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      Trump says Biden caused the economic downturn. That’s malarkey | Steven Greenhouse

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      While Donald Trump delusionally asserts that “we’re celebrating the most successful first 100 days of any administration in American history”, last week’s economic news emphatically refutes that. Trump’s commerce department reported on Wednesday that the US economy – in a sharp and dismaying reversal – shrank in the first quarter of this year.That of course is when Trump returned to the White House, but Trump, true to form, denied that he was in any way responsible for the surprisingly bad economic news. Trump, who has spent his life blaming others and refusing to admit mistakes, was quick to blame Joe Biden for the downturn. The nation’s gross domestic product declined at a 0.3% annual rate in the quarter, after adjusting for inflation.At Wednesday’s cabinet meeting – where cabinet secretaries sounded like North Korean officials obsequiously extolling Kim Jong-un – Trump noted the bad first-quarter report and said: “This is Biden, and you can even say the next quarter is sort of Biden.” Later in the day in a speech to corporate executives, Trump continued to try to dodge responsibility, saying: “This is Biden’s economy.”Even the very careful New York Times said that Trump was full of it. The Times wrote that Trump “blamed his predecessor for handing him a bad economy, despite data showing that growth was strong when he took office”.When Biden left office, many economists had glowing words about the economy. “President Trump is inheriting an economy that is about as good as it ever gets,” said Mark Zandi, chief economist at Moody’s Analytics. “The US economy is the envy of the rest of the world, as it is the only significant economy that is growing more quickly post-pandemic than pre-pandemic.”With regard to the bad first-quarter GDP report, economists overwhelmingly agree that there was one overriding cause, and that cause was not Joe Biden. Rather, it was the huge uncertainty and fears stirred by the prospect of Trump’s tariffs. Eager to stock up on foreign goods before Trump imposed his wave of tariffs, US businesses rushed to increase their imports, and according to the formula used to calculate GDP, soaring imports have a downward effect on economic growth.Like the boy who would never admit he broke the cookie jar, Trump refused to admit that his tariffs had anything to do with the first-quarter downturn. For Trump, truth is a distant galaxy. It’s a foreign enemy that he is forever trying to repel. He stubbornly refuses to admit that the economy was in strong shape when he took office, just as he shamelessly refuses to admit that “MS-13” was Photoshopped on to the knuckles of Kilmar Ábrego García, an immigrant who was wrongly deported to a brutal prison in El Salvador. Far too often, Trump seems allergic to the truth. During an interview with Terry Moran of ABC News, he brazenly insisted that Moran accept Trump’s falsehood about Ábrego García, telling him: “Why don’t you just say: ‘Yes, he does’” have MS-13 tattooed on his knuckles.It’s as delusional for Trump to claim that “we inherited from the last administration an economic catastrophe”, as he did in a speech to a joint session of Congress in March, as it is for him to insist that Ábrego García’s knuckles say “MS-13”.When Biden left office, no economists were forecasting a recession anytime soon – that’s why Wednesday’s report that the economy shrank in the first quarter was such a surprising reversal. During last year’s fourth quarter, Biden’s last full quarter in office, the nation’s GDP grew at a solid 2.4% rate. Indeed, ever since the Covid-19 pandemic ended, economic growth in the US was considerably stronger than in Britain, Germany, France, Japan and other G7 nations. Several weeks before election day, the Economist magazine ran headlines saying the US economy was “the envy of the world” and had “left other rich countries in the dust”.When Biden’s term ended, the jobless rate was a low 4.0%. Not only that, during Biden’s four years, the average unemployment rate was lower than for any president since the 1960s. Trump won over many voters by attacking high inflation under Biden – and it was a serious problem – but by the time Biden left office, inflation had slid to just 2.9%, far below its 9% peak in 2022 and nearly down to the Federal Reserve’s inflation goal.As part of his economic disinformation efforts, Trump has repeatedly said that job growth was a disaster under Biden. Sorry, Donald, that’s a lie. The fact is that during Biden’s four years, the US added 16.6 million jobs, more than during any four-year term of any previous president. (Trump will never tell you this, but during his first term, the nation lost 2.7 million jobs overall, making his first-term presidency the first presidency since Herbert Hoover’s to suffer an overall loss in jobs. The pandemic was largely responsible for that.)As part of his never-ending effort to dodge responsibility, Trump blamed Biden for the stock market’s recent troubles. During Trump’s first 100 days, the S&P 500 fell 7%, making it the market’s worst beginning to a presidential term since Gerald Ford took office in 1974 after Richard Nixon resigned due to the Watergate scandal.Devious as ever, Trump posted on Truth Social on Wednesday: “This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th.” What Trump failed to say was that the stock market didn’t begin to plunge until 2 April, when he announced his steep, worldwide “liberation day” tariffs. That was more than two months after Biden left office – so it’s absurd for Trump to blame him for that decline. And don’t expect Trump to ever acknowledge that Wall Street soared during Biden’s four years. The Dow Jones Industrial Average climbed 39% and the S&P 500 soared by 55.7%, including a 28% jump during 2024.Jared Bernstein, who was chair of the council of economic advisers under Biden, said on MSNBC on Thursday that it was ludicrous for Trump to blame Biden for the first-quarter downturn. “I have never seen a more direct connection to what we’re seeing in the economy and stock market to the action of one person, which is to President Trump and his trade war,” Bernstein said.Many economists warn that the US economy may sink further in the second quarter due to Trump’s tariffs as some supply chains break down, some imports dry up, prices rise on many goods and many consumers and business pull back on spending due to all the uncertainty and anxiety.John Kasich, a Republican and former governor of Ohio, sneered at Trump’s efforts to weasel out of responsibility. “You can’t blame Biden,” he said. “It’s like saying the dog ate my homework.”

