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      The American system is badly broken | Bernie Sanders

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      Let’s take a deep breath and, for one moment, forget about Donald Trump, Jimmy Kimmel, the UN, Charlie Kirk, Gaza, a government shutdown and the other crises that we face.Let’s talk instead about the reality which the corporate-controlled media and the corporate-controlled political system don’t talk about very much.What we are witnessing right now is the rise of two Americas. One for the billionaire class. And one for everybody else.In one America, the richest people are becoming obscenely richer and have never, ever had it so good. That America is overflowing with unimaginable wealth, greed and opulence that makes the Gilded Age seem very modest.And then there is a second America – an America where a majority of people live paycheck to paycheck, struggling to secure the very basic necessities of life – food, healthcare, housing and education.The simple truth is that never before in our history have so few had so much wealth and power while so many live in economic desperation.In the first America, one man – Elon Musk, the richest man in the world, worth more than $480bn, owns more wealth than the bottom 52% of American households. After spending $290m to put Trump back into the White House, Musk has become more than $180bn richer since election day. That’s a pretty good return on his investment.But that’s apparently not good enough for Musk. In order to keep him “motivated” as CEO, Tesla’s board proposed giving him a $1tn pay package if he meets certain goals. A trillion dollars.Jeff Bezos, the fourth wealthiest person in the world, has a fortune of $233bn. He can sail to Venice on his $500m yacht for his reported $50m wedding, where he gave his wife a $3m-$5m ring – because, among other things, his effective tax rate is just a reported 1.1%.Mark Zuckerberg, the third richest person in the world, is worth $258bn. He has spent $110m to buy 11 homes in Palo Alto, California, to create his own private compound, and another $270m for more than 2,300 acres in Hawaii with a 5,000 sqft underground bunker and three yachts reportedly worth more than $530m.Larry Ellison, the second wealthiest person in the world – worth $377bn – recently became nearly $100bn richer in a single day. He owns a private island in Hawaii and a fleet of jets, and now he’s reportedly trying to buy up major media companies such as Warner Bros and CNN.Together, these four men alone are worth more than $1.3tn. But it’s not just them. The top 1% now owns more wealth than the bottom 93%.The 1% lives in a world completely removed from ordinary Americans. They don’t ride overcrowded subways to get to work or sit in traffic jams to get home. They fly on private jets and helicopters they own. They live in mansions all over the world, send their kids to the most elite private schools and vacation on their own islands. And, for fun, some spend millions to fly off into space on their own rocket ships.And then there is the other America, where the vast majority of our people live. For them, the economy is not just broken, it is collapsing. In this America, despite a massive increase in worker productivity, real weekly wages for the average American worker are lower today than they were more than 52 years ago.In this America, people are unable to afford a doctor’s visit (if they’re lucky enough to find one); are paying over half of their limited incomes on rent or a mortgage; and are unable to afford the outrageous cost of childcare or send their kids to college. In this America, the price of vegetables, fruit and other healthy foods is beyond the budget for many.For most Americans, the system is not just broken, it is collapsing and is increasingly resembling life in the third world.Everyone needs healthcare. Yet today, more than 85 million Americans are uninsured or underinsured – a number that will rise by at least 15 million under Trump’s so-called big, beautiful bill.Everyone needs housing. Yet today, nearly 800,000 Americans are homeless and more than 20m households pay more than 50% of their limited incomes on rent or a mortgage. Since 2000, average rents have more than doubled and the median price of a home has soared to more than $435,000.Everyone needs a decent education. Yet today, our childcare system is broken and wildly expensive. Many of our public schools are dilapidated with teachers underpaid and underappreciated, and American students are falling behind in math, science and reading compared with their international peers. College education is unaffordable for millions and vocational schools fail to train the workers we desperately need.Everyone needs a secure retirement. Yet, nearly half of older workers have no retirement savings and no idea how they will ever retire with any shred of dignity or respect. Meanwhile, 22% of seniors are trying to survive on an income of less than $15,000 a year.Enough is enough.As supreme court justice Louis Brandeis said in 1933: “We can have democracy in this country or we can have great wealth concentrated in the hands of the few, but we cannot have both.”That warning is even more relevant today.In this pivotal moment in American history, we must create a government and an economy that works for all, or we will continue sliding into oligarchy – where the billionaire class controls our government, our economy and our future.Let me say to my fellow Americans: I know day-to-day life can take a toll, but we must not allow ourselves to fall into despair. If we do not allow ourselves to be divided up by Trump and his oligarch allies, we can change the path we are on.The choice is clear. Let’s stand together for democracy and justice. More

