Today is
Friday March 28, 2025
(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.
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(NEW YORK) -- U.S. stocks ticked higher on Thursday in the first trading since President Donald Trump announced 25% auto tariffs.
The tariffs have escalated a global trade war and prompted forecasts of higher car prices.
The Dow Jones Industrial Average climbed 20 points, or 0.05%, while the S&P 500 increased 0.25% on Thursday morning. The tech-heavy Nasdaq jumped 0.25%.
Shares of major U.S. automakers dropped in early trading. General Motors dropped more than 6%, while Ford fell nearly 2%. Stellantis -- the parent company of Jeep and Chrysler -- declined 1%.
Tesla, the electric carmaker led by Trump-advisor Elon Musk, bucked the trend. Shares of Tesla climbed 5.5% in early trading on Thursday.
The 25% tariffs will be applied to imported passenger vehicles, including cars, SUVs, minivans, cargo vans and light trucks, according to a White House fact sheet released after Trump's Oval Office remarks on Wednesday. The tariffs will take effect on April 3.
The tariffs will also be applied to key imported auto parts, including engines, powertrain parts and electrical components.
The auto tariffs are set to target a sector that employs more than a million U.S. workers and relies on a supply chain intricately intertwined with Mexico and Canada. Tariffs placed on the auto industry risk raising car prices for U.S. consumers, experts previously told ABC News.
Ferrari may raise U.S. prices as much as 10% in response to the tariffs, the company said in a statement on Thursday. Dan Ives, a managing director of equity research at the investment firm Wedbush, predicted general tariff-related price increases of between $5,000 and $10,000 per vehicle.
Canadian Prime Minister Mark Carney on Wednesday called the measure "a direct attack on our workers." The Canadian government plans to review its trade options, Carney said.
European Commission President Ursula von der Leyen on Wednesday expressed "regret" about the decision to impose auto tariffs. "We will now assess this announcement, together with other measures the US is envisaging in the next days," von der Leyen said in a statement.
Early Thursday morning, Trump warned of retaliatory tariffs if officials in Canada and Europe move forward with countermeasures.
"If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!" Trump said in a post on Truth Social.
This is a developing story. Please check back for updates.
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(WASHINGTON) -- Republicans accused public media outlets NPR and PBS of bias at a House subcommittee hearing on Wednesday, while Democrats defended the organizations and criticized the event as a distraction from the ongoing controversy regarding the Trump administration's use the Signal messaging app for the communication of sensitive information.
PBS President and CEO Paula Kerger and NPR President and CEO Katherine Maher rebutted allegations of bias, saying the outlets abide by journalistic standards and serve a diverse audience that includes rural viewers.
The hearing, titled "Anti-American Airwaves: Holding the Heads of NPR and PBS Accountable," was held by the Delivering on Government Efficiency (DOGE) subcommittee, the name of which echoes the Department of Government Efficiency, the Trump administration’s cost-cutting initiative overseen by Elon Musk.
House Rep. Marjorie Taylor Greene, R-Ga., criticized NPR and PBS during the hearing for alleged liberal bias, pointing to federal funding for the outlets as the target of potential cuts.
“NPR and PBS have increasingly become radical, left-wing echo chambers for a narrow audience of mostly wealthy, white, urban liberals and progressives,” Greene said.
Minutes later, House Rep. Stephen Lynch, D-Ma., defended the public media outlets and criticized the hearing as a distraction for more important issues often taken up by the House Oversight Committee, the larger body to which the DOGE subcommittee belongs.
“I’m sad to see this once proud committee -- the principle investigative committee in the House of Representatives -- has now stooped to the lowest levels of partisanship and political theater to hold a hearing to go after the likes of Elmo and Cookie Monster and Arthur the aardvark,” Lynch said.
Later in the hearing, Rep. Robert Garcia, D-Ca., said sarcastically: "Is Elmo now, or has he ever been, a member of the Communist Party?"
This is a developing story. Please check back for updates.