      Steven Greenhouse is a journalist and author focusing on labor and the workplace, as well as economic and legal issues More

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      Trump’s tariffs get one thing right: capitalism is changing | Avram C Alpert

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      Trying to understand Donald Trump’s across-the-board tariffs based solely on economic theory won’t work. As the US president himself said: “Chronic trade deficits are no longer merely an economic problem, they’re a national emergency that threatens our security and our very way of life.” That may be why, as many economists have pointed out, there’s simply no good economic case for his plans.But few commentators have understood that facts and figures aren’t the whole point of the tariffs. As always, economics is part of a broader political vision. The tariffs help Trump make his claim that a way of life is under threat and he alone can protect it.Indeed, the political meaning of Trump’s tariffs is in the idea itself: “protectionism”. He is not just telling people that he’s going to improve the economy. He’s signaling that he’s going to protect a way of life, even – or especially – if it hurts others, by creating, in theory, good-paying factory jobs that could sustain local communities. (Never mind that the key to any industry’s ability to sustain communities are the practices of labor organizing Trump opposes.) On the campaign trail, he said: “Whether the women like it or not, I’m going to protect them.” He’s now saying the same thing to the country as a whole.Such non-economic justifications for economic policy are nothing new. They are part of what the sociologist Max Weber called “the spirit of capitalism”. Weber argued that capitalists had to justify a claim unique in human history: profit is good. For millennia before, philosophers had argued the opposite. Jesus, for example, told his disciples that it was likelier for a camel to go through the eye of a needle than for a rich man to get into heaven.But with capitalism, the pursuit of profit became good. How did it justify this? Weber said that’s where “spirit” comes in. He pointed to notions of work as a holy value in Protestantism and Calvinist ideas about how monetary success proved you were among God’s chosen few. These spiritual views engendered a work ethic and made capitalist excess palatable. At least for a time.When capitalist greed becomes unpalatable, new spirits emerge. To understand Trump’s protectionist spirit, we have to understand this preceding history.After the Great Depression, people saw that they might lose everything no matter how hard they worked and so the work ethic spirit lost its power. In its place, social democratic states gave a new collectivist spirit to capitalism. Social democracy limited excess and provided a moral logic by offering stability to all through a linked system of jobs and life-long public services.This collectivist spirit began to break down in the 1960s under the pressures of stagflation, oil shocks, and criticisms of a conformist, consumerist lifestyle. In response, capitalism’s spirit transformed itself again. According to two scholars of this transitional period, Luc Boltanski and Ève Chiapello, it did so by ingeniously incorporating the criticisms: it became about nomads, connections, flexibility, creativity.It was no longer the staid cubicle office man; it was now the exciting creative entrepreneur who knows no allegiances and is at home in the chaos of disruption. Hence Silicon Valley. Hence the destroyed manufacturing bases where jobs were converted to low-wage poverty traps and where Trump now finds many of his most loyal supporters. Hence his protectionist vision of a new spirit of capitalism.There is some merit in this desire to help those who lost out, but, as Weber noted, the spirits of capitalism can mask more sinister desires. By also pushing massive tax breaks for the wealthy, Trump is hoping that tariffs can provide rhetorical appeal without radically changing the social order.The tariffs say: we will protect your community by hurting those who profited off your pain and became rich through globalization. That’s why Trump blamed “globalists” for the dip in the stock market after the tariffs were announced: “A lot of [those selling stocks] are globalist countries and companies that won’t be doing as well … Because we’re taking back things that have been taken from us many years ago.” But that ignores the real ways in which jobs have been lost and communities upended. What the tariffs leave unsaid is that they won’t address the real issues underlying today’s economic pain: gutting welfare, failing to retrain workers, under-utilizing technology, and letting inequality rise relentlessly.Trump is right that capitalism, in a period of untrammeled greed and injustice, needs a new spirit to show it the way. But the trouble with a protectivist spirit is that it implies that some get protected while others get hurt. That will just create new cycles of dismay – as we are already seeing with the tariff whiplash and draconian immigration policies.What we need is a democratizing spirit, one that isn’t about protecting some and hurting others, but instead guides us to work collectively to ensure that all people can lead decent and meaningful lives even in a chaotic world. There are economic policies for this, such as fair trade, meaningful industrial policy, more worker representation on corporate boards, and more cooperatively owned businesses.But Democrats also need to learn from Trump and emphasize the spirit. They need to show that their democratic vision is not just technocratic, but as powerful and affirming as the feeling of being protected.The desire for this spirit may be why the rallies of Bernie Sanders and Alexandria Ocasio-Cortez have drawn record crowds. Most attenders say they aren’t there to hear the policies, which they already know. They’re there for the “community”, and to experience the “closest thing to a version of America you actually want to live in”, one that works for all of us. If the Democratic party can catch that spirit, they will not only win elections; they might just bring an end to decades of destruction.

