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The US Supreme Court is primed to recalibrate government power

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TWO WEEKS before America’s Supreme Court considers whether Donald Trump may constitutionally remain on the presidential ballot, it will tackle a question closely tied to Mr Trump’s deregulatory plans for a second term. The power of some 436 federal agencies that do the bulk of the work of the federal government—from food safety to banking rules to pollution control—comes under the justices’ scrutiny on January 17th.

Herring—a silvery fish of the North Atlantic that can be smoked, pickled or, when young, tinned—is the unlikely star of Loper Bright Enterprises v Raimondo and Relentless v Department of Commerce. Both cases involve herring fishermen upset with the National Marine Fisheries Service (NMFS), a federal agency charged with safeguarding America’s ocean resources and habitat.

Drawing on a line in a statute giving the agency licence to make regulations that are “necessary and appropriate…to prevent overfishing and rebuild overfished stocks”, in 2020 the NMFS required fishermen to bring an observer along with them on their boats—and to pay that person’s per-diem fee themselves. Space on these vessels is a “scarce and precious resource”, the fisheries’ lawyer argues, making the NMFS’s rule (which was suspended in April 2023) an “enormous imposition”. Making the fishermen foot the bill “adds insult to injury”.

The rule nevertheless found receptive audiences at two of America’s appellate courts. In allowing the agency to impose the regulation, three-judge panels on both courts turned to a Supreme Court decision, Chevron USA v Natural Resources Defence Council, that has managed the inter-branch balance of power since 1984.

Chevron has two steps. First, judges determine if a law governing an administrative agency speaks clearly. If it does, judges interpret it themselves and tell the agencies what the law means. But if judges believe the law is ambiguous, they give bureaucrats the benefit of the doubt. At this second step, if the court sees the agency’s interpretation as reasonable—even if it is not the interpretation the court thinks best—it defers to the agency. In Loper Bright and Relentless, the circuit courts concluded that the law in question is ambiguous and that the NMFS’s interpretation of it is reasonable.

Chevron was popular among conservative justices in its early days. Five years after it was decided, Antonin Scalia (an arch-conservative justice who died in 2016) gave a lecture at Duke Law School in which he predicted that agency deference would endure as it “reflects the reality of government” and “serves its needs”. Yet two justices on the court today—Neil Gorsuch and Clarence Thomas—have made clear their deep disdain for what has become known as “Chevron deference”.

In a 2015 case involving the Environmental Protection Agency, Justice Thomas wrote that the wide berth Chevron afforded bureaucrats meant the court was “blithely giving the force of law” to “agency ‘interpretations’ of federal statutes” (note the scare quotes) and thereby straying “further and further from the constitution”. For Justice Gorsuch, who was railing against Chevron when he was still a judge on the 10th circuit court of appeals, agency deference is akin to “judicial abdication”.

The plaintiffs in Loper Bright and Relentless are banking on at least three more justices keen on reining in the administrative state. It may be a good bet. Brett Kavanaugh, two years before he became a justice, raised critical questions about Chevron in an article in the Harvard Law Review. The conservative majority has not invoked Chevron since 2016. The plaintiffs write that the doctrine has been “the-case-which-must-not-be-named” at the high court for years; the conservative court may see this as the moment to give Chevron, as Justice Gorsuch put it in 2022, “a tombstone no one can miss”.

Dozens of friend-of-the-court briefs urge the justices to do just that: bury-Chevron filings outnumber save-Chevron briefs by a ratio of four to one. But the implications of ditching the 40-year-old precedent are contested. For the plaintiffs, “Chevron’s primary victim is the citizenry” because the approach “literally gives the tie to their regulators in every close case”.

Not all regulations, though, are as hard to swallow as forcing fishermen to dole out up to a fifth of their profits to an on-board observer. Federal agencies, staffed by some 2.2m civil servants with expertise that judges often lack, protect workplace safety and respond to natural disasters. They keep aeroplanes and financial markets aloft. The government warns that abandoning Chevron—which lower courts continue to rely on even as the Supreme Court has quietly ignored it—would “threaten settled expectations in virtually every area of conduct regulated by federal law”.

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Economics

Bulgaria is set to join the euro zone. Its citizens aren’t convinced

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A person beats a drum with the euro logo crossed out in red on the drumhead during a demonstration against Bulgaria entering the Eurozone in Sofia on May 31, 2025.

Nikolay Doychinov | Afp | Getty Images

Bulgaria is set to become the 21st member of the euro zone after receiving sign off from the European Commission and European Central Bank last week — but not everyone is convinced the move is a good idea.