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(NEW YORK) -- President Donald Trump has vowed to issue a fresh round of tariffs on April 2, presenting it as an inflection point for the economy weeks after a previous set of duties roiled markets and incited recession fears.
Trump has repeatedly referred to April 2 as "liberation day," saying a wide-ranging slate of reciprocal tariffs would rebalance U.S. trade relationships.
Trump's plan for reciprocal tariffs next week, however, is expected to be narrower than he previously vowed, though the plan remains under discussion, sources told ABC News this week.
The news of a potentially softer approach to forthcoming tariffs rallied U.S. stocks earlier this week, recovering some of the losses suffered earlier in March.
While key details remain unknown, new duties would ratchet up the global trade war, raising prices for an array of consumer goods and risking an economic slowdown, experts told ABC News.
"This certainly will be an escalation," Mary Lovely, a senior fellow at the Peterson Institute for International Economics who studies trade policy, told ABC News. "We know the direction of travel, if not how far this will go."
Here's what the latest round of tariffs could mean for prices and the economy, according to experts:
Will the tariffs on April 2 raise prices?
In setting tariffs for April 2, the U.S. will target countries that have major trade imbalances with the U.S., sources said.
"It's 15% of the countries, but it's a huge amount of our trading volume," Treasury Secretary Scott Bessent said last week, describing the countries as a "Dirty 15."
Last year, according to federal census data, the U.S. had its biggest trade deficits with China, the European Union, Mexico, Vietnam, Taiwan, Japan, South Korea, Canada and India, among other nations.
Reciprocal tariffs could raise prices for imported goods from those countries, since importers typically pass along a share of the tax burden to consumers.
The tariffs could hike prices for furniture and consumer electronics from Vietnam, fresh fruits and vegetables from Mexico, and cars from South Korea, experts told ABC News.
"This is going to mean prices will ultimately go up," Jason Miller, a professor of supply chain management at Michigan State University, told ABC News.
The scale of price increases will likely depend on the tariff rate set by the Trump administration, which remains unclear, the experts said.
Speaking at the White House on Monday, Trump said the reciprocal tariffs could fall short of the rate that target countries impose on U.S. goods.
"I may give a lot of countries breaks," Trump told reporters in the Oval Office. "I'm embarrassed to charge them what they've charged us."
Kyle Handley, a professor of economics at the University of California, San Diego, said he expects consumer prices to rise enough for consumers to identify the change.
"Depending on what tariff rates they put in place, it could be pretty massive," Handley said. "It will be a non-trivial increase in the price of imports. People will notice."
What do the tariffs on April 2 mean for the economy?
Experts told ABC News the fresh tariffs would put downward pressure on U.S. economic growth, since the additional tax burden for importing businesses and uncertainty about additional duties could deter private sector investment.
"A lot of the uncertainty about tariffs very likely has firms sort of frozen in place as they're waiting to evaluate and see what happens," Miller said.
Looming tariffs also risk unease among shoppers, threatening to undermine a key engine of the U.S. economy, some experts said. Consumer attitudes worsened more than expected in March, dropping to their lowest levels since 2021, a Conference Board survey on Tuesday showed.
Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shopper sentiment sours, Bret Kenwell, U.S. investment analyst at eToro, told ABC News in a statement.
By some key measures, however, the economy remains in solid shape. A recent jobs report showed steady hiring last month and a historically low unemployment rate. Inflation stands well below a peak attained in 2022, though price increases register nearly a percentage point higher than the Fed's goal of 2%.
Still, recession fears are mounting on Wall Street as businesses and consumers weather the trade war. Goldman Sachs earlier this month hiked its odds of a recession from 15% to 20%. Moody's Analytics pegged the chances of a recession over the next year at 35%.
"These tariffs will be very detrimental for economic performance and business growth," Handley said. "It may not take long for us to start seeing some of those effects."
ABC News' Selina Wang contributed to this report.
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(NEW YORK) -- New Mega Millions rules will come into play next month, the company has announced, under which the minimum jackpot value will more than double to $50 million.