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      Jerome Powell dismisses Trump’s criticism of ‘political’ Fed as ‘cheap shot’

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      The US Federal Reserve chair, Jerome Powell, pushed back hard against claims the central bank allows politics to drive decisions, in the midst of an extraordinary battle over its independence.Donald Trump, who is seeking to increase his administration’s control over the Fed, has branded Powell “a very political guy” after he declined to bow to the president’s public demands for drastically lower interest rates.The White House has launched an unprecedented campaign to overhaul the Fed’s rate-setting board of governors, installing an administration official and trying to fire a Biden appointee over unconfirmed claims of mortgage fraud.But on Tuesday, Powell, who is typically diplomatic when speaking publicly, roundly dismissed one of the common allegations made by Trump and his allies: that the Fed is somehow political when making key decisions about the world’s largest economy.“Many people don’t believe” the Fed is simply allowing economic data to drive its decisions, Powell acknowledged at an event in Rhode Island. “But the truth is, mostly people who are calling us political, it’s just a cheap shot.”He did not mention Trump by name. But the president has become the most prominent critic of the Fed and Powell since returning to office.skip past newsletter promotionafter newsletter promotionIt comes a week after the central bank ordered its first rate cut since December, a move to stabilize a wobbling labor market, even as Trump’s tariffs continue to push up prices.“Near-term risks to inflation are tilted to the upside and risks to employment to the downside – a challenging situation,” Powell reiterated on Tuesday.Stephen Miran, the Trump official now serving as a Fed governor, takes a different view. He dissented from every other policymaker on the central bank’s board of governors last week to advocate for a deeper rate cut.“Relatively small changes in some good prices have led to what I view as unreasonable levels of concern,” Miran argued in a speech earlier this week, claiming that tariffs would ultimately lead to “substantial swings in net national savings” for the country.Reuters contributed reporting More

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      Federal Reserve cuts interest rates by a quarter point, for first time in nearly a year – as it happened

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      The Fed just announced an interest rate cut by a quarter point, which was largely anticipated amid a weakening labor market.This is the first time the Fed has cut rates since December 2024. Rates now stand at a range of 4% to 4.25%, the lowest since November 2022.Stay tuned for a press conference Fed chair Jerome Powell is expected to give at 2.30pm ET.The US Federal Reserve cut interest rates by a quarter point today, a move that will reverberate across the economy in the coming months. Fed chair Jerome Powell spoke at a closely watched press conference about the Fed’s decision.Here’s a summary of what happened this afternoon:

      The Fed cut interest rates by a quarter point, the first cut since December 2024. Rates are now at a range of 4% to 4.25%.

      Fed economists also released projections, which point to a majority expecting at least one more rate cut by the end of the year.

      During his press conference, Powell said the rate cut was a move toward “risk management” instead of a testament to the strength of the economy. Economists at the Fed are concerned about a weakening labor market, which could see higher layoffs if worsened.

      But Fed officials are still concerned about inflation. Powell said that prices are likely to continue going up toward the end of the year as companies pass along the price of tariffs to consumers.

      A question remains: Will tariff-related inflation be a one-time price increase, or will it be persistent? Powell said economists at the Fed expect it to be more of a one-time price increase but that the Fed’s just is to make sure it’s not persistent.

      With pressure from the labor market and prices, Powell described it as an “unusual” situation for the Fed to manage. “Our tools can’t do two things at once,” he said.

