Jobs report set to offer gauge of economic health amid Trump’s tariffs

(WASHINGTON) — The Federal Reserve held interest rates steady on Wednesday, just days after President Donald Trump called on the central bank to lower them.

The announcement put the central bank on a potential collision course with Trump, though a longstanding norm of independence typically insulates the Fed from direct political interference.

The decision to maintain the current level of interest rates pauses a series of three consecutive interest rate cuts imposed by the Fed over the final months of 2024.

The Federal Open Market Committee (FOMC), a policymaking body at the Fed, said on Wednesday that the central bank remains attentive to concerns centered on the potential for both a rise in unemployment and a surge of inflation. Inflation stands at a moderately elevated rate, while unemployment remains at a historically low level, the FOMC added.

Taken together, those two considerations — employment and inflation — make up the Fed’s “dual mandate.”

“The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance,” the FOMC said. 

“The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.”

The Fed indicated last month that it would cut interest rates at a slower pace than it had previously forecast, however, pointing to a bout of resurgent inflation. That forecast sent stock prices plummeting, though markets have broadly recovered the losses.

Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases remain nearly a percentage point higher than the Fed’s target rate of 2%.

During a virtual address to the World Economic Forum in Davos, Switzerland, last week, Trump demanded a drop in interest rates after calling for a reduction of oil prices set by a group of nations known as OPEC, which includes Saudi Arabia.

The prospect of low oil prices will enable the Fed to dial back its fight against inflation and bring down interest rates, Trump said.

“I’m going to ask Saudi Arabia and OPEC to bring down the cost of oil,” Trump said, later adding: “With oil prices going down, I’ll demand that interest rates drop immediately.”

The U.S. does not belong to OPEC, nor does the president play a role in the organization’s decisions regarding the price of oil sold by its member states.

Several past presidents have sought to influence the Fed’s interest rate policy, including Trump, who repeatedly spoke out in favor of low interest rates during his first term.

On the campaign trail in August, Trump said a U.S. president should have a role in setting interest rates.

Fed Chair Jerome Powell struck a defiant tone in November when posed with the question of whether he would resign from his position if asked by Trump.

“No,” Powell told reporters assembled at a press conference in Washington, D.C., blocks away from the White House.

When asked whether Trump could fire or demote him, Powell stated: “Not permitted under the law.”

The Fed retreated in its fight against inflation over the final months of last year, lowering interest rates by a percentage point. Still, the Fed’s interest rate remains at a historically high level of between 4.25% and 4.5%.

Last month, Powell said the central bank may proceed at a slower pace with future rate cuts, in part because it has now lowered interest rates a substantial amount.

Powell also said a recent resurgence of inflation influenced the Fed’s expectations, noting that some policymakers considered uncertainty tied to potential policy changes under Trump.

“It’s common-sense thinking that when the path is uncertain, you get a little slower,” Powell said. “It’s not unlike driving on a foggy night or walking around in a dark room full of furniture.”

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(NEW YORK) — U.S. stocks stood essentially unchanged in trading on Wednesday hours before President Donald Trump’s expected announcement of sweeping tariffs, which the White House has dubbed “Liberation Day.”

The Dow Jones Industrial Average ticked up 7points, or 0.02%, while the S&P 500 climbed 0.05%. The tech-heavy Nasdaq inched up 0.02%.

Tesla, the electric carmaker led by billionaire Trump-advisor Elon Musk, fell nearly 2%. The stock decline came minutes after the company reported a 13% drop in car deliveries over the past three months compared to the same period a year ago.

The S&P 500 and NASDAQ both posted their first quarterly losses since 2022 this week as investors prepared for the new measures and economists warned of the possibility of a recession — with major potential knock-on effects for other economies around the globe.

Canada vowed Tuesday to respond with retaliatory tariffs if Trump slaps additional levies on Canadian goods.

Europe has a “strong plan” to retaliate against Trump’s planned tariffs, Ursula von der Leyen, president of the European Commission, said in a speech on Tuesday.

Trump is set to make his tariff announcement in the White House Rose Garden on Wednesday at 4 p.m. ET, after the stock market closes.

Abroad, the British FTSE 100 index dropped by more than 0.6% on Wednesday morning, with Germany’s DAX index down by 1.2%. The French CAC 40 index was down more than 0.5%.

Japan’s Nikkei index rose nearly 0.3%, but South Korea’s KOSPI index dropped by more than 0.6%.

On Tuesday, the Dow Jones ended at 41,989.96 down 0.03%. The S&P 500 ended at 5,633.07 up 0.38% and the NASDAQ ended at 17,449.89 up 0.87%.

Automakers and pharmaceutical companies have reportedly been lobbying the Trump administration for carve outs and a phase-in approach for the promised tariffs.

World leaders have threatened a response while pressing the White House for clarity.

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(NEW YORK) — Consumer confidence plummeted in February, indicating worry about the direction of the U.S. economy under President Donald Trump.

A gauge of consumer confidence registered its largest monthly drop since August 2021, the nonpartisan Conference Board said on Tuesday.

Meanwhile, the share of consumers who expect a recession within the next year surged to a nine-month high, the data showed. A growing portion of consumers believe the job market will worsen, the stock market will fall and interest rates will rise, the report added.

Trump has issued a flurry of economy-related directives since he took office last month, including tariff proposals, spending cuts and an assault on diversity, equity and inclusion initiatives.

Earlier this month, Trump announced 25% tariffs on goods from Mexico and Canada as well as 10% tariffs on products from China.

Trump paused the tariffs on Mexico and Canada for one month after striking a deal with each of the two countries on drug trafficking and border security. On Monday, Trump said he plans to go forward with the tariffs when that pause lifts next week.

Seven of every 10 American adults believe tariffs will raise prices, an Ipsos survey found last week.

Concern about rising prices coincides with a bout of resurgent inflation that stretches back to the final months of the Biden administration. Consumer prices rose 3% in January compared to a year ago, registering a percentage point higher than the Federal Reserve’s target of 2%.

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.

“Consumers who fear the impact of higher tariffs, spending cuts, and deportations are getting worried and are likely to be more cautious,” Bill Adams, chief economist at Comerica Bank in Dallas, told ABC News.

Meanwhile, U.S. hiring slowed at the outset of the year. The nation added 143,000 jobs in January, far fewer than the 265,000 jobs gained a month prior, government data showed.

Still, some measures of consumer sentiment improved this month. Consumers’ assessment of current business conditions moved higher, while an uptick in purchasing plans for a home extended a monthslong recovery.

The fresh data follows a report last month from the University of Michigan showing that its gauge of consumer sentiment had declined for the first time in six months.

The results showed a sharp disparity between Democrats and Republicans, however. Attitudes among Democrats worsened while sentiment among Republicans improved.

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