The new rules will come into force after the final drawing of the current game on Friday, April 4, the company said in a notice posted to its website. The first drawing under the new rules will be on April 8.
From that draw, jackpots will start at $50 million, rather than the current starting point of $20 million. "Jackpots are expected to grow faster and get to higher dollar amounts more frequently in the new game," the company said.
Minimum non-jackpot prizes will jump in value from between $2 and $1 million to between $10 and $10 million. Every winning ticket will payout at least double the price, Mega Millions said.
Mega Millions will introduce a new $5 game with a built-in multiplier, with a multiplier value of 2, 3, 4, 5 or 10 randomly assigned at the time of purchase.
Prizes for match 5 -- achieved by matching five white balls -- will range from $2 million to $10 million with the new multiplier.
Matching the Mega Ball on its own will now payout $10 to $50, depending on the assigned multiplier.
Mega Millions said the new rules improve the odds of players winning the jackpot -- from 1 in 302,575,350 to 1 in 290,472,336 -- due to the removal of one gold Mega Ball from the game. The new format will have 24 rather than 25 Mega Balls.
Overall odds of winning any prize will improve to 1 in 23 from 1 in 24, the company said.
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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."
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(NEW YORK) -- Consumer attitudes worsened in March as President Donald Trump's tariffs set off a market rout and warnings of a possible recession, Conference Board survey data on Tuesday showed. Sentiment worsened more than economists expected.
The fresh data on consumer sentiment arrives a week before the onset of additional U.S. tariffs, indicating potential fear of further escalation in an ongoing global trade war.
Trump has repeatedly referred to April 2 as "liberation day," saying a wide-ranging slate of reciprocal tariffs would rebalance U.S. trade relationships.
Trump’s plan for reciprocal tariffs next week, however, is expected to be more targeted and narrower than he previously vowed, though the plan remains under discussion, sources told ABC News on Monday. The administration is focused on trading partners who have major trade imbalances with the U.S., the sources said.
The news of a potentially softer approach to forthcoming tariffs rallied U.S. stocks on Monday, recovering some of the losses suffered earlier this month.
Consumer sentiment appears to align with dampening expectations at the Federal Reserve. Last week, the Fed predicted weaker year-end economic growth and higher inflation than it had in a December forecast.
Speaking at a press conference in Washington, D.C., last Wednesday, Fed Chair Jerome Powell faulted tariffs for a "good part" of recent inflation.
This is a developing story. Please check back for updates.
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(WASHINGTON) -- Boeing is seeking to withdraw its guilty plea agreement with the Department of Justice in the criminal cases surrounding two deadly 737 MAX crashes, sources familiar with the matter told ABC News.
The agreement blamed the aerospace giant for misleading the Federal Aviation Administration before the two crashes in October 2018 and March 2019 that killed 346 people in total.
Boeing is seeking more lenient treatment from President Donald Trump's administration and the DOJ is considering modifying aspects of the plea agreement, the sources said.
The Wall Street Journal was first to report the news.
The initial plea agreement was rejected by U.S. District Judge Reed O'Connor in December 2024, who cited the government's diversity, equity and inclusion policies as a factor in the selection of an independent compliance monitor for Boeing.
According to the most recent court filing, the two parties will continue to meet and negotiate and must notify the court by April 11 on how they plan to proceed forward.
Boeing declined to comment to ABC News and referred the question to the DOJ.
"Boeing got one of the most lenient deferred prosecution agreements in American history," said Paul Cassell, a lawyer representing some families of the MAX crash victims. "The idea that after they breached that agreement, they get another opportunity to avoid acknowledging what it's done seems, to me, to be wishful thinking on the part of Boeing."
The first crash on Oct. 29, 2018, in Jakarta, Indonesia, killed all 189 passengers and crew. The second crash, on March 10, 2019, happened in Addis Ababa, Ethiopia, when a Boeing aircraft crashed minutes after takeoff and killed 157 people onboard.
Both crashes preceded the Alaska Airlines incident in Jan. 2024, when a door plug fell out of the fuselage of a Boeing 737 Max 9, a newer model, after departure.