      Powell also took questions about the recent appointment of Fed governor Stephen Miran, who was confirmed by the Senate on Monday. Powell assured that the Fed’s independence is a priority to the entire committee that sets interest rates. And the Fed’s structure offers protection: For a single member to have outsized influence, they need to “make really strong arguments based on the data and one’s understanding of the economy… That’s in the DNA of the institution.”
      Powell responded to a question about comments new Fed governor Stephen Miran made at his confirmation hearing in front of the Senate earlier this week.Miran said that the Fed actually has a “third mandate”, which is to “moderate long-term interest rates”.The introduction of a third mandate is in opposition to how Powell has framed the Fed’s “dual mandate” – balancing unemployment and price increases.“We always think of it as the dual mandate,” Powell said, explaining that moderate interest rates come from stable inflation.“As far as I’m concerned, there’s no thought of … incorporating that in a different way,” he said.Markets appear to be relatively unresponsiveness to the Fed’s highly anticipated rate cut. Both the S&P and Nasdaq are both slightly down for the day, while the Dow is up.It’s a stark contrast to last week, when markets shot up at data that showed wholesale prices falling slightly in August, and consumer inflation being within expectations for the month.The overall picture that Powell has painted of the economy in his press conference isn’t necessarily one that’s thriving. Powell said that the economy has left the Fed in an “unusual” situation, and said that the Fed’s rate cut is more about “risk management” rather than an testament to a strong economy. The recent rate cut could cause inflation to rise, but risks of the job market worsening under current rates are higher.“We’ve seen much more challenging economic times from a policy standpoint, the standpoint of what we’re trying to accomplish, it’s challenging to know what to do,” Powell said. “There are no risk-free paths now.”Powell was, again, questioned about Stephen Miran’s role as both a new Fed governor and Trump’s chair to the Council of Economic Advisor.A reporter asked Powell how the Fed can be nonpolitical if one of its voting members is explicitly connected to politics. Powell emphasized that there are 12 voting members and 19 total participants on the board.“The only way for any voter to really move things around is to be incredibly persuasive, and the only way to do that in the context in which we work is to make really strong arguments based on the data and one’s understanding of the economy,” Powell said. “That’s really all that matters. … That’s in the DNA of the institution, that’s not going to change.”A Politico reporter asked Powell how Americans will be able to tell if the Fed, which has historically been nonpartisan, starts to be partisan.“We don’t frame these questions at all or see them in terms of political outcomes. In another part of Washington, everything is seen through the lens of does it help or hurt this political party, this politicians,” Powell said. “That’s the framework. People find it hard to believe that’s not at all the way we think about things at the Fed. We take a longer perspective, we’re trying to serve the American people as best as we can.”“I think you would be able to tell. I don’t think we’ll ever get to that place.”When asked about Fed governor Lisa Cook’s lawsuit against Donald Trump for her firing (a court reinstated her last week), Powell said: “I see it as a court case that I would see as inappropriate for me to comment on.”Powell said that Fed officials are expecting inflation from tariffs to be a one-time price level increase, though “we can’t just assume that, [and] or job is to make sure that’s what happens.”“We continue to expect it to move up,” Powell said of prices. “Maybe not as high as we would have expected it to.”He added that the case for “persistent inflation” is weaker.Which is why the Fed cut rates, what he described as a “neutral” policy, given that inflation isn’t out of control, but the labor market has slowed down.But Powell acknowledged that it’s “an unusual situation” – the Fed would most likely want to be more careful with rate cuts because of inflation, but has to be wary of the labor market.“Our tools can’t do two things at once,” he said.Powell is again describing the labor market as being in a “curious balance” – a term that he first used in his Jackson Hole speech last month.The labor market is balanced out, meaning that the supply of workers is on par with the demand that employers have for workers, but it’s not necessarily a sign of strength.Because of immigration, “the supply of workers is coming down”, Powell noted. “At the same time, demand for workers has come down quite sharply to the point where we see what I’ve called a ‘curious balance’.”“Typically, when we say things are in balance that sounds good,” he added. “But in this case, the balance is because both demand and supply have come down sharply, now demand is coming down more sharply because we now see the unemployment rate going up.”A reporter asked Jerome Powell about Stephen Miran’s appointment, specifically on the fact that Miran is the first Fed governor to also have a role in the executive branch while also serving on the Fed board. Miran is the chair of the Council of Economic Advisors.“The committee remains united in pursuing our dual mandate goals,” Powell said in response. “We’re strongly committed to maintaining our independence and beyond that, I really don’t have anything to share.”Fed chair Jerome Powell just started his press conference on the Fed’s rate cut decision.As outlined in the board’s statement, Powell said that the unemployment rate, while still generally low, has edged up.“Job gains have slowed and the downside risks to unemployment have risen,” he said.Powell pointed to new immigration policy as a major factor in the labor market slowdown.“A good part of the slowing likely reflects a decline in the growth of the labor force, due to lower immigration and lower labor force participation,” Powell said. “Even so, labor demand has softened and the recent pace of job creation appears to be running below the breakeven rate needed to hold the unemployment rate constant.”The median projection for the unemployment rate, which is currently at 4.3%, sees it rising to 4.5% by the end of the year.Powells also said higher tariffs have begun to push up some prices in some categories of goods, though the full impact have yet to be seen. Price increases due to tariffs could be a one-time price increase or it could lead to “persistent” inflation.