      Avram Alpert is a lecturer in the Princeton Writing Program. His most recent book is The Good-Enough Life More

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      Donald Trump’s cartoon-like chaos leaves US economy on unstable course | Heather Stewart

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      Ten days reporting from the US – in Pittsburgh, Washington DC, and just across the Potomac River in Arlington, Virginia – gave me a fascinating snapshot of what feels like the slow-motion unravelling of the world’s largest economy.So many conversations featured uncertainty and wariness; and weariness, too, as businesses and consumers weigh up every decision, against the backdrop of the chaos emanating from the White House.Even the president conceded last week that the economy was in a “transition period”, claiming he had warned of this during his campaign. (When challenged, the White House could not come up with any examples of when he had done so.)The problem for Trump and his supporters, many of whom remain staunchly loyal, is that the transition period in question is starting to resemble that felt by the classic Looney Tunes character Wile E Coyote between charging off a cliff into midair and plunging to the ground.So far, the hard data from the US economy is holding up well. Friday’s payrolls report was strong, and the negative first quarter gross domestic product reading, while worrying, was hard to take a clear reading from because of the rise in imports as companies stocked up ahead of tariffs.There is little sign of anything as dramatic as mass job cuts, or a sudden stop in consumer spending – although the recent crop of data mainly relates to the period before “liberation day”.Look at the forward-looking surveys, though, and there are clear signs of anxiety. The long-running Michigan consumer sentiment index just had its steepest quarterly decline since the 1990 recession.Spend any amount of time talking to US consumers and businesses, and it is abundantly clear why: there are so many sources of policy ambiguity as to make the future not just uncertain but completely unknowable.There is a cliche that “markets hate uncertainty”, but in truth the same applies to everyone in the real economy, too: the company wondering what size order to put in and how many people to hire and the family thinking about buying that fridge or booking that holiday.It is not surprising they are uncertain. No one, even inside the administration, can say with any confidence what the tariff rates on imports from specific countries will be in July.Even if the tariff policy was crystal clear, its impact on prices would be hard to gauge – depending, as it does, on how much of the cost companies are willing to bear (or “eat”, as the Americans have it) at the expense of reduced profits, and how much is passed on to consumers.For the moment, as the Treasury secretary, Scott Bessent, has admitted, the tariffs on China, at 145%, are now so high as to amount to an effective trade embargo.Not every company will have the deep pockets and global reach of Apple to be able to bend its supply chain away from China to manufacture products for the US elsewhere (in the iPhone-maker’s case, India). Instead, many will be scrambling to find substitutes, which may be more expensive or not exist at all. Shortages of some products seem a distinct possibility.At the same time, sharp cuts in federal budgets, many of which have an ideological taint, including Robert F Kennedy Jr’s decimation of the National Institutes of Health, are raising short-term questions about unemployment and much longer-term worries about the US’s world-leading science base.Some of the most heartbreaking conversations I had were about aspects of Trump’s immigration policy: the man who said a Guatemalan friend’s six-year-old son had stopped going to school in case his mum was snatched by the authorities while he was there, and the restaurant manager who said it was becoming harder to hire Latinos because even fully documented workers feared they could face deportation anyway.skip past newsletter promotionafter newsletter promotionThese are first and foremost human tragedies, but clearly they also have an economic dimension. The credit rating agency Fitch warned in a report last week: “Risks associated with mass deportations could include potential worker shortages, production delays and increased wage inflation that hinders revenue growth, weakens profitability and lowers return on investment.”Of course, because the US economy’s abrupt gearshift has been driven by deliberate policy actions, it’s tempting to think: “It doesn’t have to be like this.”Much more of the real economy impact so far results from this widely shared uncertainty – or perhaps it is better to call it fear – than from the specifics of Trump’s policies.Business owners told me that if they just knew what the final tariffs on products from the various countries in their supply chain would be, for example, then over time they could adapt.It is not completely out of the question that a more settled policy position could arrive in the coming weeks.Certainly, Bessent appears to be trying to manoeuvre Trump towards striking a series of “deals” (in effect, promises of concessions in exchange for tariff carve-outs) with key economies.Yet the president appears to have such a love of political drama – and such an inability to choose a course and stick to it – that the unknowability of future policy seems to be the very essence of Trump 2.0.It seemed to be the mighty bond markets, driving up the cost of US borrowing, that checked Trump’s initial “liberation day” drive, prompting the “pause”.But if time drags on with no agreements in sight, the next wave of distress signals are likely to come not from Wall Street but from main street – in soaring prices and empty shelves. How Trump responds then is anyone’s guess. More