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(NEW YORK) -- Over the weekend, genetic testing and biotechnology company 23andMe filed for Chapter 11 bankruptcy.
Founded in 2006, the company became popular with millions of Americans who sent in samples of saliva with the promise of learning about their ancestry and genetic health predispositions.
However, following a class-action settlement from a data breach, the resignation of the entire board of independent directors, layoffs and its drug development division closure, the firm has experienced business troubles and said it may be looking for a buyer.
"The Company intends to continue operating its business in the ordinary course throughout the sale process," 23andMe said in a statement this week. "There are no changes to the way the Company stores, manages, or protects customer data."
23andMe directed ABC News to its statement in a request for comment as well as to an open letter to its customers.
The bankruptcy filing has led to concerns over what will happen to the personal and genetic information of 23andMe's more than 15 million consumers worldwide.
"I don't think they ever built sufficient consent into people sending them information, saying, 'We'll do our best to protect it, but we can't promise,"' Dr. Arthur Caplan, a professor of bioethics at the NYU Grossman School of Medicine, told ABC News.
"So, what you might have thought was safe and secure is clearly not, as the bankruptcy is making clear now, but hasn't been from the beginning," he added.
Anya Prince, a professor at the University of Iowa College of Law with research interests in health and genetic privacy, said what happens to the data 23andMe collects is covered by the company's privacy policy.
In the event of a bankruptcy or sale, a user's 23andMe data can go to a new company or be sold in bankruptcy, Prince noted.
"The privacy policy also says that the new company has to follow the existing privacy policy, which sounds great, but the existing privacy policy also says that it can be changed at any time," Prince told ABC News. "So, the new company could adopt the same privacy policy and then change it in ways that maybe the customers don't like."
I. Glenn Cohen, a professor of health law and bioethics at Harvard Law School, told ABC News that in one of 23andMe's bankruptcy filings, the company indicated that any bidder would have to express compliance with the current privacy statement.
However, it's not uncommon for a new company to issue a new privacy statement and to ask people to click through to agree, he said.
One example of a change could be in how a new company would handle handing over data to law enforcement.
"Under the current 23andMe privacy rules, they will wait for a valid subpoena, search warrant or court order" before sharing data with law enforcement, Cohen said. "It's possible this new company would have a different approach and would get you to opt in to their privacy statements such that the information might be more readily shared with law enforcement or possibly with employers and insurance."
Additionally, about 80% of 23andMe users have selected the additional opt in for their data to be used for medical research.
Under existing 23andMe policy, when the data is shared with companies for research, it doesn't have names attached to the genetic samples. While the data might be anonymous for the company that is conducting the research, it isn't necessarily anonymous at 23andMe, experts told ABC News.
Cohen said that data will also transfer over to a new company as part of bankruptcy proceedings.
This information is not protected by HIPAA, which is a law that protects patient privacy and ensures the security of health information.
"Unlike your health records, which are covered by HIPAA, your electronic health records, and the kind of data you share with your doctor … 23andMe does business with you as a consumer, not as a patient," Cohen said. "You don't get those overall federal health privacy protections that we give, for example, to the data you share with your doctor."
Added Caplan: "The privacy law we have applies to information in health care settings. It doesn't apply to protecting information that you gave freely to a private company."
Consumers have the option of deleting their account and asking for their sample to be destroyed, especially if they are in a state that has a genetic privacy law, such as California.
California's Attorney General Rob Bonta put out a press release with steps on how to delete genetic data, destroy a test sample and to revoke permission for genetic data being used in research.
"There might be people out there who say, 'I'm fine with that, I think the risks are low, and I'm happy for a new company to share my data in x, y or z way,'" Prince said. "But to the extent that that it's somebody who does say, 'Oh, I didn't realize that that's how my data can be shared, or I just I trusted 23andMe but I don't know whether I trust the next company that might have this data, then they might want to consider going in and deleting that account."