“Our obligation is to ensure that a one-time price increase in the price level does not become an ongoing inflation problem,” he said.Much of this is what Powell said during his speech last month at the Fed’s symposium in Jackson Hole, during which he first suggested that the Fed was looking toward an interest rate cut.In economic projections released after the Fed’s rate-cute decision, members of the Fed’s board submitted their economic predictions for the economy over the next few years.A slight majority of board members seem to expect another rate cut by the end of the year, while a majority see more rate cuts in 2026. Board members are predicting a slight increase in unemployment, though they seem to think that inflation will largely cool in 2026 and 2027.It’s a more dovish take on the economy than how the Fed is describing the current economy in its board statement, where the Fed said that the labor market has slowed and inflation is going up – a dynamic that points to an economic condition known as stagflation.Before Fed chair Jerome Powell can expand on the Fed’s decision in his 2.30pm ET press conference, right now we just have the Fed’s statement on its rate cut to parse through why officials voted for a cut.Notably, the Fed’s rate-setting board took note of the jobs market.“Job gains have slowed, and the unemployment rate has edged up but remains low,” it said. It also noted that “inflation has moved up and remains somewhat elevated”.This is a change from the board’s last meeting in July, when it said that labor market conditions “remain solid”. And this is the first time the board has said inflation is going up.The statement also noted that Stephen Miran, Trump’s appointee to the board who was confirmed on Monday, was the only member of the board to vote against the rate cut. Miran wanted to lower rates by a half-point, instead of a quarter-point.The Fed just announced an interest rate cut by a quarter point, which was largely anticipated amid a weakening labor market.This is the first time the Fed has cut rates since December 2024. Rates now stand at a range of 4% to 4.25%, the lowest since November 2022.Stay tuned for a press conference Fed chair Jerome Powell is expected to give at 2.30pm ET.Inflation rose slightly in August as companies continued to push the cost of tariffs on to consumers.The newest update to the consumer price index (CPI), which measures a basket of goods and services, showed that prices increased 2.9% over the last year – the highest since January. Core CPI, which excludes energy and food costs, stayed stable at 3.1% after going up in July.Despite this slight uptick in inflation, Wall Street remains optimistic that the Federal Reserve will cut interest rates at the central bank’s board meeting next week. The Fed is under intense pressure from Donald Trump to cut rates, but the decision looks likely to be led by fears that the US jobs market is weakening.Investors are anticipating a quarter-point rate cut. Rates currently stand at a range of 4.25% to 5.5%.The Fed chair Jerome Powell indicated last month that the central bank was gearing up to cut interest rates for the first time this year.For months, policymakers defied public calls from Trump to lower rates – and brushed off his increasingly aggressive criticism of the Fed’s decision to hold them steady.“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said in a closely scrutinized speech at the Jackson Hole symposium in Wyoming, highlighting a “challenging” dichotomy of risks: that Trump’s tariffs might increase inflation, while his immigration policies knock the US labor market.Concerning economic signs, including data indicating that the labor market has stalled while inflation picked up, have reinforced expectations that many policymakers will want to tread carefully in the months ahead.Trump has already suggested that he will be unhappy with the modest cut the Fed is widely expected to unveil later. Powell “MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND”, the US president wrote on his Truth Social platform early on Monday, claiming: “HOUSING WILL SOAR!!!”The Trump administration’s extraordinary bid to fire Lisa Cook, a Fed governor appointed by Biden, and remove her from the central bank’s board before this meeting, has so far failed.Late on Monday, a federal appeals court rejected Trump’s request to block Cook from attending the Fed’s latest rate-setting session, which started yesterday.The president cited unconfirmed allegations of mortgage fraud as he attempted to fire Cook, who has denied wrongdoing and argued Trump has no authority to fire her. Her term is not due to expire until 2038.No president has pursued such action – and moved to dismiss a governor at the Fed, which has long been independent from political interference – since the central bank’s founding in 1913.Trump has made no secret of his hopes to increase his oversight of the Fed, calling into question the future of its longstanding independence from political oversight by publicly describing plans to swiftly build “a majority” on its board.The Trump administration raced to strengthen its influence over the Fed ahead of this week’s meeting.Stephen Miran, a senior official who served as chair of the White House council of economic advisers, was confirmed by Senate Republicans as a Fed governor on Monday evening, and formally sworn in on Tuesday.His appointment marks the first time in the history of the modern Federal Reserve, which stretches back almost a century, that a sitting member of the executive branch will also work at the highest levels of the central bank.While Miran described the Fed’s independence as “critical” during a confirmation hearing earlier this month, and pledged to preserve it as governor, his decision to only take unpaid leave from his current job at the White House, rather than resign, raised questions over his ability to operate independently.The US Federal Reserve is expected to announce the first interest rate cut since December as a two-day policy meeting nears its end.The Fed started the meeting on Tuesday, hours after Donald Trump’s new appointee narrowly won confirmation to join the central bank – while Fed governor Lisa Cook continues to fight her removal by the president.Stephen Miran, the chair of Trump’s Council of Economic Advisers, took the oath of office as a Fed governor early on Tuesday after narrowly winning a Senate confirmation vote along party lines on Monday night.There is little doubt that the Fed will make its first interest rate cut of 2025 after the latest gathering, as policymakers pivot towards shoring up a deteriorating jobs market.But concerns about political influence targeting the independent central bank looms over the gathering, as Trump repeatedly bashes Fed Chair Jerome Powell over his rate decisions, and after he moved to fire governor Lisa Cook, sparking a legal battle.On Tuesday, Trump told reporters that the Fed should “listen to smart people like me”. 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      Trump’s tariffs have hurt tea exports to the US, says Fortnum & Mason boss

