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The US added over 300,000 jobs in March and the unemployment rate dropped slightly

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The unemployment rate decreased from 3.9% to 3.8% in March.  (iStock)

The unemployment rate decreased marginally in March to 3.8%, the Bureau of Labor Statistics noted in its Employment Situation Report. Last month, the unemployment rate sat at 3.9%. The rate dropped, in part, due to the additional 303,000 jobs added in March.

The unemployment rate hasn’t shifted much over the last few months. It’s been ebbing and flowing between 3.7% and 3.9% since August 2023.

Currently, there are 6.4 million unemployed people in the U.S. The number of long-term unemployed people — those who have been jobless for at least 27 weeks — reached 1.2 million this month, barely changing since February.

The industries that saw the largest gains include health care, government and construction. The healthcare industry added 72,000 jobs, which is higher than the average monthly gain of 60,000 over the last year.

The U.S. government added 71,000 jobs, also higher than the average in the last 12 months. The construction industry added 39,000 jobs, which is nearly double the average monthly gain of 19,000 in the last 12 months.

Some industries saw little to no change in jobs last month. The mining, quarrying, oil, gas and manufacturing industries saw hardly any change to job numbers.

The building materials and equipment industry as well as automotive parts dealers saw job losses. Builders and equipment dealerships lost 10,000 jobs and automotive parts makers lost 3,000 jobs.

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HIGH DEBT IS CAUSING MORE CONSUMERS TO LIVE PAYCHECK-TO-PAYCHECK

Inflation is back up slightly

The U.S. Bureau of Labor Statistics Consumer Price Index (CPI) — a major measure of inflation — increased by 0.4%, after rising 0.3% in January.

The index for shelter rose by 0.4% in February and the gasoline index rose by 3.8%. These two indexes drove inflation the most. The food index remained steady, with no change between January and February.

A couple of the indexes within the CPI decreased by small margins. The medical care services index decreased by 0.1%. The new vehicles decreased by the same 0.1%.

While new cars dropped in price in February, the cost of used vehicles went up. The used car index rose by 0.5%.

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Home prices remain unaffordable despite rising incomes

Although the job market is staying strong, housing remains unaffordable for both buyers and renters.

The average sale price for a single-family home was 5.6 times higher than the average income, a study from the Joint Center for Housing Studies of Harvard University recently revealed. This is higher than it’s ever been on record, dating back to the 1970s.

In 2019, before the pandemic, the national price-to-income ratio stood at 4.1, today it stands at 5.6. A high price-to-income ratio indicates low homebuyer affordability.

During the pandemic, low mortgage rates helped balance out high prices, but now, the average 30-year mortgage rate sits at 6.82%, Freddie Mac recently reported. Plus, high homeowners insurance rates and lingering high home prices, are also pushing many buyers out of the market.

Renters aren’t fairing much better than buyers. Another recent Joint Center study measured affordability for renters. It found that, in 2022, half of renters in the U.S. were cost burdened, spending more than 30% of their incomes on rent and utilities.

The number of renters spending 30% of their incomes rose by two million and has reached a record high of 22.4 million. During the pandemic, there were more resources to help renters deal with these high costs. 

“As these resources have expired, however, the housing safety net is once again overwhelmed and underfunded,” Chris Herbert, the managing director of the Joint Center, said in a press release.

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Tariffs may raise much less than White House projects, economists say

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President Donald Trump speaks before signing executive orders in the Oval Office on March 6, 2025.

Alex Wong | Getty Images

President Donald Trump says that tariffs will make the U.S. “rich.” But those riches will likely be far less than the White House expects, economists said.

The ultimate sum could have big ramifications for the U.S. economy, the nation’s debt and legislative negotiations over a tax-cut package, economists said.

White House trade adviser Peter Navarro on Sunday estimated tariffs would raise about $600 billion a year and $6 trillion over a decade. Auto tariffs would add another $100 billion a year, he said on “Fox News Sunday.”

Navarro made the projection as the U.S. plans to announce more tariffs against U.S. trading partners on Wednesday.

Economists expect the Trump administration’s tariff policy would generate a much lower amount of revenue than Navarro claims. Some project the total revenue would be less than half.

Roughly $600 billion to $700 billion a year “is not even in the realm of possibility,” said Mark Zandi, chief economist at Moody’s. “If you get to $100 billion to $200 billion, you’ll be pretty lucky.”

The White House declined to respond to a request for comment from CNBC about tariff revenue.

The ‘mental math’ behind tariff revenue

There are big question marks over the scope of the tariffs, including details like amount, duration, and products and countries affected — all of which have a significant bearing on the revenue total.

The White House is considering a 20% tariff on most imports, The Washington Post reported on Tuesday. President Trump floated this idea on the campaign trail. The Trump administration may ultimately opt for a different policy, like country-by-country tariffs based on each nation’s respective trade and non-trade barriers.

But a 20% tariff rate seems to align with Navarro’s revenue projections, economists said.