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(NEW YORK) -- A representative of the Securities and Exchange Commission served Elon Musk earlier this month with a copy of a complaint alleging he misled investors when he bought millions of dollars in Twitter stock in 2022, according to a court filing on Thursday.
An employee of a Virginia-based process server delivered the SEC complaint to Musk at SpaceX's Starbase facility in Brownsville, Texas, on March 14, according to a sworn filing.
The process server said three different security guards refused to accept service of the legal documents, so he left it on the ground outside at the SpaceX facility.
"Upon arrival, I stepped one foot past the gate, but security told me to step back and that I was trespassing. I then spoke to three different security guards who refused to accept. I placed the documents on the ground then a security guard started taking pictures of me and my car as I departed," he said in the filing.
According to a docket update, Musk was served on March 14.
Confirmation of the service came the same day that an attorney with the SEC mmission admitted to practice law in Texas filed a notice of appearance in the case.
The new developments are largely procedural and do not guarantee the lawsuit will move forward. Since Trump has taken office, the SEC has moved to drop some cases previously initiated under the Biden administration.
On Jan. 14 – six days ahead of Trump's inauguration – the SEC filed the lawsuit against Musk, arguing he underpaid more than $150 million by failing to disclose his stake in Twitter. Musk's failure to disclose his purchase to the public made the stock price he paid "artificially low," according to the SEC.
"They spend their time on s--- like this when there are so many actual crimes that go unpunished," Musk said on X to respond to the lawsuit in January.
The SEC, Musk and the process service company could not be immediately reached for comment.
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(WASHINGTON) -- President Donald Trump late Wednesday criticized the Federal Reserve, urging the central bank to reduce interest rates, hours after it chose to leave borrowing rates unchanged.
The move marked the latest example of Trump exerting pressure on the Federal Reserve, despite a longstanding norm of political independence at the central bank.
Trump said lower rates would best prepare the economy for tariffs that are set to escalate over the coming weeks.
“The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy,” Trump said in a post on Truth Social on Wednesday, adding “Do the right thing.”
The president did not provide further explanation but as recently as January, Trump advocated for interest-rate cuts in response to what he described as the prospect of lower oil prices.
Speaking in Washington, D.C. on Wednesday afternoon, Fed Chair Jerome Powell faulted Trump’s tariffs for a “good part” of recent inflation, advocating for a wait-and-see approach as the new administration’s policy changes take hold.
Even as the Fed left its main policy lever unchanged, the central bank predicted weaker year-end economic growth and higher inflation than it had in a December forecast.
Uncertainty clouds the economic outlook, Powell said, pointing to the Trump administration's potentially "significant policy changes" in areas like trade, immigration and regulation.
"Uncertainty around the changes and their effects on the economic outlook is high,” Powell said. “We are focused on parsing the signal from the noise.”
If the central bank raises rates as a means of protecting against tariff-induced inflation, the Fed risks stifling borrowing and slowing the economy, experts previously told ABC News.
On the other hand, experts said, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to boost spending and drive up inflation.
The rare rebuke of the central bank by Trump came weeks after his tariffs touched off a global trade war that sent stocks reeling and triggered concern about a possible recession.
By some key measures, however, the economy remains in solid shape. A recent jobs report showed steady hiring last month and a historically low unemployment rate. Inflation stands well below a peak attained in 2022, though price increases register nearly a percentage point higher than the Fed's goal of 2%.
In January, Trump also made a call for lower rates, days before the Fed opted to hold interest rates steady.
Speaking at a press conference in Washington, D.C. after that rate announcement, Powell declined to comment about Trump's call for lower interest rates, saying it would be "inappropriate" to respond.
"The public should be confident that we'll continue to do our work as we always have," Powell said, adding that the Fed would continue to "use our tools to achieve our goals."
After the rate decision on Wednesday, a reporter again asked Powell whether Trump may interfere with the Fed. In a brief response, Powell affirmed his previous comments.
“I think I did answer that question in this very room some time ago,” Powell said. “And I have no desire to change that answer, and have nothing new for you on that today.”