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      Trump’s promised ‘golden age’ for the US economy is off to a chaotic start

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      Donald Trump promised to usher in a new “golden age” for the US economy – one with lower prices, more jobs and greater wealth. This week, his first quarter report card came in, and the new age is off to a chaotic start.Gross domestic product (GDP) shrank for the first time in three years during the first quarter, abruptly turning negative after a spell of robust growth as trade distortions and weaker consumer spending dampened activity.It took the US president all of 43 minutes to distance himself from the dismal reading, released on Wednesday morning.“Our Country will boom, but we have to get rid of the Biden ‘Overhang’,” Trump wrote on Truth Social, his social media platform. “This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!”By Trump’s telling, any bad numbers are the fault of Joe Biden – but this attribution does not extend to the good ones.March’s strong jobs report demonstrated how “the private sector is roaring back under President Donald J. Trump”, according to a statement issued by the White House. “IT’S ALREADY WORKING,” the president declared the day it was published.But April’s less buoyant jobs report, released on Friday, prompted a more tepid response. He wrote: “Just like I said, and we’re only in a TRANSITION STAGE, just getting started!!!”So which is it? Is the “golden age” of America well under way? Or will it take a while?Growth in the first three months of the year – no matter how much Trump wants to blame the 19 or so days he was not yet in office – was significantly challenged by the new administration’s plans to overhaul the world economy. US goods imports surged 41% as companies scrambled to pre-empt tariffs, while consumer spending on durable goods fell 3.4% as sentiment came under pressure.And the first quarter figures raised troubling questions about the second. Activity weakened largely as firms braced for the lion’s share of Trump’s tariffs, which he only unveiled in early April. How those firms, and their customers, ultimately respond to those tariffs – and the confusion around them – is widely expected to have a greater impact on growth.Trump’s erratic rollout of 10% tariffs on goods from much of the world, and 145% on China, “have altered the picture dramatically” since the end of the first quarter, Oliver Allen, senior US economist at Pantheon Macroeconomics, observed. “Any support to spending from pre-tariff purchases will unwind soon now that substantial new tariffs have been imposed.“Consumers’ spending will also be weighed down by a hit to confidence and real incomes from higher prices, while intense uncertainty will put the freeze on business investment, and exports – especially to China – will suffer.”It is too soon to say whether tariffs, which the administration insists will revitalize the US economy, will, in fact, set the stage for a recession: two consecutive quarters of contraction. On Trump’s watch, the landscape shifts rapidly from one day to the next, let alone during an entire quarter.Trump is right, to a point: most of his tariffs are not to blame for the stunning reversal of growth in the first quarter. The US only hiked duties on China and imposed its blanket 10% levy on many other countries last month, days into the second quarter.The foundations of a potential Trumpcession were not laid in the early months of the year by the tariffs themselves, but by his administration’s execution of them.From repeated jerks and jolts around sweeping duties on Canada and Mexico to announcing “reciprocal” tariffs on dozens of nations which were ultimately imposed for less than a day, widespread confusion and uncertainty is now embedded into the world’s largest economy. Businesses inside it and out are not happy.Scott Bessent, Trump’s treasury secretary, has coined an interesting term for this playbook of threats, theatrics and social media broadsides. “President Trump creates what I would call ‘strategic uncertainty’ in the negotiations,” he told a press briefing on Tuesday. “As we start moving forward, announcing deals, then there will be certainty. But certainty is not necessarily a good thing in negotiating.”However useful Trump and his officials find “strategic uncertainty” during trade negotiations, it has different consequences for those paying bills they were repeatedly assured would swiftly fall, trying to grow a business in a market with leaders locked in a war of words with the White House, or planting a crop without knowing what the economic realities will be by the harvest.Trump returned to office after winning the backing of rural and lower-income voters in significant numbers last November. He needs to preserve his base if Republicans are to maintain power in Washington during his second term.Polling suggests these groups are concerned. A PBS News/NPR/Marist survey, published this week, found 48% of rural voters disapproved of Trump’s handling of the economy. The same was true for 57% of voters with a household income of less than $50,000.As apprehension grows, the US president has sought to play down the risks. In one of the more peculiar moments in another bizarre week, he appeared to play down the threat of empty store shelves.“Well, maybe the children will have two dolls instead of 30 dolls, y’know,” Trump said during a cabinet meeting on Wednesday. “And maybe the two dolls will cost a couple of bucks more than they would normally.”China has “ships that are loaded up with stuff, much of which – not all of it, but much of which – we don’t need”, he continued.It is typically up to the American consumer, not their president, to decide what they do and don’t need to buy. For a man whose fortune and image are built around conspicuous consumption, the comments seemed very off-brand. “Skimp on the Barbie” read the front page of the often Trump-friendly New York Post. It is still early days for Trump. But already the Biden “overhang” argument is wearing thin. It will be up to US voters, not their president, to deliver a verdict on his handling of the economy. More

