US News
LAST UPDATE: May 30, 2025
US Economy Shrinks 0.2% on Weaker Spending, Larger Trade Impact
The U.S. economy contracted at a 0.2% annualized rate in Q1 2025, attributed to reduced consumer spending and adverse effects from trade policies.
Insight
This contraction signals potential vulnerabilities in the U.S. economy, particularly concerning consumer confidence and trade dynamics. The decline in spending suggests that households may be feeling the pinch from inflation or uncertainty. Additionally, the impact of trade policies indicates that tariffs and international tensions are affecting economic performance. Policymakers may need to reassess current strategies to stimulate growth and address these challenges. Monitoring subsequent quarters will be crucial to determine if this is a temporary setback or the beginning of a more prolonged downturn.
US weekly jobless claims rise; corporate profits fall in first quarter
U.S. weekly jobless claims increased by 14,000 to 240,000, while corporate profits declined sharply in Q1 2025 amid economic uncertainties.
Insight
The rise in jobless claims indicates a softening labor market, which could lead to increased unemployment if the trend continues. The significant drop in corporate profits suggests that businesses are facing headwinds, possibly from higher costs or reduced demand. Together, these indicators point to a slowing economy that may require policy interventions. The Federal Reserve and government officials might consider measures to bolster employment and support businesses. Close attention to upcoming economic data will be essential to guide appropriate responses.
Trump Told Powell He’s Making a Mistake on Rates
President Trump criticized Federal Reserve Chair Jerome Powell for not lowering interest rates, arguing it disadvantages the U.S. economy.
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This interaction underscores ongoing tensions between the executive branch and the Federal Reserve regarding monetary policy. Trump’s pressure on Powell to cut rates reflects concerns about economic performance and competitiveness. However, the Fed’s commitment to data-driven decisions highlights the importance of maintaining its independence. Such public disagreements can create uncertainty in financial markets and may influence investor sentiment. It’s crucial for the Fed to communicate its rationale clearly to preserve credibility and ensure effective policy implementation.
Powell tells Trump that Federal Reserve’s interest rate policy will depend on data and outlook
Federal Reserve Chair Jerome Powell reaffirmed to President Trump that interest rate decisions will be based on economic data and forecasts, not political considerations.
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Powell’s stance emphasizes the Fed’s role as an independent institution focused on achieving its dual mandate of maximum employment and price stability. By resisting political pressure, the Fed aims to maintain market confidence and ensure that monetary policy decisions are made in the economy’s best interest. This approach is vital for long-term economic health, even if it leads to short-term disagreements with political leaders. The situation highlights the delicate balance central banks must maintain between independence and accountability.
Fed’s Goolsbee: if tariffs are avoided, policy rate can come down
Chicago Federal Reserve Bank President Austan Goolsbee stated that avoiding major tariffs could allow the Fed to lower interest rates, citing the underlying strength of the economy and progress toward the 2% inflation target.
Insight
Goolsbee’s remarks highlight the significant impact of trade policy on monetary decisions. The avoidance of tariffs would reduce inflationary pressures, providing the Fed with greater flexibility to adjust interest rates. This perspective underscores the interconnectedness of fiscal and monetary policies and the importance of coordinated approaches to economic management. The Fed’s cautious stance reflects the need to balance growth objectives with inflation control amid policy uncertainties.
White House adviser says three trade deals nearly done
White House economic adviser Kevin Hassett announced that three trade deals are nearly finalized, expressing optimism for additional agreements despite a recent court ruling blocking most of President Trump’s tariffs.
Insight
Hassett’s announcement suggests that the administration is actively pursuing trade agreements to bolster economic growth. The near completion of these deals indicates progress in opening markets for American products. However, the recent court ruling introduces legal complexities that may affect the implementation of new trade policies. The administration’s ability to navigate these challenges will be crucial in achieving its trade objectives. This situation highlights the dynamic interplay between legal decisions and economic policymaking.
Hassett Says US Has Other Options on Tariffs But Awaiting Appeal
White House economic adviser Kevin Hassett stated that the Trump administration is considering alternative legal avenues to reinstate tariffs after a federal court ruled many of them unlawful.
Insight
The administration’s exploration of options such as Section 122 of the Trade Act of 1974 indicates a determination to maintain its tariff strategy despite legal setbacks. This approach underscores the administration’s commitment to its protectionist policies, which could lead to prolonged trade tensions. The consideration of alternative legal justifications also reflects the complexities of U.S. trade law and the challenges in balancing executive authority with legislative oversight. The outcome of these deliberations will have significant implications for international trade relations and domestic economic policy.
US May Take Trump Tariff Case to Supreme Court on Friday
The Trump administration announced plans to petition the U.S. Supreme Court to overturn a lower court’s decision that invalidated broad tariffs imposed under the International Emergency Economic Powers Act.
Insight
This move highlights the administration’s aggressive legal strategy to preserve its tariff regime, emphasizing the significance it places on these measures as tools of economic policy. The potential involvement of the Supreme Court introduces a new dimension to the legal battle, potentially setting precedents for the scope of presidential authority in trade matters. The outcome could redefine the balance of power between the executive and legislative branches concerning trade policy. Additionally, the decision will be closely watched by international trading partners and could influence global economic dynamics.
State Dept overhaul will cut thousands of jobs, push ‘Western values’
The Trump administration submitted a comprehensive plan to Congress to restructure the State Department, aiming to eliminate or merge 132 bureaus and offices and cut 3,448 domestic jobs.
Insight
This significant reorganization reflects the administration’s intent to streamline government operations and align foreign policy with its “America First” agenda. By emphasizing “Western values” and focusing on preventing illegal migration, the plan signals a shift in diplomatic priorities. The consolidation of functions previously managed by USAID under a new undersecretary may impact the delivery of foreign aid and humanitarian assistance. Critics argue that such changes could diminish the U.S.’s global influence and undermine long-standing diplomatic relationships. The restructuring also raises concerns about the morale and effectiveness of the remaining workforce.