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(WASHINGTON) -- Federal Reserve Chair Jerome Powell stepped to the podium in August with a sunny forecast that defied the snow-capped mountains inscribed on curtains behind him.
The central bank planned to begin cutting rates, Powell announced, reversing a yearslong battle against pandemic-era inflation. "The time has come," Powell told the audience at a conference in Jackson Hole, Wyoming, touting a steady cooldown of price increases.
Months later, economic uncertainty looms large, complicating the Fed's approach while clouding the outlook for inflation and interest rates, some experts told ABC News.
President Donald Trump's tariffs have roiled markets, stoked recession concerns and heightened worries about inflation. In short order, Trump has paused or reversed some tariffs, casting doubt over his plans and adding to the uncertainty, the experts added.
Policymakers, business leaders and everyday borrowers will turn their attention to the Fed on Wednesday for its latest interest rate decision, the first such move since days after Trump took office.
"The Fed is in a tough position," Wendy Edelberg, director of the Hamilton Project and senior fellow in economic studies at the left-leaning Brookings Institution, told ABC News.
"We have all of the potential negative effects of tariffs, but we also have extraordinary uncertainty," Edelberg added.
The Trump administration earlier this month slapped 25% tariffs on goods from Mexico and Canada, though the White House soon imposed a one-month delay for some tariffs. A fresh round of duties on Chinese goods doubled an initial set of tariffs placed on China a month prior.
Tariffs imposed on steel and aluminum last week triggered retaliatory tariffs from Canada and the European Union, adding to countermeasures already initiated by China.
By some key measures, the economy remains in solid shape. A recent jobs report showed solid hiring last month and a historically low unemployment rate. Inflation stands well below a peak attained in 2022, though price increases register nearly a percentage point higher than the Fed's goal of 2%.
However, experts said, tariffs may threaten both parts of the Fed's mission: controlling inflation and maximizing employment.
Economists widely expect tariffs to increase inflation, since exporters typically pass along a share of the tax to consumers in the form of price hikes.
Consumers expect the inflation rate to rise from 2.8% to 4.9% over the next year, according to University of Michigan survey results released last week. The measure marked a significant jump in year-ahead inflation expectations compared to findings in February.
"There will be a price impact," Yeva Nersisyan, a professor of economics at Franklin & Marshall College, told ABC News.
Tariffs could also threaten economic growth and employment since duties slapped on imports risk increasing input costs for domestic businesses that rely on raw materials from abroad, some experts told ABC News. Retaliatory tariffs may crimp exporting businesses since the taxes make U.S.-made products less competitive in foreign markets, they added.
Goldman Sachs earlier this month hiked its odds of a recession over the next year from 15% to 20%. Moody's Analytics pegged the chances of a recession at 35%.
"There's a risk that the economy does roll over and fall into a recession," William English, a professor of finance and former economist at the Federal Reserve, told ABC News.
"The Fed probably sees an upside risk to inflation and a downside risk to employment," English added. "They'll have to balance those as they consider the path of policy."
For its part, the Trump administration has largely declined to rule out the possibility of a recession. Speaking at the White House last week, Trump said a "little disturbance" may prove necessary to rejuvenate domestic production and reestablish well-paying manufacturing jobs.
The thorny economic outlook presents potential difficulty for the Fed, experts said.
If the central raises rates as a means of protecting against possible tariff-induced inflation, the Fed risks stifling borrowing and slowing the economy. On the other hand, if the Fed lowers rates to stimulate the economy in the face of a potential recession, it threatens to boost spending and drive up inflation.
"If we were in an environment where inflation were to rise and rise consistently at the same time growth is slowing and unemployment is rising, that's a real challenge for the Fed," Claudia Sahm, chief economist at New Century Advisors and a former Fed official, told ABC News.
For now, the main quandary before the Fed stems from the wide range of possible outcomes, the experts said. Uncertainty, they said, will likely prompt the central bank to await further clarity.
Investors overwhelmingly expect the central bank to leave rates unchanged on Wednesday, according to the CME FedWatch Tool, a measure of market sentiment.
