(WASHINGTON) — The U.S. government is set to release new inflation data on Wednesday, offering a fresh look at price increases little more than a week after the issue appeared to help former President Donald Trump win re-election.
Inflation has cooled dramatically since a peak of 9% attained in 2022, now hovering near the Federal Reserve’s target rate of 2%.
The slowdown of price increases has coincided with robust economic growth, establishing the twin conditions necessary for the U.S. to achieve a “soft landing.”
Economists expect prices to have risen 2.6% over the year ending in October. That figure would mark a slight uptick from the annual rate of 2.4% recorded during the previous month.
Still, policymakers at the Fed forecast that inflation will inch downward toward normal levels next year, and reach the central bank’s target rate in 2026, according to projections released in September.
The Fed cut interest rates by a quarter of a percentage point last week. The move came two months after the Fed cut its benchmark interest rate a half of a percentage point, dialing back its fight against inflation since it began in 2021.
The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, lower interest rates help stimulate economic activity and boost employment.
While the central bank’s concern about inflation has receded in recent months, a renewed focus on the labor market has risen to the fore. Employment has continued to grow but expansion has slowed in recent months. The unemployment rate has ticked up from 3.7% to 4.1% this year.
“We continue to be confident that with an appropriate recalibration of our policy stance, strength in the economy and labor market can be maintained with inflation moving sustainably down to 2%,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last week.
Even as inflation has slowed, that progress hasn’t reversed a leap in prices that dates back to the pandemic. Since President Joe Biden took office in 2021, consumer prices have skyrocketed more than 20%.
The price hikes appeared to fuel support for Trump in last week’s election. More than two-thirds of voters say the economy is in bad shape, according to the preliminary results of an ABC News exit poll.
However, Trump’s proposals of heightened tariffs and the mass deportation of undocumented immigrants could rekindle rapid price increases, some experts previously told ABC News.
When asked last week about the Fed’s potential response to Trump’s policies, Powell said the central bank would make its decisions based on how any policy changes could impact the economy.
“In the near term, the election will have no effects on our policy decisions,” Powell said on Thursday. “We don’t know what the timing and substance of any policy changes will be. We therefore don’t know what the effects on the economy will be.”
“We don’t guess, we don’t speculate and we don’t assume,” Powell added.
The Michael Kors Store on Rodeo Drive on Feb. 23, 2017 in Beverly Hills, Calif. (Fg/bauer-griffin/GC Images via Getty Images, FILE)
(NEW YORK) — The Federal Trade Commission is asking a federal judge in New York to block the $8.5 billion merger of Tapestry, the company behind Coach, Kate Spade, and Capri, which controls Michael Kors.
In April, the FTC sued to block the sale, arguing that these brands dominate what’s known as the “accessible luxury” market and that if they combined, consumers would suffer by paying higher prices.
“This has to be the first time the focus of a federal court hearing turned to a $279 Kate Spade tote described as ‘colorful, joyful, feminine, green and white seen on Emily in Paris,” ABC News senior investigative reporter and correspondent Aaron Katersky said on Good Morning America Tuesday.
Tapestry argues the FTC is ignoring the reality of a marketplace, in which consumers have a lot of choices, suggesting it takes a mere stroll through Bloomingdale’s or Macy’s to see Gucci, Kors and Calvin Klein bags fighting for attention.
Michael Kors himself testified last month during a hearing, telling the judge there’s already plenty of competition for handbags, noting that he learned about one brand when he saw a photo of pop superstar Taylor Swift wearing an Aupen bag similar to those made by Kate Spade.
Kors also testified his handbags have “reached a point of brand fatigue” and a lawyer arguing in favor of the merger said it would revitalize the Michael Kors brand, so consumers have yet another choice. The goal, he said, is to sell more handbags to consumers.
The judge took these arguments under advisement and could rule at any time.
Doug Mills/The New York Times/Bloomberg via Getty Images
(NEW YORK) — The debate between Vice President Kamala Harris and former President Donald Trump on Tuesday opened with a fiery exchange about the economy, an issue that often ranks as the top priority for voters.