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      The boss of upmarket retailer Fortnum & Mason has said Donald Trump’s trade war has hit sales of its luxury tea exports to the US and forced up prices.Tom Athron, the London-based retailer’s chief executive, said Trump’s stricter country of origin rules and the end of the “de minimis” cost exemption for parcels worth less than $800 (£587) had hit customers across the Atlantic.“The American authorities have told us – this is the tea industry in its entirety – that if you’ve got tea from China and India in your tea, then its country of origin [is] China or India, and therefore those enormous tariffs apply,” he told the Financial Times.Trump, who landed in the UK on Tuesday for an unprecedented second state visit for a US president, last month imposed a 50% tariff on imports from India as a punishment for buying Russian oil.And earlier this year, the US administration raised tariffs as high as 145% on Chinese goods as the trade war intensified, before dropping them to 30% in May to facilitate talks between the two trading giants. The world’s two largest economies held talks in Madrid this week to try to reach a potential deal.For a 250g canister of loose leaf Royal Blend tea, which retails to US consumers at $27.85, Fortnum’s has now been forced to charge delivery fees starting at $25.41 owing to the changes to US taxes and duties.The 318-year-old retailer, which holds two royal warrants, was not previously liable for any tariffs on the majority of its deliveries to US customers.US custom agents assess whether a “substantive transformation” has been made to a product to decide whether its country of origin is different from where the product has been sourced.skip past newsletter promotionafter newsletter promotionThis process can be unclear to retailers, while the scrapping of “de miminis” rules has led to customers being wary of buying Fortnum & Mason’s products, which are popular with expats and international buyers.“A lot of our things are sent as gifts [so] if you’re living in New York and I’m sending a present to you, I want to be sure that you’re not going to be landed with a $200 bill on receipt of your parcel,” said Athron. “It’s all in hand, logistically we’re immaculate, it just means prices will go up for US consumers.”Overseas sales of Fortnum & Mason’s goods, including its famous hampers, were £12.5m in the year to July 2024, accounting for about 5.5% of total revenues.Wider inflationary pressure has led the retailer to raise the UK price of a 250g canister of loose leaf Breakfast Blend tea by almost 40% over the last five years. More