"For now, the Fed probably sees waiting as the best approach," Nersisyan said.
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(NEW YORK) -- The Federal Reserve is set to announce its first interest rate decision since a global trade war touched off by President Donald Trump's tariffs sent stocks reeling and triggered concern about a possible recession.
The move arrives less than two weeks after Fed Chair Jerome Powell said tariffs would likely raise prices, while voicing patience as Trump's economic policies take shape.
"We are focused on parsing the signal from the noise as the situation evolves," Powell told an economic forum in New York City. "We are not in a hurry."
Investors expect the central bank to leave rates unchanged on Wednesday, according to the CME FedWatch Tool, a measure of market sentiment.
The Trump administration earlier this month slapped 25% tariffs on goods from Mexico and Canada, though the White House soon imposed a one-month delay for some of the tariffs. A fresh round of duties on Chinese goods doubled an initial set of tariffs placed on China a month prior.
Tariffs imposed on steel and aluminum last week triggered retaliatory tariffs from Canada and the European Union, adding to countermeasures already initiated by China.
Last week, the S&P 500 closed down more than 10% since a peak attained last month, meaning the decline officially qualified as a market correction. It marked the index's first correction since October 2023. The Dow Jones Industrial Average suffered its worst one-week drop since March 2023.
By some key measures, the economy remains in solid shape, however. A recent jobs report showed steady hiring last month and a historically low unemployment rate. Inflation stands well below a peak attained in 2022, though price increases register nearly a percentage point higher than the Fed's goal of 2%.
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%.
Stretching back to his first term in office, Trump has repeatedly urged the Fed to lower interest rates.
During a virtual address to the World Economic Forum in Davos, Switzerland, in January, Trump called on the central bank to cut rates days before it was set to announce an interest rate decision.
At the ensuing meeting that month, the Fed decided to hold interest rates steady. Speaking at a press conference in Washington, D.C., after the announcement, Powell declined to comment about Trump's call for lower interest rates, saying it would be "inappropriate" to respond.
"The public should be confident that we'll continue to do our work as we always have," Powell said, adding that the Fed would continue to "use our tools to achieve our goals."
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(NEW YORK) -- As Tesla stock has fallen in recent weeks, members of the board and an executive at Elon Musk's company have been selling off millions of dollars in stock, according to filings with the U.S. Securities and Exchange Commission.
Together, four top officers at the company have offloaded over $100 million in shares since early February.
Last week, longtime Musk ally James Murdoch -- the estranged son of Fox boss Rupert Murdoch and a board member since 2017 -- became the latest to do so, exercising a stock option and selling shares worth approximately $13 million, according to an SEC filing. The sale took place on March 10, coinciding with the stock's largest single-day decline in five years.
According to one filing, the shares were sold "to cover the exercise price relating to the exercise of stock options to purchase 531,787 shares, which are scheduled to expire in 2025."
Elon Musk's brother, Kimbal Musk, who also sits on the board, unloaded 75,000 shares worth approximately $27 million last month, according to a filing.
The chairman of the board, Robyn Denholm, has offloaded more than $75 million dollars worth of shares in two transactions in the past five weeks, federal filings show. The selloffs made by Denholm came as part of a predetermined sales plan.
A number of board members and executives made similar moves in November and December. But the recent sales come at a tumultuous time for Tesla, with the stock falling nearly 50% from a peak in mid-December. The company's shares have suffered most of those losses since President Donald Trump took office and Musk began his controversial governmental cost-cutting efforts as the head of the newly created Department of Government Efficiency.
"Whenever insiders, including directors, are selling shares, it's not a positive signal," Jay Ritter, a professor of finance at the University of Florida, told ABC News.
However, Ritter added, an exception applies to the predetermined sales plan adopted by Denholm in July 2024, which marks a routine effort to avoid the perception an officer unloaded shares based on inside information.
"Filing a plan months ago to sell some of those shares over time is common," Ritter said.