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      Despite Pope Francis’s wishes, there’s little appetite for richer nations to help the poorest

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      Pope Francis’s vast funeral in Rome on Saturday featured a certain amount of politicking amid the splendour, against the magnificent backdrop of St Peter’s Basilica.If the meeting between Volodymyr Zelenskyy and Donald Trump results in progress towards a less inequitable peace than the one currently envisaged by the US, perhaps that will be fitting, given the late pontiff’s consistent calls for an end to war.But in Washington last week, at the International Monetary Fund and World Bank, where the architecture is far less glorious, campaigners struggled to find much backing among the powerful for another aspect of Francis’s worldview – his calls to make 2025 a Jubilee year of debt forgiveness for the world’s poorest countries.A quarter century on from the hugely consequential Jubilee 2000 movement – in which churches played a major role – the pope had asked a commission chaired by the economist Joseph Stiglitz to report on the issue next month. Debt relief is also likely to be discussed at the UN financing for development conference in Seville in late June.But there was little optimism in Washington that any country is prepared to offer the necessary moral and political leadership to force the issue up the agenda. Certainly, it will not be the UK, which played a crucial role in the Jubilee 2000 campaign under Gordon Brown, but has shown little interest in the issue since imposing brutal cuts to aid spending, to boost defence.Meanwhile, ample evidence was shared in Washington to show how the situation is rapidly deteriorating. The IMF’s analysts warned that Trump’s dramatic shake-up of the global trading system, the final shape of which remains impossible to guess, will depress economic growth and ratchet up the risks of financial crisis.For emerging economies, the outlook is especially bleak. Many had already been left heavily indebted, after grappling with the Covid pandemic. And as the IMF’s Global Financial Stability Review made clear, one side-effect of the market chaos triggered by Trump’s “liberation day” is likely to be tighter financial conditions.That will make it harder, and more costly, for countries to refinance their debts – a problem the IMF said could be compounded by fresh volatility in the currency markets.The more is spent on debt repayments, the less is available for important areas of government spending that are necessary for development. As Achim Steiner, the head of the UN’s development arm, the UNDP,said on the sidelines of the spring meetings: “The debt servicing is essentially a defunding. We’re defunding, or forcing countries to take money out of their social and welfare and education budgets and health budgets just to service their debt. This is for obvious reasons bad: it’s not sustainable and ultimately contributes further to locking countries in into this stagnation.”He added: “If you are defunding your own education system, you’re locking yourself into a generation that is going to fall behind.”skip past newsletter promotionafter newsletter promotionA report by the British thinktank Development Finance International into tackling inequality in eastern and southern Africa, published at the spring meetings, found that 40% of countries in the region spent more on debt servicing last year than on healthcare and education combined. Since 2022, 80% have cut social spending as a share of their budget.This comes at a time when the economic impacts of the climate crisis are already being felt, in the soaring costs of extreme weather events for example. There is a consensus, at least outside the White House, that significant investment will be needed to manage the transition away from fossil fuels.Another report launched in Washington last week – from the expert panel on climate and finance, a joint project of the Colombian, French, Kenyan and German governments – warned of a “vicious circle”, between the “debt, climate and nature crises”.“Debt pressures and environmental vulnerabilities are most pronounced in the poorest and most credit-constrained countries … yet these countries account for only a tiny fraction of the consumption and emissions driving nature loss and climate change,” they said.Even the IMF itself suggested last week that debt restructuring may need to be part of the toolkit to respond to the rapidly changing economic and financial situation.“The path forward demands clarity and coordination. Countries should work constructively to promote a stable and predictable trade environment, facilitate debt restructuring, and address shared challenges,” it said in its World Economic Outlook.But campaigners complain that the IMF’s debt restructuring process, the Common Framework, is cumbersome and time-consuming – and can still leave beneficiaries with high servicing costs, because it does not contemplate debt write-offs.Scott Bessent, the US Treasury secretary, when he was not taking anti-woke side swipes at the IMF and the World Bank, said he would like to see the IMF get more involved in restructuring struggling countries’ debt. In a much-analysed speech, he said the IMF should “more proactively push official bilateral lenders to come to the table early, to work with borrower countries to minimise periods of debt distress”.Some development campaigners seized on his comments as a positive sign that the US would not stand in the way of multilateral efforts to ease the burden for the world’s poor.But others warned that in saying that he wanted to “make the IMF again”, and calling for it to be a “brutal truth teller”, Bessent appeared to be yearning for a return to the bad old days of economic shock theory, when the fund swept into struggling countries and imposed a prescription of harsh spending cuts and privatisation.Meanwhile, as they geared up to amplify Francis’s calls for a jubilee, some in Washington last week privately warned it may take a large-scale default to force the world’s powerful to accept the need to lift developing countries’ debt burdens. Let’s hope it doesn’t come to that. More

