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Biden Portrays Next Phase of Economic Agenda as Middle-Class Lifeline

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President Biden used his State of the Union speech on Thursday to remind Americans of his efforts to steer the nation’s economy out of a pandemic recession, and to lay the groundwork for a second term focused on making the economy more equitable by raising taxes on companies and the wealthy while taking steps to reduce costs for the middle class.

Mr. Biden offered a blitz of policies squarely targeting the middle class, including efforts to make housing more affordable for first-time home buyers. The president used his speech to try and differentiate his economic proposals with those supported by Republicans, including former President Donald J. Trump. Those proposals have largely centered on cutting taxes, rolling back the Biden administration’s investments in clean energy and gutting the Internal Revenue Service.

Many of Mr. Biden’s policy proposals would require acts of Congress and hinge on Democrats winning control of the House and the Senate. However, the president also unveiled plans to direct federal agencies to use their powers to reduce costs for big-ticket items like housing at a time when the lingering effects of inflation continue to weigh on economic sentiment.

From taxes and housing to inflation and consumer protection, Mr. Biden had his eye on pocketbook issues.

Many of the tax cuts that Mr. Trump signed into law in 2017 are set to expire next year, making tax policy among the most critical issues on the ballot this year.

On Thursday night, Mr. Biden built upon many of the tax proposals that he has been promoting for the last three years, calling for big corporations and the wealthiest Americans to pay more. He proposed raising a new corporate minimum tax to 21 percent from 15 percent and proposed a new 25 percent minimum tax rate for billionaires, which he said would raise $500 billion over a decade.

Criticizing the cost of the 2017 tax cuts, Mr. Biden asked, “Do you really think the wealthy and big corporations need another $2 trillion in tax breaks?”

High interest rates have made housing unaffordable for many Americans, and Mr. Biden called for a mix of measures to help ease those costs. That included tax credits and mortgage assistance for first-time home buyers and new incentives to encourage the construction and renovation of affordable housing.

Mr. Biden called on Congress to make certain first-time buyers eligible for a $10,000 credit, along with making some “first generation” home buyers eligible for up to $25,000 toward a down payment.

The president also unveiled new grants and incentives to encourage the construction of affordable housing. He also said the Consumer Financial Protection Bureau would be pursuing new rules to address “anticompetitive” closing costs that lenders impose on buyers and sellers, and called for more scrutiny of landlords who collude to raise rents and sneak hidden fees into rental agreements.

There is only so much that a president can do to tame rapid inflation, but Mr. Biden used his remarks to lean into his favorite new boogeyman: shrinkflation.

“Same size bag, put fewer chips in it,” Mr. Biden said. He called on lawmakers to pass legislation to put an end to the corporate practice of reducing the size of products without reducing their price tag.

The president also touted his efforts to cut credit card late charges and “junk” fees and to eliminate surprise fees for online ticket sales, and he claimed to be saving Americans billions of dollars from various forms of price gouging.

One of the mysteries that consume Mr. Biden’s advisers is why he does not get sufficient credit for the major pieces of legislation that have been enacted during the last three years.

The president blitzed through those accomplishments, reminding his audience of the construction of new roads and bridges and investments in the development of microchips and clean energy manufacturing.

Veering off script, Mr. Biden ribbed Republicans for voting against some of those policies while reaping the benefits of the investments in their states.

As president, Mr. Biden has prioritized stabilizing America’s economic relationship with China while also trying to reduce the United States’ reliance on Chinese products. Mr. Biden took aim at Mr. Trump, saying that while the former president portrayed himself as tough on China, the Biden administration’s policies were having a bigger impact on shrinking the bilateral trade deficit and powering U.S. economic growth.

The president added that his administration had been pushing back against China’s unfair trade practices and keeping exports of sensitive American technology away from the Chinese military. He said that Republicans who claim that the U.S. is falling behind China were wrong.

“America is rising,” Mr. Biden said. “We have the best economy in the world.”

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Empty shelves, trucking layoffs lead to recession in Apollo’s trade war timeline

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The economic impact of the tariffs imposed by the Trump administration will soon become apparent to everyday Americans and lead to a recession this summer, according to Apollo Global Management.

Torsten Slok, chief economist at Apollo, laid out a timeline in a presentation for clients that showed when the impact of tariffs announced by President Donald Trump could hit the U.S. economy. Based on the transport time required for goods to China, U.S. consumers could start to notice trade-related shortages in their local stores next month, according to the presentation.

“The consequence will be empty shelves in US stores in a few weeks and Covid-like shortages for consumers and for firms using Chinese products as intermediate goods,” Slok wrote in a note to clients Friday.