The U.S. imported about $3.3 trillion of goods in 2024. Applying a 20% tariff rate to all these imports would yield about $660 billion of annual revenue.

“That is almost certainly the mental math Peter Navarro is doing — and that mental math skips some crucial steps,” said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration.

Trade advisor to U.S. President Donald Trump Peter Navarro speaks to press outside of the White House on March 12, 2025 in Washington, DC. 

Kayla Bartkowski | Getty Images

That’s because an accurate revenue estimate must account for the many economic impacts of tariffs in the U.S. and around the world, economists said. Those effects combine to reduce revenue, they said.

A 20% broad tariff would raise about $250 billion a year (or $2.5 trillion over a decade) when taking those effects into account, according to Tedeschi, citing a Yale Budget Lab analysis published Monday.  

There are ways to raise larger sums — but they would involve higher tariff rates, economists said. For example, a 50% across-the-board tariff would raise about $780 billion per year, according to economists at the Peterson Institute for International Economics.

Even that is an optimistic assessment: It doesn’t account for lower U.S. economic growth due to retaliation or the negative growth effects from the tariffs themselves, they wrote.

Why revenue would be lower than expected

Tariffs generally raise prices for consumers. A 20% broad tariff would cost the average consumer $3,400 to $4,200 a year, according to the Yale Budget Lab.

Consumers would naturally buy fewer imported goods if they cost more, economists said. Lower demand means fewer imports and less tariff revenue from those imports, they said.

Tariffs are also expected to trigger “reduced economic activity,” said Robert McClelland, senior fellow at the Urban-Brookings Tax Policy Center.

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For example, U.S. companies that don’t pass tariff costs on to consumers via higher prices would likely see profits suffer (and their income taxes fall), economists said. Consumers might pull back on spending, further denting company profits and tax revenues, economists said. Companies that take a financial hit might lay off workers, they said.

Foreign nations are also expected to retaliate with their own tariffs on U.S. products, which would hurt companies that export products abroad. Other nations may experience an economic downturn, further reducing demand for U.S. products.

Tariffs could be a major rewiring of the domestic and global economy, says Mohamed El-Erian

“If you get a 20% tariff rate, you’re going to get a rip-roaring recession, and that will undermine your fiscal situation,” Zandi said.

There’s also likely to be a certain level of non-compliance with tariff policy, and carve-outs for certain countries, industries or products, economists said. For instance, when the White House levied tariffs on China in February, it indefinitely exempted “de minimis” imports valued at $800 or less.

The Trump administration might also funnel some tariff revenue to paying certain parties aggrieved by a trade war, economists said.

President Trump did that in his first term: The government sent $61 billion in “relief” payments to American farmers who faced retaliatory tariffs, which was nearly all (92%) of the tariff revenue on Chinese goods from 2018 to 2020, according to the Council on Foreign Relations.

The tariffs will also likely have a short life span, diluting their potential revenue impact, economists said. They’re being issued by executive order and could be undone easily, whether by President Trump or a future president, they said.

“There’s zero probability these tariffs will last for 10 years,” Zandi said. “If they last until next year I’d be very surprised.”

Why this matters

The Trump administration has signaled that tariffs “will be one of the top-tier ways they’ll try to offset the cost” of passing a package of tax cuts, Tedeschi said.

Extending a 2017 tax cut law signed by President Trump would cost $4.5 trillion over a decade, according to the Tax Foundation. Trump has also called for other tax breaks like no taxes on tips, overtime pay or Social Security benefits, and a tax deduction for auto loan interest for American made cars.

If tariffs don’t cover the full cost of such a package, then Republican lawmakers would have to find cuts elsewhere or increase the nation’s debt, economists said.

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Investors hope April 2 could bring some tariff clarity and relief. That may not happen

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Cliff Asness’s AQR multi-strategy hedge fund returns 9% in the first quarter during tough conditions

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Cliff Asness.

Chris Goodney | Bloomberg | Getty Images

AQR Capital Management’s multistrategy hedge fund beat the market with a 9% rally in the first quarter as Wall Street grappled with extreme volatility amid President Donald Trump’s uncertain tariff policy.

The Apex strategy from Cliff Asness’ firm, which combines stocks, macro and arbitrage trades and has $3 billion in assets under management, gained 3.4% in March, boosting its first-quarter performance, according to a person familiar with AQR’s returns who asked to be anonymous as the information is private.

AQR’s Delphi Long-Short Equity Strategy gained 9.7% in the first quarter, while its alternative trend-following offering Helix returned 3%, the person said.

AQR, whose assets under management reached $128 billion at the end of March, declined to comment.

The stock market just wrapped up a tumultuous quarter as Trump’s aggressive tariffs raised concerns about an severe economic slowdown and a re-acceleration of inflation. The S&P 500 dipped into correction territory in March after hitting a record in February.

For the quarter, the equity benchmark was down 4.6%, snapping a five-quarter win streak. The tech-heavy Nasdaq Composite lost 10.4% in the quarter, which would mark its biggest quarterly pullback since a 22.4% plunge in the second quarter of 2022.

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