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      US consumer sentiment sees largest drop since 1990 after Trump tariff chaos

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      US consumer sentiment plummeted in April after Donald Trump’s trade war threw the global economy into chaos, according to a new report.The index of consumer sentiment, a score based on a monthly survey asking Americans about their financial outlooks, fell by 32% since January – the largest drop since the 1990 recession, according to the University of Michigan’s Institute for Social Research.“Expectations worsened for vast swaths of the population across age, education income and political affiliation,” said Joanne Hsu, director of the surveys of consumers, in a statement. “Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead.”In April, the index of consumer sentiment fell to 52.2, down from 57 in March. The last time the index fell below 55 was in the summer of 2022, when inflation rose to 9%.Consumer expectation of inflation also soared from 5% in March to 6.5% in April, the highest it has been since 1981.It is a sign that, despite his insistence that tariffs will “make a lot of money” and have not yet raised prices, Trump still has not convinced many Americans that his tariffs will actually work.Trump’s trade policies have scared investors, causing sell-offs in stock and bond markets. The president softened his tone earlier this week on his trade war with China after a volatile few weeks. Markets rallied after Trump said that his Chinese tariffs “will come down substantially”, though he also warned that “it won’t be zero.”But Wall Street tends to be more reactive than consumers, who have shown four straight months of declining sentiment on the economy. Even after Trump paused the highest of his reciprocal tariffs, causing stock markets to rise, consumer inflation expectations still remained much higher compared with March.Higher inflation expectations have also been paired with consumers anticipating slower income growth for the year ahead, meaning that more of them will be hesitant to spend in the months ahead – which all could ultimately mean a slowdown in the economy.“Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warning signs perceived by consumers,” Hsu said. More

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      Ukraine, Gaza and Iran: can Witkoff secure any wins for Trump?