Tariff to recession timeline:

  • April 2: Tariffs announced, containership departures from China to U.S. slowing
  • Early-to-mid May: Containerships to U.S. ports come to a stop
  • Mid-to-late May: Trucking demand comes to a halt, leading to empty shelves and lower sales for companies
  • Late May to early June: Layoffs in trucking and retail industries
  • Summer 2025: recession

Source: Apollo Global Management

To support the idea that the U.S. economy is on the verge of recession, the presentation also included data that shows new orders for business, earnings outlooks and capital spending plans have all fallen sharply in recent weeks.

The Trump administration has paused some of the tariffs announced on April 2, but has hiked duties even higher on China. Treasury Secretary Scott Bessent acknowledged Monday on “Squawk Box” that the current tariff standoff with Beijing is “unsustainable.” Levies on goods from China are now subject to a 145% rate.

China is not the only source of consumer goods, but it does have a large role in the U.S. economy. The U.S. imported $438.9 billion of goods from China in 2024, according to the Office of the United States Trade Representative, putting it right behind Mexico and above Canada on the list of trading partners by that metric.

While many on Wall Street are now saying that a recession for the U.S. is likely in 2025, Slok’s predictions are toward the more pessimistic side. Bessent has said the administration expects a “detox period” for the economy due to the trade negotiations but not necessarily a recession.

There is also some evidence of a “pull-forward” in orders from before the tariffs were announced, which could keep goods on the shelves for longer than the Apollo timelines sets out.

“Don’t expect empty shelves yet — [year to date] stock is still up, and demand is slowing,” Bernstein analyst Aneesha Sherman said in a note to clients Monday.

— CNBC’s Michael Bloom contributed reporting.

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German fiscal boost won’t outweigh tariff drag for euro zone: IMF

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Europe has so much more room to produce improved productivity, IMF official says

Higher German infrastructure spending will boost Europe’s economic growth in the coming years — but not enough to outweigh the expected drag from U.S. tariffs, according to Alfred Kammer, director of the European department at the International Monetary Fund.

The IMF last week cut its growth outlook for the euro area, also making downgrades for the U.S., U.K. and many Asian countries due to President Donald Trump’s volatile tariff policy.

The institution cut its euro area growth forecasts for each of the next two years by 0.2 percentage points, to 0.8% in 2025 and 1.2% in 2026.

“It’s the tariffs and the trade tensions which weigh on the outlook rather than the positive effects on the fiscal side,” Kammer told CNBC’s Carolin Roth in an interview at the IMF-World Bank Spring Meetings last week.

“What we see is we have a meaningful downgrade for Europe advanced economies… and for the emerging euro area countries double as much over this two-year period.”

The negative impact of tariffs will be slightly offset by Germany’s recent infrastructure spending bill, which will boost growth in the euro area over those two years, Kammer said.

Exemptions passed to Germany’s longstanding debt rules have unlocked higher defense spending and enabled creation of a 500 billion euro ($548 billion) infrastructure and climate fund. The move has been described by economists as a potential “game changer” for the sluggish economy — the largest in the euro zone.

Guests and attendeess mingle and walk through the atrium during the IMF/World Bank Group Spring Meetings at the IMF headquarters in Washington, DC, on April 24, 2025.

Inflation job nearly done but tariff risks loom — What European Central Bank members said this week

However, optimism has been shaken by U.S. tariffs, which are widely expected to dampen global growth and trade flows.

Several policymakers at the European Central Bank told CNBC last week that while the inflation path appeared positive — with tariffs potentially bringing inflation in the bloc down further — their broader outlook was now significantly more uncertain.

The IMF’s Kammer said that the ECB should only cut interest rates once more this year, by a quarter percentage point, despite growth risks.

The ECB has so far reduced rates seven times in quarter-percentage-point increments, starting in June 2024. Its most recent move lower in April took the deposit facility, its key rate, to 2.25%.

“We have a very clear recommendation for the ECB. What we saw so far is a huge success in the disinflation effort and monetary policy has worked … so we are expecting to sustainably hit the 2% inflation target in the second half of 2025,” Kammer told CNBC.

“Our recommendation is there is room for one more 25-basis-point cut, in the summer, and then the ECB should hold that 2% policy rate unless major shocks hit and there is a need for recalibrating monetary policy,” he added.

Overnight index swap pricing on Monday pointed to market expectations for two more quarter-point cuts this year.

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Economics

Water sommeliers say the simplest drink is the future of luxury

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SIX ESTEEMED sommeliers sit silently behind a judging table. A waiter tops up their glasses one by one and they appraise the stuff: sniff, hold it to the light, sometimes swirl, sip, swish between cheeks, dump the extras and give it a score. But the liquid is no Zinfandel or Syrah. Instead the bon viveurs are tasting high-end waters.

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