The two candidates exchanged sharp barbs over the nation’s recent bout of inflation, Trump’s plan for an escalation of tariffs, and the economic proposals put forward by Harris.
Economists who spoke to ABC News offered an assessment of the attacks leveled by the two candidates, fact-checking major claims and providing context for a full evaluation of their implications.
Here’s what to know about what economists thought of key claims made during the debate:
Harris: “My opponent has a plan that I call the Trump sales tax, which would be a 20% tax on everyday goods that you rely on to get through the month.”
Harris deploys the phrase “Trump sales tax” in reference to Trump’s plan for additional tariffs in a potential second term.
Trump told Fox Business last year that a tax on all imported goods could land at 10%. In April, he proposed a higher tariff of at least 60% on Chinese goods.
Economists who spoke to ABC News confirmed that tariffs are widely thought to raise prices for consumers in the importing country. That’s because foreign producers typically pass along some or all of the tax burden to consumers in the form of higher prices, they said.
“This is generally accepted in economics,” said Stephan Weiler, a professor of economics at Colorado State University and a former Fed research officer.
Economists couldn’t verify the estimate put forward by Harris of a 20% increase on the prices of goods, in part because it’s difficult to predict exactly how foreign manufacturers might respond to tariffs.
In theory, foreign producers that control a given market could offset higher taxes by pushing the costs onto consumers with price increases, Yeva Nersisyan, a professor of economics at Franklin & Marshall College, told ABC News. However, Nersisyan added, companies in competitive industries may face more difficulty doing so.
“It’s hard to say whether that 20% number is accurate,” Nersisyan said.
Trump: “We have inflation like very few people have ever seen before. Probably the worst in our nation’s history.”
Economists who spoke to ABC News rejected the assertion that the nation’s bout of inflation marks its worst ever, noting that the U.S. endured higher price increases as recently as the 1980s.
In addition, economists said Trump overstated the extent to which the Biden administration caused the rapid rise in prices, though they acknowledged that a stimulus measure enacted by Biden may have contributed to some of the inflation.
Like many economic problems, inflation emerged due to an imbalance between supply and demand, economists said.
Hundreds of millions of people across the globe who endured pandemic-era lockdowns replaced restaurant expenditures with online orders of couches and exercise bikes. But the demand for goods and labor far outpaced supply, as COVID-19-related bottlenecks slowed delivery times and infection fears kept production workers on the sidelines.
“The number-one cause of the inflation was a supply adjustment to the COVID shock, particularly coming out of isolation,” Jeffrey Frankel, an economist at Harvard University, told ABC News.
Pandemic-era spending measures enacted by Trump and Biden may also have contributed to the price spike, economists said.
Jason Furman, a professor at Harvard University and former economic adviser to President Barack Obama, estimated that Biden’s American Rescue Plan added between 1 and 4 percentage points to the inflation rate in 2021, Roll Call reported. Michael Strain, of the conservative-leaning American Enterprise Institute, estimated that the legislation added 3 percentage points to inflation.
“One could argue that the COVID-related policies helped heat and possibly overheat the economy,” Weiler said.
Harris: “Donald Trump left us the worst unemployment since the Great Depression … what we have done is clean up Donald Trump’s mess.”
The economy had already emerged from the pandemic-induced recession and begun to recover by the time Biden took office, economists said.
However, the U.S. remained well below pre-pandemic levels in some key measures of economic health, including employment. In turn, economists said, Biden inherited an economy in need of significant rejuvenation.
The unemployment rate peaked at 14.8% in April 2020 when Trump was in office – which was indeed the highest level since the Great Depression, according to the Bureau of Labor Statistics. But unemployment rapidly declined to 6.4% in January 2021 by the time Trump left office, as the economy started to rebalance.
The effort to blame Trump for the spike in unemployment is misleading, since it resulted from a once-in-a-century pandemic, economists said.
“COVID is the tidal wave that overwhelmed the whole story,” Weiler said. “The politics of this is hyperbole.”