Bulgaria’s Prime Minister Rosen Zhelyazkov, member of the center-right GERB party, has made joining the euro zone a priority, arguing that it would boost economic stability and growth.

However, fears of higher prices and a loss of independence have stoked nationalist-party fueled protests against the country’s euro ascension. A recent European Union survey showed that half of Bulgaria’s population is against adopting the euro.

Economists and experts weighed in on the potential risks to Bulgaria joining the euro, outlining what the eastern European country could lose and gain from the move.

Inflation and interest rates

“The most immediate concern is a spike in prices during the currency switch, as some businesses may round up prices. Many Bulgarians worry that eurozone membership could erode their purchasing power, especially in poorer rural areas,” Valentin Tataru, an economist at ING who covers Bulgaria, told CNBC.

Nevertheless, he also noted Bulgaria’s currency has long had a fixed exchange rate to the euro and therefore, “the transitional inflation bump should be mild.”

A worker counts Bulgarian Lev banknotes at a store in Sofia, Bulgaria, on Friday, March 29, 2024.

The euro zone is ready for a new member: Bulgaria

The second key concern is what giving up Bulgaria’s currency, the lev, will mean for the country’s independence and sovereignty — ideals for which it has become symbolic according to Andrius Tursa, central and eastern Europe advisor at Teneo.

“Its replacement with the euro may be perceived by parts of the population as a loss of national control,” he told CNBC. In addition there are concerns about relinquishing control of monetary policy as countries in the euro zone are subject to decisions by the ECB, Tursa added.

The Bulgarian National Bank (BNB) would for example no longer solely be responsible for setting the country’s interest rates based only on how its individual economy is developing.

However, “eurozone countries benefit from lower interest rates due to the credibility of the ECB and reduced currency risk,” Tursa pointed out. Lower interest rates typically benefit borrowers as loans and mortgages become more affordable.

Economic stability and power

Joining the euro zone and securing oversight from the ECB could boost economic stability and growth prospects for Bulgaria, Jasmin Groeschl, senior economist for Europe at Allianz SE, told CNBC.

Foreign investment could for example increase, she suggested, and the country’s gross domestic product would be expected to be boosted by euro zone membership.

“Deeper financial integration would strengthen Bulgaria’s financial system under the ECB’s oversight, enhancing monetary stability,” Groeschl explained. “Adopting the euro would strengthen Bulgaria’s ties with the EU, enhancing its influence and credibility,” she added.

Key areas that underpin the economy like trade and tourism could also be supported, Teneo’s Tursa said.

'We are seeing lots of opportunities in Europe,' says Ares co-president

Many of Bulgaria’s key trading partners are in the EU, with most of its exports going to members of the 27-state bloc in 2023 according to data from the country’s statistics office. Key sectors include machinery and transport equipment, manufactured goods and food.

Tourism has meanwhile become a major contributor to the economy as Bulgaria positions itself as both a summer and winter destination. Over 13 million foreigners visited the country in 2024, official statistics showed.

“Bulgaria’s accession to the eurozone would facilitate trade and tourism flows with other eurozone countries by eliminating the costs and burden associated with currency conversion,” Tursa said, adding that this would be particularly important due to Bulgaria’s strong integration into EU supply chains.

Political tensions

One risk flagged by the economists and analysts are the political tensions surrounding Bulgaria’s euro adoption.

“Public opposition to euro adoption has already triggered notable protests, and in the medium term, the issue could become a key driver of rising support for populist and Euroskeptic political movements,” Teneo’s Tursa explained.

But despite local protests and concerns about euro zone ascension, at least in the long term the benefits for the country outweigh any negatives, Allianz SE’s Groeschl argued.

“The trade-off involves losing some economic autonomy in exchange for deeper integration,” she said. “Although Bulgaria would lose some monetary policy control and be subject to strict fiscal rules, the advantages of greater economic stability, reduced transaction costs and stronger integration with the EU market would typically outweigh these disadvantages.”

ING’s Tataru struck a similar tone, saying that because the lev is already tied to the euro, there should not be a major shock.

“Joining the euro is one of the most strategic steps Bulgaria can take to secure long-term prosperity and deeper European integration,” he said.

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Economics

CEO recession expectations decline from April scare, survey says

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Alexander Spatari | Moment | Getty Images

Business leaders are walking back recessionary expectations for the U.S. that initially spiked in the aftermath of President Donald Trump’s tariff announcement, according to data released Monday.