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      Donald Trump maelstrom likely to leave US economic model unrecognisable | Heather Stewart

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      Donald Trump observed blithely last week that if his cherished tariff regime is struck down by the US supreme court, he may need to “unwind” some of the trade deals struck since he declared “liberation day” in April.It was a reminder, as if it were needed, that nothing about Trump’s economic policy is set in stone. Not only does the ageing president alter his demands on a whim, but it is unclear to what extent he has the power to make them stick.Yet even if the “reciprocal” tariffs first announced on 2 April are rolled back, they are only one aspect of a much wider assault on the last vestiges of what was once known as the “Washington consensus”.To name just a few of Trump’s recent interventions, he has taken a 10% government stake in the US tech company Intel, demanded 15% of the revenue of Nvidia’s chip sales to China and suggested the chief executive of Goldman Sachs should go.This at the same as taking a sledgehammer to Federal Reserve independence by lobbing insults at the chair, Jerome Powell, and trying to sack Lisa Cook from the central bank’s board.The head of the Bureau of Labor Statistics was removed by Trump after a run of poor jobs data; the chief of the National Labor Relations Board, Jennifer Abruzzo, was fired, too.The tech bros who back Trump loathe the NLRB for its role in upholding workers’ rights – mandating unionisation ballots at Amazon warehouses, for example.Trump’s approach is simultaneously systematic, in its determination to smash existing norms, and utterly chaotic. It is hard to categorise: corporate America is being unleashed – through the wilful destruction of environmental and labour standards, for example – and brought to heel.The leftwing senator Bernie Sanders welcomed Trump’s efforts to take a stake in Intel in exchange for government grants, for example – something he advocated in the Guardian back in 2022 – while some Republicans have condemned the approach as (heaven forbid) “socialism”.Partly because it coincides with the AI-fuelled stock boom that has propelled the value of tech companies into the stratosphere, the market response to this torching of the status quo has so far been modest.Whatever emerges from another three and a half years of this maelstrom is likely to be unrecognisable as the US economic model of recent decades.Its destruction has not happened overnight. The days were already long gone when the US, as the world’s undisputed economic superpower, could export free market, financialised capitalism worldwide.After the 2008 crash, the conditions for which were created in Wall Street boardrooms, any moral or practical claim the US had to offer an economic example to other nations evaporated.As the turmoil rippled out through the global economy, and the US government responded by bailing out large chunks of its financial sector, the lie of laissez-faire was laid bare.The crisis exposed the risks of turbocharged capitalism to countries outside the US, too – not least in the former Soviet bloc – that had been advised to adopt the model wholesale.As Ivan Krastev and Stephen Holmes put it in their compelling polemic The Light that Failed, “confidence that the political economy of the west was a model for the future of mankind had been linked to the belief that western elites knew what they were doing. Suddenly it was obvious that they didn’t.”skip past newsletter promotionafter newsletter promotionBack home in the US, meanwhile – as in the UK – the perception that banks had been bailed out, while the galaxy brains behind the crisis got off scot-free, sowed the seeds of a corrosive sense of injustice.Similarly, even before the crash, the idea that ever-expanding free trade brings economic benefits was bumping up against the fact that even if that is true in aggregate, for workers across the US rust belt, just as in the UK’s former manufacturing heartlands, it brought deindustrialisation and unemployment.This was fertile ground for Trump’s populist economic message. His first-term China tariffs were, with hindsight, a relatively modest stab at, as he saw it, tilting the playing field back towards the US.Joe Biden did not unwind those tariffs, which went with the grain of geopolitics, as any hopes that economic liberalisation would bring China into the fold of democracies were sadly dashed, and President Xi’s regime took on an increasingly authoritarian bent.Biden also took a muscular approach to the state’s role in the economy, with the billions in grants and loans distributed under the Inflation Reduction Act linked to national priorities of cutting carbon emissions and creating jobs.So the idea that before Trump arrived on the scene, free market US capitalism was motoring along unchallenged is misleading, but the pace at which he is crushing its remaining norms is extraordinary.There is ample ground for legitimate disagreement here: taxpayer stakes in strategic companies are much more common in European economies, for example. Trump may be laying down tracks that future US governments with different priorities could follow.Given that it is so unclear even what kind of economy he is groping towards, the overriding sense for the moment is of radical uncertainty. Friday’s weak US payrolls data, with the unemployment rate close to a four-year high, suggested companies may be responding with caution.Investors appear to have decided to avert their eyes for now, buoyed up by the prospect of Fed rate cuts, and the mega returns of the tech companies. However, with every chaotic week that passes, the risks must increase – and as the UK has learned in the wake of the Liz Truss debacle, economic credibility is quicker to lose than to rebuild. More

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      US justice department reportedly opens criminal inquiry into Fed governor Lisa Cook

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      The US justice department has initiated a criminal investigation into mortgage fraud claims against Federal Reserve governor Lisa Cook, according to new reports, as a lawsuit she filed against Donald Trump over her firing makes its way through court.Lawyers with the justice department have issued subpoenas for the investigation, according to the Wall Street Journal.Last month, Trump moved to fire Cook over unconfirmed claims that she listed two properties as her primary residence. Bill Pulte, the director of the Federal Housing and Finance Agency and a close ally of Trump, alleged Cook had lied on bank documents and records to obtain a better mortgage rate.Cook, a voting member of the Fed board that sets interest rates, said she has “no intention of being bullied to step down” and that she would “take any questions about my financial history seriously”.In response to Trump’s bid to dismiss her, Cook filed a lawsuit against the president arguing that her removal was unconstitutional and threatened the independence of the Fed. Cook’s lawyers say the firing was “unprecedented and illegal” and that federal law requires showing “cause” for a Fed governor’s removal.“An unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not [cause],” her lawyers said in court documents.In court documents, lawyers for Cook suggested that a “clerical error” may be behind the discrepancies found in her mortgage records.Cook was appointed by Joe Biden in 2022 for a 14-year term on the board that was set to end in 2038. She is the first Black woman to be appointed to the board.US district court judge Jia Cobb heard arguments for the lawsuit last week and said she will expedite the case, which is ultimately expected to be taken up by the US supreme court.Trump’s attacks against Cook come against the backdrop of a long fight the White House has waged against the Fed, which has historically been treated as nonpartisan.skip past newsletter promotionafter newsletter promotionEarlier in the year, Trump threatened to fire the Fed chair, Jerome Powell, for not lowering interest rates, but ultimately walked back his threats after negative responses from investors. Trump also tried to accuse Powell of fraud over renovations at the Fed’s headquarters, which have cost more than anticipated.Abbe Lowell, Cook’s lawyer, told the Journal that “it takes nothing for this DoJ to undertake a new politicized investigation”. The justice department did not immediately respond to the Guardian’s request for comment.This is the third mortgage fraud inquiry the justice department has launched against Democrats and Democratic-appointed officials. Experts have called the pattern a type of “lawfare” as Trump and his allies use their roles to take down other officials.Last month, the US attorney general, Pam Bondi, appointed a special attorney to investigate similar mortgage fraud allegations the White House has levied against California senator Adam Schiff and the New York attorney general, Letitia James. More

