffs, according to WABC-TV’s report. In Queens, at least half a dozen people living in a six-unit apartment building said in court documents that they were injured on the job at construction sites.
“If you think about it, the law of averages tells you it’s really unlikely that there’s going to be this large number of people living at the same address, who are all in the same business, work for the same employer, have the same injury, have the same medical treatment and are going through the exact same things,” Michelle Rafield, the executive editor for Coalition Against Insurance Fraud, told ABC News.
Orlando’s company, Tradesman, claimed undocumented migrants are being recruited to participate in the scheme.
“They’re told, ‘Listen, we can teach you how to make millions. This is all you have to do. You have to fake a fall on a construction site,'” Katz said.
Katz and Orlando claim that some doctors and lawyers are in on the scheme, and that after the construction accidents are reported, the migrants undergo unnecessary surgeries and then become plaintiffs in slip-and-fall lawsuits
“I would call the plaintiffs in this case victims, because they are the ones being taken advantage of,” Orlando said.
Tradesman has now filed lawsuits of its own, taking over 100 defendants, including law firms and doctors, to federal court on accusations of racketeering.
“It’s morally wrong,” Orlando said. “Take out the fraud element. You’re taking advantage of someone who’s deprived as it is, and America is supposed to be the land of opportunities.”
Attorneys for dozens of the defendants say the allegations have no merit and that they intend to seek dismissals of the claims against them.
“The insurance industry and the industry lobby is very wealthy and very strong. They’re doing everything they can to tarnish and to change the civil justice system, which is only going to make it less safe for construction workers,” Warywoda, who isn’t among those accused in Trademan’s lawsuits, said. “It’s about putting profits over people.”