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      Donald Trump’s version of Pax Americana, the idea that the US can through coercion impose order on the world, is facing its moment of truth in Ukraine, Gaza and Iran.In the words of the former CIA director William Burns, it is in “one of those plastic moments” in international relations that come along maybe twice a century where the future could take many possible forms.The US’s aim has been to keep the three era-defining simultaneous sets of negotiations entirely separate, and to – as much as possible – shape their outcome alone. The approach is similar to the trade talks, where the intention is for supplicant countries to come to Washington individually bearing gifts in return for access to US markets.The administration may have felt it had little choice given the urgency, but whether it was wise to launch three such ambitious peace missions, and a global trade war, at the same time is debatable.It is true each of the three conflicts are discrete in that they have distinctive causes, contexts and dynamics, but they are becoming more intertwined than seemed apparent at the outset, in part because there is so much resistance building in Europe and elsewhere about the world order Donald Trump envisages, and his chosen methods.In diplomacy nothing is hermetically sealed – everything is inter-connected, especially since there is a common thread between the three talks in the personality of the property developer Steven Witkoff, Trump’s great friend who is leading the US talks in each case, flitting from Moscow to Muscat.View image in fullscreenTo solve these three conflicts simultaneously would be a daunting task for anyone, but it is especially for a man entirely new to diplomacy and, judging by some of his remarks, also equally new to history.Witkoff has strengths, not least that he is trusted by Trump. He also knows the president’s mind – and what should be taken at face value. He is loyal, so much so that he admits he worshipped Trump in New York so profoundly that he wanted to become him. He will not be pursuing any other agenda but the president’s.But he is also stretched, and there are basic issues of competence. Diplomats are reeling from big cuts to the state department budget and there is still an absence of experienced staffers. Witkoff simply does not have the institutional memory available to his opposite numbers in Iran, Israel and Russia. For instance, most of the Iranian negotiating team, led by the foreign minister, Abbas Araghchi, are veterans of the 2013-15 talks that led to the original Iran nuclear deal.Yuri Ushakov, Vladimir Putin’s chief foreign policy adviser, who attended the first Russian-US talks this year in Saudi Arabia, spent 10 years in the US as Russian ambassador. He was accompanied by Kirill Dmitriev, the head of the Russian sovereign wealth fund who then visited the US on 2 April.In the follow-up talks in Istanbul on 10 April, Aleksandr Darchiev, who has spent 33 years in the Russian foreign ministry and is Russian ambassador to the US, was pitted against a team led by Sonata Coulter, the new deputy assistant secretary of state for European and Eurasian affairs, who does not share Trump’s benign view of Russia.View image in fullscreenAs to the Gaza issue, Benjamin Netanyahu has lived the Palestinian conflict since he became Israel’s ambassador to the UN in 1984.Richard Nephew, a former US Iran negotiator, says the cuts to state department means the US “is at risk of losing a generation of expertise … It’s beyond tragedy. It’s an absolutely devastating national security blow with the evisceration of these folks. The damage could be permanent, we have to acknowledge this.”One withering European diplomat says: “It is as if Witkoff is trying to play three dimensional chess with chess grandmasters on three chessboards simultaneously, not having played the game before.”Bluntly, Witkoff knows he needs to secure a diplomatic win for his impatient boss. But the longer the three conflicts continue, the more entangled they become with one another, the more Trump’s credibility is questioned. Already, according to a Reuters Ipsos poll published this month, 59% of Americans think Trump is costing their country its credibility on the global stage.The risk for Trump is that the decision to address so much so quickly ends up not being a show of American strength but the opposite – the public erosion of a super power.In the hurry to seal a deal with Iran inside two months, Trump, unlike in all previous nuclear talks with Tehran, has barred complicating European interests from the negotiation room.To Iran’s relief, Witkoff has not tabled an agenda that strays beyond stopping Iran acquiring a nuclear bomb. He has not raised Iran’s supply of drones to Russia for use in Ukraine. Nor has he tabled demands that Iran end arms supplies to its proxies fighting Israel.That has alarmed Israel, and to a lesser extent Europe, which sees Iran’s desire to have sanctions lifted as a rare opportunity to extract concessions from Tehran. Israel’s strategic affairs minister, Ron Dermer, and Mossad’s head, David Barnea, met Witkoff last Friday in Paris to try to persuade him that when he met the Iran negotiating team the next day in Rome, he had to demand the dismantling of Tehran’s civil nuclear programme.Witkoff refused, and amid many contradictory statements the administration has reverted to insisting that Iran import the necessary enriched uranium for its civil nuclear programme, rather than enrich it domestically.Russia, in a sign of Trump’s trust, might again become the repository of Iran’s stocks of highly enriched uranium, as it was after the 2015 deal.Israel is also wary of Trump’s aggrandisement of Russia. The Israeli thinktank INSS published a report this week detailing how Russia, in search of anti-western allies in the global south for its Ukraine war, has shown opportunistic political support not just to Iran but to Hamas. Israel will also be uneasy if Russia maintains its role in Syria.But if Trump has upset Netanyahu over Iran, he is keeping him sweet by giving him all he asks on Gaza.Initially, Witkoff received glowing accolades about how tough he had been with Netanyahu in his initial meeting in January. It was claimed that Witkoff ordered the Israeli president to meet him on a Saturday breaking the Sabbath and directed him to agree a ceasefire that he had refused to give to Joe Biden’s team for months.As a result, as Trump entered the White House on 19 January, he hailed the “EPIC ceasefire agreement could have only happened as a result of our Historic Victory in November, as it signalled to the entire World that my Administration would seek Peace and negotiate deals to ensure the safety of all Americans, and our Allies”.But Netanyahu, as was widely predicted in the region, found a reason not to open talks on the second phase of the ceasefire deal – the release of the remaining hostages held in Gaza in exchange for a permanent end to the fighting.Witkoff came up with compromises to extend the ceasefire but Netanyahu rejected them, resuming the assault on Hamas on 19 March. The US envoy merely described Israel’s decision as “unfortunate, in some respects, but also falls into the had-to-be bucket”.View image in fullscreenNow Trump’s refusal to put any pressure on Israel to lift its six-week-old ban on aid entering Gaza is informing Europe’s rift with Trump. Marking 50 days of the ban this week, France, Germany and the UK issued a strongly worded statement describing the denial of aid as intolerable.The French president, Emmanuel Macron, is calling for a coordinated European recognition of the state of Palestine, and Saudi Arabia is insisting the US does not attack Iran’s nuclear sites.Witkoff, by contrast, has been silent about Gaza’s fate and the collapse of the “EPIC ceasefire”.But if European diplomats think Witkoff was naive in dealing with Netanyahu, it is nothing to the scorn they hold for his handling of Putin.The anger is partly because Europeans had thought that, after the Volodymyr Zelenskyy’s public row with Trump in the Oval Office, they had restored Ukraine’s standing in Washington by persuading Kyiv to back the full ceasefire that the US first proposed on 11 March.View image in fullscreenThe talks in Paris last week between Marco Rubio, the US secretary of state, and European leaders also gave Europe a chance to point out it was Putin that was stalling over a ceasefire.But instead of putting any countervailing pressure on Russia to accept a ceasefire, Witkoff switched strategy. In the words of Bruno Tertrais, a non-resident fellow at the Institut of Montaigne, Witkoff is “is now presenting a final peace plan, very favourable to the aggressor, even before the start of the negotiations, which had been due to take place after a ceasefire”.No European government has yet criticised Trump’s lopsided plan in public since, with few cards to play, the immediate necessity is to try to prevent Trump acting on his threat to walk away. At the very least, Europe will argue that if Trump wants Ukraine’s resources, he has to back up a European force patrolling a ceasefire, an issue that receives only sketchy reference in the US peace plan.The Polish foreign minister, Radosław Sikorski, addressing the country’s parliament on Wednesday, pointed to the necessity of these security guarantees. “Any arrangement with the Kremlin will only last so long as the Russian elite dreads the consequences of its breach,” he said.View image in fullscreenBut in a sense, Trump and Putin, according to Fiona Hill at the Brookings Institution, a Russia specialist in Trump’s first administration, may already have moved beyond the details of their Ukrainian settlement as they focus on their wider plan to restore the Russian-US relationship.It would be an era of great power collusion, not great power competition in which Gaza, Iran and Ukraine would be sites from which the US and Russia could profit.Writing on Truth Social about a phone call with Putin in February, Trump reported” “We both reflected on the Great History of our Nations, and the fact that we fought so successfully together in World War II … We each talked about the strengths of our respective Nations, and the great benefit that we will someday have in working together.”Witkoff has also mused about what form this cooperation might take. “Shared sea lanes, maybe send [liquefied natural] gas into Europe together, maybe collaborate on AI together,” he said, adding: “Who doesn’t want to see a world like that?” More