Less than 30% of CEOs forecast either a mild or severe recession over the next six months, per Chief Executive Group’s survey of more than 270 taken last week. That’s down from 46% who said the same in May and 62% in April.

The share of CEOs polled this month who said they expect some level of growth in the U.S. economy also shot up above 40%. That’s nearly double from the 23% who gave the same prediction in April.

Expectations for flat economic growth have surged in recent months, rising above 30% from 15% in April. That comes as some market participants question if “stagflation” — a term used to described an environment with stagnating economic growth and sticky inflation — could be on the horizon.

Chief Executive’s latest data reflects a shifting outlook among corporate America’s leaders as they follow the evolving policy around Trump’s tariffs. Many large companies have left their earnings outlooks unchanged, citing the uncertainty around what the president’s final trade policy will and will not include.

Trump sent U.S. financial markets spiraling in April after first unveiling his plan for broad and steep levies on many countries and territories, which market participants worried would hamper consumer spending. He placed many of those duties on pause shortly after, which helped the market recoup much of its losses.

The White House has been negotiating deals with countries during this reprieve, which is set to expire early next month. The Trump administration announced an agreement with the United Kingdom and is holding talks with China in London on Monday.

Recession talk

Firms have raised alarm that tariffs could hit their bottom lines and that they will need to pass down higher costs by raising prices. Some also said rising fears of a recession because of the levies have pushed consumers to tighten their belts financially.

The University of Michigan’s closely followed consumer sentiment index has plunged near its lowest levels on record as the tariff announcements rattled everyday Americans.

However, a New York Federal Reserve survey released Monday paints a brighter picture. The data showed that the average consumer is growing less concerned about inflation after Trump walked back some of his most severe trade plans.

“From the macro, the worst concerns, I think, have passed,” Home Depot CEO Edward Decker said last month. “We’ve gone from a dynamic of where we were going to have a near certain recession and stock market correction in early April, to where today stock markets fully recovered (and) recession expectations are way down in the past month.”

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Economics

Inflation fears receded in May as Trump eased some tariff threats, New York Fed survey shows

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Fruit and vegetables are seen at a Walmart supermarket in Houston, Texas, on May 15, 2025.

Ronaldo Schemidt | Afp | Getty Images

Americans grew less fearful about inflation in May as President Donald Trump backed off the most severe of his tariff proposals, according to a New York Federal Reserve survey Monday.

The central bank’s Survey of Consumer Expectations showed that the one-year inflation outlook took a substantial dip, down to 3.2% — a 0.4 percentage point decrease from April.

At the three-year horizon, the outlook fell 0.2 percentage point to 3%, while the five-year forecast edged down to 2.6% from 2.7%.

While all three are still above the Fed’s 2% annual target, they represent progress and a change in a fearful attitude that coincided with Trump’s saber-rattling on tariffs, culminating with the April 2 “liberation day” announcement.

Trump initially slapped universal 10% tariffs on all U.S. imports and a menu of so-called reciprocal duties on dozens of nations. However, he soon backed off the latter measures, opting for a 90-day negotiating window that expires in July.

The New York Fed survey, which is less volatile than others such as the University of Michigan and Conference Board measures, provides some good news for the White House at a time when administration officials are trying to tamp down worries about tariff-induced inflation.

“By every measure of inflation, it’s down by more than it’s been in more than four years,” National Economic Council Director Kevin Hassett said Monday morning on CNBC’s “Squawk Box.” “While the tariff revenue has been going up, inflation has been coming down, which is contrary to the story that everybody else has been saying, but very consistent with what we’ve been saying.”

Inflation as measured by the Fed’s preferred personal consumption expenditures price index was at 2.1% in April, matching lowest its been since February 2021. Excluding food and energy, core PCE stood at 2.5%, a gauge Fed officials believes is a better measure of longer-term trends.

The Fed survey showed expectations dipping across most price groups, though respondents did see food prices rising by 5.5% over the next year, a 0.4 percentage point increase from May and the most since October 2023. Elsewhere, respondents saw gas price increases easing to 2.7%, down 0.8 percentage point. The outlook for medical care, college education and rent increases also were lower on a monthly basis.

There also was a positive move in employment, with those expecting to lose their job over the next 12 months dipping to 14.8%, down half a percentage point.

Other areas showed optimism as well: The probability of missing a minimum debt payment over the next three months fell half a point to 13.4%, its lowest since January. Respondents also had more confidence in stocks, with 36.3% expecting the market to be higher a year from now, up 0.6 percentage point.

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