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      Why Trump’s firing of the US jobs chief has economists worried

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      As it has for over a hundred years, the Bureau of Labor Statistics (BLS) will release its latest monthly jobs report on Friday.But the routine monthly update on the health of the US jobs market has been overshadowed by Donald Trump’s firing of the agency’s commissioner, Erika McEntarfer, hours after July’s statistics were released last month.The BLS’s data is parsed by Wall Street, Federal Reserve officials and company bosses across the US. It is also widely watched – and admired – internationally as a barometer of the US economy.Both liberal and conservative economists have criticized Trump’s nominated replacement at the BLS and have raised concerns over what will happen to the agency after the dramatic shake-up. Here’s what we know about what’s happening to the bureau.What does the Bureau of Labor Statistics do?The bureau reports key economic statistics through surveys of employers and prices. Every month, it releases data on the labor market, including the current unemployment rate, and the Consumer Price Index (CPI), which measures the cost of a basket of goods and services. This data is an important monthly snapshot of the US economy and how it changes over time.Why did Trump fire the bureau’s commissioner?Last month, the bureau announced the US had added just 73,000 jobs in July – far lower than expected – and made big revisions to previously released stats on the labor market in May and June. The number of jobs added to the economy across those two months was dramatically cut by over 250,000.Trump, who spent months boasting about the strength of the economy amid fears about the impact of his trade wars, was furious. “Today’s Job Numbers were RIGGED in order to make the Republicans, and ME, look bad,” he declared on social media.Hours after the numbers were released, Trump announced he was firing McEntarfer and that she would “be replaced with someone much more competent and qualified”.Has Trump firing of the bureau’s commissioner changed its operations?Economists say that Trump’s firing hasn’t changed the bureau, yet. Although the White House has made other job cuts at the BLS, as it did throughout the federal workforce. Since Trump took office, the bureau has seen a hiring freeze and has lost 15% of its workforce.While the bureau said it was downsizing its data collection for CPI, it did not say it was making any significant changes to its survey to employers.Economists say that, for now, the bureau’s operations have largely remained the same. William Watrowski, a longtime leader within the bureau, is currently its acting commissioner. But there are still many questions about the future of the bureau, especially after Trump announced his nomination for McEntarfer’s replacement.Who does Trump want to appoint as the bureau’s new commissioner?Trump has nominated EJ Antoni, chief economist at the conservative Heritage Foundation, as the bureau’s commissioner.Antoni was a contributor to Project 2025 – the Heritage Foundation’s rightwing blueprint for reshaping the US government – and was a vocal critic of the bureau last year, claiming that it manipulated numbers to make them more favorable to Joe Biden and Democrats. Last November, Antoni said on Twitter that Elon Musk’s so-called Department of Government Efficiency needed to “take a chainsaw” to the bureau.“Month after month, the government bean-counters under former-president Biden published overly optimistic estimates for everything from job growth to the size of the economy, only to have those numbers routinely – and quietly – revised down later,” Antoni wrote in May.When announcing his appointment, Trump said Antoni “will ensure that the Numbers released are HONEST AND ACCURATE”.Antoni has yet to be confirmed by Congress, and a confirmation date has not been set.Why did the bureau revise its job figures for May and June?Revisions are standard to the bureau’s reporting of the labor market, which is based on surveys to employers throughout the country.Large revisions often happen when employers take more time to complete the bureau’s surveys or revise their own figures due to changing circumstances. Economists have pointed out that uncertainty can lead to larger revisions. The pandemic, for example, saw jobs figures in flux as employers were handling different shutdown laws and the spread of the virus.The impact of Trump’s tariffs on data collection could be a major factor in the revisions seen earlier this year. Businesses have been reporting rollercoaster levels of uncertainty over tariff policy, with sentiment among US small businesses dipping down in the spring before going up again in the summer.“We’ve gone through periods where there were larger revisions before,” said Michael Madowitz, principal economist at the Roosevelt Institute who served on the bureau’s data users advisory committee before it was dissolved by the Trump administration. “This is like so standard, and the idea that it’s what actually set off this big political kerfuffle – this is a really unprecedented political situation.”Has the bureau gone through any political fights before?This isn’t the first time the bureau has been accused of manipulating numbers for politics. In the mid-90s, Alan Greenspan, the Federal Reserve chair at the time, criticized the way the bureau was calculating the CPI. Greenspan argued that the bureau was overestimating CPI, making inflation look higher than it actually was.Thomas Stapleford, a historian at the University of Notre Dame and author of The Cost of Living in America: A Political History of Economic Statistics, pointed out that Greenspan’s criticism led to a series of hearings where the bureau’s methodology came under question and debate. There were congressional hearings and a committee of economists was formed to investigate the methodology.“There’s all this detailed look at digging into the methodology by these outside experts and also testimony from [the bureau],” Stapleford said. “In my mind, if you have questions about the methodology, that’s the way to approach it.”But Trump has pushed the bureau into uncharted waters. Stapleford noted McEntarfer’s firing was the first time the president fired a bureau commissioner.“What the administration, in the eyes of critics, is doing is pushing the numbers in a particular direction. Not for reasons that it can justify publicly in terms of methodology, but simply because it would like a different outcome,” Stapleford said. “That’s a really big deviation from how the bureau has operated in the past.”What does this all mean for the future of the bureau?The commissioner isn’t involved in much of the day-to-day operations of the bureau. A new leader could have major sway over how the bureau collects and reports data in the long term, but there are protections in place, and any significant changes would be subject to public scrutiny.“The commissioner isn’t directly involved in the data calculation. Most of the BLS staff are long-term civil servants. They’ve been there a long time, they have various protections around them,” Stapleford said. “If the new commissioner started to force major methodological changes, I think that would raise a lot of red flags if those changes were controversial.”But even if major changes aren’t made immediately, the fact that Trump has called the bureau’s data into question could risk confusing Americans over whether the data can be trusted.“It takes a whole lot longer to build credibility than to lose. I don’t think any of the experts involved at this point are at all worried about the credibility of BLS’s work, but I know a whole lot less about what’s filtering down to the average person right now,” Madowitz said.As an example, Madowitz pointed out how the science around climate change has been clear.“But having a one-side, other-side public position on what the science says has left the public really confused,” Madowitz said. “It would be really bad if that’s how we decided to understand the economy.” More