Tesla did not immediately respond to ABC News' request for comment.
Seth Goldstein, an analyst at research firm Morningstar who studies the electric vehicle industry, said some of the stock sales may owe to personal financial choices made by individual officers.
"While a sale doesn't necessarily mean an executive or board member feels negatively about a company's outlook, it could mean they think the stock is at a fair price or even overvalued," Goldstein said.
The share selloffs made by board members and executives totaled about $118 million, but the transactions often came after the individuals exercised stock options, the costs of which totaled about $16 million. The officers ended up with a profit of just over $100 million.
ABC News previously reported on concerns from shareholders and pension funds, some of whom have called on Musk to turn his attention back from slashing government spending to running his car company.
Tesla Chief Financial officer Vaibhav Taneja also sold off shares totaling more than $5 million over recent weeks. Some of those transactions came as part of predetermined sales plans, but a transaction earlier this month did not stem from a scheduled sale.
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(NEW YORK) -- President Donald Trump’s tariffs sent stocks tumbling in recent weeks, but the uncertainty helped propel a different asset viewed as a safe haven: gold.
The price of gold topped $3,000 per ounce for the first time ever last week, and the precious metal continued to hover around that mark in early trading on Monday.
Gold prices have soared 12% so far this year, while the S&P 500 has plummeted nearly 7%. Over that period, the Dow Jones Industrial Average has dropped 2% and the tech-heavy Nasdaq has tumbled 8.5%.
The rush toward gold makes financial sense, experts said. The asset offers investors a hedge against uncertain stock performance, since gold prices often display a degree of independence from movements in equities markets.
However, gold prices carry volatility of their own, some experts added, especially when buyers enter the market at a high point, risking losses instead of providing a security blanket.
“Investors need to be careful,” Campbell Harvey, a professor at Duke's Fuqua School of Business who studies commodity prices, told ABC News.
“At a time of heightened uncertainty, people look toward a safe haven – and gold is a perceived safe haven. But most people don’t realize that gold is volatile,” Harvey added.
The run-up in gold prices comes amid a market slump set off by an escalating global trade war.
Last week, the S&P 500 closed down more than 10% since its high in February, meaning the decline officially qualified as a market correction. It marked the index's first correction since October 2023. At the same time, the Dow suffered its worst one-week drop-off since 2023.
“Right now, it’s a very anxious marketplace,” Jim Wyckoff, senior market analyst at Kitco Metals, told ABC News. “That’s been a detriment for stock-market bulls and a boom for gold-market bulls.”
The flight to gold in moments of market crisis draws on decades of evidence, according to an analysis co-authored by Harvey in 2020. The price of gold moved higher during seven of the last nine major stock market selloffs stretching back to the late 1980s, researchers found.
“It’s a good track record, but it’s not a sure thing,” Harvey said. “Even though it went up seven out of nine of these drawdown periods, that doesn’t mean it will be seven out of nine in the next nine drawdowns.”
Last week, Paris-based financial firm BNP Paribas raised its forecast for gold prices, predicting the precious metal would exceed $3,100 an ounce. The company attributed the rosy outlook to economic uncertainty incited by Trump, but it warned such gains would likely fizzle out by the second half of this year.
“The gold market will price in or normalize Trump-driven trade risks, as it typically does with geopolitical risk,” BNP Paribas said in a report shared with ABC News. “Thus, if there is no ongoing escalation in trade tensions, gold prices will, in our view, struggle to maintain further upside momentum.”
Some experts who spoke to ABC News acknowledged the current price boom may eventually lose steam, but they still encouraged investors to add the precious metal to their portfolios as a means of offsetting the heightened risk of stocks.
“Gold offers diversification,” Trevor Yates, an analyst at investment firm Global X, told ABC News. “We see gold warranting a place in the portfolio.”
Investors who add gold for the sake of diversifying their portfolio, however, may want to add other assets alongside it, such as Treasury bonds or real estate, Harvey said.
“There are other safe assets besides gold,” Harvey said. “Don’t put all of your eggs in one basket.”
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