The COVID-induced recession lasted two months in the spring of 2020, the shortest U.S. recession ever recorded, according to the National Bureau of Economic Research, a non-profit organization that serves as the recognized authority on economic downturns. The speedy recovery was owed in part to trillions in economic stimulus enacted by Trump that March.
“It was very quick and very, very big,” Nersisyan said.
Still, the economy suffered a dearth of jobs and persistent supply blockages when Biden took office, economists said. Over the course of the Biden administration, the labor market expanded at a rapid pace while economic growth quickened. By 2022, the economy had recovered all of the jobs that were lost during the pandemic.
“The recovery from the recession had already begun when Biden took office, but it hadn’t gotten that far,” Frankel said.
Trump: “She doesn’t have a plan. She copied Biden’s plan. And it’s, like, four sentences, like, run-Spot-run. Four sentences that are just, oh, we’ll try and lower taxes.”
Trump sharply criticized Harris for a perceived lack of detailed economic proposals.
Some economists who spoke to ABC News agreed that there was an absence of a complete economic plans from Harris. However, they added, Trump has also failed to provide a detailed set of policy proposals on economic issues.
“I would like to see more detailed policy proposals from both candidates,” Anne Villamil, a professor of economics at the University of Iowa, told ABC News.
“For Harris, I would like to know how her policies would differ from current policies,” Villamil added. “For Trump, I would like to know how his policies would differ from the policies of his previous administration.”
Last month, Harris unveiled economic plans intended to ease inflation, fix the housing market, and slash taxes for middle-income families. The plans include eye-catching proposals such as a $25,000 subsidy for first-time homebuyers and a ban on grocery price gouging, the latter of which had not been put forward by Biden.
Harris has also proposed a 28% tax on long-term capital gains, which clocks in well below the 39.6% tax rate for such income put forward by Biden.
Trump has said he would renew his signature tax-cut measure, which eased taxes for individuals and corporations, while vowing to do away with taxes on tips and Social Security benefits.
“Trump is not one who has a lot of detailed policies himself,” Nersisyan said. “This is not a policy election.”
Fisher-Price is recalling over 366,000 dumbbell toys that were sold as part of the brand’s Baby Biceps Gift Set. — United States Consumer Product Safety Commission
(NEW YORK) — Toy giant Fisher-Price is recalling hundreds of thousands of dumbbell toys due to a potential choking hazard.
The dumbbell toys were included in the Fisher-Price Baby Biceps Gift Set, according to the Consumer Product Safety Commission, which announced the recall on Thursday. About 366,200 recalled units were sold in the United States, with another 37,850 sold in Canada.
Fisher-Price states on its recall website that the gray caps on the dumbbell toys can separate, leading to a potential choking hazard for infants. The company recommends taking away recalled toys from kids immediately.
The CPSC states that the dumbbell toys were sold between April 2020 through August 2024 and were part of Fisher-Price’s Baby Biceps Gift Set, which includes three additional toys and is marketed as suitable for children ages 3 months and up.
According to Fisher-Price and the CPSC, the dumbbell component features a plastic gray bar and red and orange plastic “weights” with gray caps on each side of the bar. The recalled dumbbell toys bear the model number GJD49 on the back of the kettlebell toy in the gift set.
The toys were manufactured in China and Vietnam and sold in the U.S. at stores nationwide, according to the CPSC. The toys were sold at Buy Buy Baby, Fred Meyer, Hobby Lobby, Kohls, Marshalls, Target, TJMaxx and Walmart stores and online at Amazon.com, Target.com, Walmart.com, Zulily.com and other websites, retailing for about $18.
Fisher-Price says it has received seven reports of incidents where the gray caps separated from the toy, but has not received any reports of injuries as a result of the incidents.
Customers with the recalled dumbbell toys can reach out to Fisher-Price for a $10 refund on the company’s recall website, which also provides instructions on how to dispose of the recalled toys. Fisher-Price says a receipt or proof of purchase is not required to receive a refund for the dumbbell toy.
ABC News has reached out to Fisher-Price for comment.