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      Trump asks US supreme court to overturn trade tariffs ruling

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      Donald Trump has asked the US supreme court to overturn a lower court decision that most of his sweeping trade tariffs were illegal.The US president filed a petition late on Wednesday to ask for a review of last week’s federal appeals court ruling in Washington DC, which centred on his “liberation day” border taxes introduced on 2 April, which imposed levies of between 10% and 50% on most US imports, sending shock waves through global trade and markets.The court found in a 7-4 ruling last Friday that Trump had overstepped his presidential powers when he invoked a 1977 law designed to address national emergencies to justify his “reciprocal” tariffs.The decision was the biggest blow yet to Trump’s tariff policies, but the levies were left in place until 14 October – giving the administration time to ask the supreme court to review the decision.Trump has now appealed and the supreme court is expected to review the case, although the justices must still agree to do so. The administration asked for that decision to be made by 10 September.The appeal calls for an accelerated schedule with arguments being heard by 10 November, according to filings seen by Bloomberg. Justices could then rule by the end of the year.skip past newsletter promotionafter newsletter promotionThe ruling that the tariffs were unlawful upheld a previous decision by the US Court of International Trade.The federal appeals court said last Friday that US law “bestows significant authority on the president to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax”.It said many of Trump’s steep tariffs were “unbounded in scope, amount and duration”, the ruling added, and “assert an expansive authority that is beyond the express limitations” of the law his administration has leaned on.A defeat for Trump’s levies would at least halve the current average US effective tariff rate of 16.3%, and could force the country to pay back tens of billions of dollars, according to Chris Kennedy, an analyst at Bloomberg Economics. It could also derail the preliminary trade deals the president has struck with some countries, including the UK and the European Union.Tariffs typically need to be approved by Congress, but Trump claimed he has the right to impose tariffs on trading partners under the International Emergency Economic Powers Act, which in some circumstances grants the president authority to regulate or prohibit international transactions during a national emergency.Earlier this week, the US clothing brand Levi’s said that “rising anti-Americanism as a consequence of the Trump tariffs and governmental policies” could drive British shoppers away from its denim. Other brands, such as Tesla, have also suffered in Europe and in Canada, while protests against US goods have led to a slump in sales of Jack Daniel’s whiskey. More