US News
LAST UPDATE: June 5, 2025
US Economic Activity Ebbs, Prices Rise in Fed’s Beige Book
The Federal Reserve’s latest Beige Book reports a decline in U.S. economic activity amid rising tariffs and cost pressures, with only three of the twelve Fed districts reporting growth.
Insight
The Beige Book’s findings indicate a slowing U.S. economy, influenced by factors such as increased tariffs and inflationary pressures. The uneven growth across regions and sectors suggests that businesses are facing challenges in forecasting and adapting to changing trade policies. While employment remains largely flat, the contraction in the service sector and rising input costs raise concerns about sustained economic momentum. These developments may complicate the Federal Reserve’s policy decisions, balancing the need to control inflation without hindering economic growth.
Trump tax-cut bill could cost $2.4 trillion, less than earlier forecast
The Congressional Budget Office (CBO) estimates that President Trump’s proposed tax-cut and spending bill would add $2.4 trillion to the U.S. national debt over the next decade, a figure lower than previous projections.
Insight
The CBO’s revised estimate suggests a slightly reduced fiscal impact compared to earlier forecasts. However, the substantial addition to the national debt remains a concern for fiscal conservatives and economists. The bill’s provisions, including permanent tax cuts and increased spending on defense and border security, continue to spark debate over their long-term economic implications. Critics argue that the benefits may disproportionately favor higher-income individuals and corporations, while potentially leading to cuts in social programs to offset the increased deficit.
Donald Trump’s ‘big beautiful bill’ will swell US debt by $2.4tn, warns fiscal watchdog
The Congressional Budget Office (CBO) projects that President Trump’s proposed tax legislation would increase U.S. national debt by $2.4 trillion by 2034, despite claims of deficit reduction.
Insight
The CBO’s analysis indicates that the bill would result in a $3.75 trillion revenue loss over ten years, partially offset by $1.3 trillion in spending cuts. The legislation extends 2017 tax cuts and includes reductions in social programs like Medicaid. Critics, including Elon Musk and JPMorgan CEO Jamie Dimon, express concerns over fiscal irresponsibility and potential market instability. The bill narrowly passed the House and faces uncertainty in the Senate. The administration argues that economic growth and tariff revenues will mitigate fiscal concerns, though the CBO highlights potential negative impacts from tariffs.
US service sector unexpectedly contracts in May; inflation heats up
In May 2025, the U.S. service sector contracted for the first time in nearly a year, with the ISM services PMI dropping to 49.9 from 51.6 in April, indicating potential economic trouble amid rising inflation.
Insight
The contraction reflects industry unease, partly due to ongoing trade tensions and import tariffs imposed by President Trump, which have disrupted supply chains and prompted companies to withhold financial forecasts. The decline in new orders and worsening supplier delivery times contribute to inflationary pressure, with input prices surging to their highest level since November 2022. Economists caution that the combination of weak economic performance and rising prices raises concerns of stagflation.
US private payrolls post smallest gain in over two years in May
The U.S. private sector added only 37,000 jobs in May 2025, the smallest monthly gain since March 2023, significantly missing economists’ expectations of 110,000 new jobs.
Insight
The slowdown in job growth is attributed to economic uncertainty fueled by the Trump administration’s tariffs, which have impacted business confidence and hiring decisions. Job growth was concentrated in the services sector, while goods-producing industries shed jobs. Despite the weak number, the labor market may still be gradually easing. Analysts forecast that the more comprehensive BLS report will show a private payroll increase of 120,000 and total nonfarm payrolls rising by 130,000 in May, with the unemployment rate holding steady at 4.2%.
Economists Raise Questions About Quality of U.S. Inflation Data
Economists express concerns about the reliability of recent U.S. inflation data due to staffing shortages at the Bureau of Labor Statistics (BLS), leading to increased reliance on imputation methods.
Insight
A federal hiring freeze has forced the BLS to scale back its monthly price surveys, with 29% of price data in April’s report involving imputation—nearly double the rate of the previous five years. These changes may affect the precision of the Consumer Price Index (CPI), a key metric influencing Social Security, tax brackets, federal bond payments, and Federal Reserve policy. The data inaccuracies have sparked concern among economists and investors, especially as the U.S. has historically led in accurate economic reporting. Budget constraints and disbanding of expert advisory panels under the Trump administration are cited as contributing factors to declining data quality.
US economic activity declines as tariffs pressure prices, Fed says
The Federal Reserve’s latest Beige Book reports a decline in U.S. economic activity amid rising tariffs and cost pressures, with only three of the twelve Fed districts reporting growth.
Insight
The survey-based report indicates widespread expectations of accelerating prices and uneven economic performance across regions. Tariffs and trade policy uncertainty are significantly impacting business behavior, such as altering product offerings and forecasting difficulties. While employment remains largely flat, the Beige Book highlights growing pessimism and regional disparities. The Federal Reserve continues to hold interest rates steady while assessing the economic impact of government trade policies. The mixed signals from survey insights and broader data present a policy challenge for the Fed, which is grappling with both slowing growth and upward inflation pressure.
US SEC says new foreign firm rules needed, singles out China
The U.S. Securities and Exchange Commission (SEC) is considering new regulations for foreign firms listed in the U.S., focusing on Chinese companies that benefit from less stringent disclosure requirements.
Insight
The SEC’s initiative aims to address concerns that certain foreign companies, particularly from China, exploit their classification as foreign private issuers to avoid rigorous U.S. disclosure standards. Many of these firms are listed solely on U.S. exchanges, yet they are subject to less frequent reporting obligations compared to domestic companies. The proposed changes would ensure that all firms trading exclusively in the U.S. adhere to the same transparency and accountability standards, thereby protecting investors and maintaining market integrity. This move also reflects broader geopolitical tensions and the U.S. government’s efforts to scrutinize Chinese entities operating within its financial markets.
US House plans quick action on Trump cuts to foreign aid spending
Republican leaders in the U.S. House of Representatives plan to swiftly act on President Donald Trump’s request to cut $9.4 billion in previously approved spending on foreign aid and public broadcasting.
Insight
The proposed rescissions package reflects the Trump administration’s commitment to its “America First” policy, aiming to reduce what it considers wasteful spending. The cuts target various programs, including international disaster assistance, global health initiatives, and funding for the Corporation for Public Broadcasting. While proponents argue that these measures will eliminate unnecessary expenditures, critics warn that such reductions could exacerbate global humanitarian crises and diminish U.S. influence abroad. The swift legislative action indicates strong alignment between the executive branch and the current GOP-dominated Congress, potentially leading to significant shifts in U.S. foreign aid and public diplomacy strategies.