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      The Guardian view on the IMF’s warning: Donald Trump could cost the world a trillion dollars | Editorial

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      Wake up! When the most sober of global institutions, the International Monetary Fund, abandons its usual technocratic calm to sound the alarm on the political roots of global financial instability, it’s time to pay attention. The IMF is warning of a non-negligible risk of a $1tn hit to global output, as Donald Trump’s erratic “America first” agenda – part oligarchic enrichment scheme, part mobster shakedown – collides with a perfect storm of global financial vulnerabilities.Such a shock would be equivalent to a third of that experienced in the 2008 crisis. But it would be felt in a much more fragile and politically charged environment. This time, the crisis stems not just from markets but from the politics at the heart of the dollar system. The IMF’s latest Global Financial Stability Report sees the danger in Mr Trump’s trade policies, especially his “liberation day” announcements, which have pushed up America’s effective tariff rate to the highest in over 100 years.The IMF put investors on notice that Trumpian volatility was taking place as US debt and equities – especially tech stocks – were overvalued. It cautions that hedge funds have made huge bets that have gone sour, requiring them to sell US treasuries for cash and potentially deepening the chaos in bond markets. Ominously, the IMF draws the comparison, first made by the analyst Nathan Tankus, with the “dash for cash” in March 2020 during Covid, when the Federal Reserve rescued US treasury markets directly. Developing nations, already grappling with the highest real borrowing costs in a decade, may now be forced to take on even more expensive debt – the IMF warns – just to cushion the blow from Mr Trump’s new tariffs, risking a dreaded “sudden stop” in capital flows.At the heart of this chaos stands the US, the very country meant to uphold the global financial architecture. Just over a week ago, Adam Tooze of Columbia University wondered if markets had begun to “sell America” after US long-maturity bond prices fell precipitously. He thought that markets were no longer just responding to economic fundamentals but to politics as a systemic risk factor. In this case: Mr Trump’s tariff threats and his increasing political pressure on Fed’s chair, Jerome Powell. In essence, Prof Tooze gave us the theory; the IMF just confirmed the data.The US president’s continued attacks on the Fed chair over the weekend have only added to a flight from US equities, bonds and the dollar itself. The money is fleeing to safe havens such as gold. Some of the loss has been clawed back, but at what cost? Investors aren’t just jittery about inflation or growth – they’re hedging against political chaos. That might explain the seemingly divergent IMF messaging: blunt systemic warnings in its report versus the soothing market-facing comments from a senior official at the fund’s press conference. This is central bank diplomacy. The institution is signalling that it is worried while trying not to spark a self-fulfilling panic in treasuries and the dollar.The real concern here is not technical dysfunction in treasury markets or the mechanics of the Fed, which are the bedrock of the global financial system. It’s about the politicisation of the monetary-fiscal nexus under a Trumpian regime that is fundamentally hostile to the norms of liberal-democratic governance. When even the dollar is no longer a safe haven, what – or who – can be?Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. More