budget-tax-and-economy19.015 min read
Treasury weighs deficit-free plan for universal $5,000 dividend
23 days ago•Source: Yahoo Finance
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22.38 min•28 days ago
Oil shock tests inflation as Fed weighs next move
Friday’s inflation report is pivotal as renewed Middle East conflict pushes energy costs higher. Economists expect headline inflation to ease to about 3.3% year over year, with core inflation around 0.2% month over month, but surging oil and gas prices could lift overall prices again. The Federal Reserve remains split on a rate hike next week, while longer‑term yields rose on inflation fears, underscoring heightened borrowing costs amid a sensitive economic and political backdrop ahead of the midterms.
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South Korea unlocks record 2027 budget to drive AI and chip prowess
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US debt crisis deepens as interest costs surge to new highs
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Inflation sticks around as Growth Outlook Brightens for Q3
U.S. inflation remained above the Fed’s 2% target in July, with the PCE price index up 3.7% year over year and core PCE at 3.3%, while spending cooled modestly and incomes rose faster than prices. BEA data showed durable goods orders rebound and corporate profits surge, and second-quarter GDP growth was left at 1.5% but with consumption revised up to 3.4% and private sales strengthening to 4.2%, signaling stronger private demand and a possible ~3% pace for Q3. The mixed signals keep the Fed focused on inflation, with markets pricing about a 40% chance of a rate hike in September as tariffs and geopolitical tensions continue to influence price pressures ahead of Jackson Hole.
Growth Alone Won’t Fix a $40 Trillion Debt, Warns Top Economist
With the U.S. debt reaching $40 trillion, Trump argues the economy can grow its way out of the problem, but Kent Smetters of the Wharton School calls the notion a “fantastic story” that isn’t realistically feasible. The debt-to-GDP ratio sits around 122%, and major entitlement costs (Social Security, Medicare, Medicaid) and political constraints limit any growth-driven fix. Bond-market signals and unscheduled Treasury buybacks highlight looming risks, while policymakers debate deficit reduction or commissions. Economists emphasize that a credible, broad-based plan—not growth alone—is needed to address the debt, even as AI-driven investment fuels near-term expansion and midterm politics heighten attention to fiscal policy.
Treasury's bond-market fix falls short — what's next?
Treasury officials have rolled out buybacks and other tools to calm a selloff in long-dated Treasurys, but long-term yields remain elevated and market skeptics say liquidity moves don’t tackle the underlying rise in the national debt. With deficits ballooning and the government needing to finance growing borrowing, more measures are likely, even as tensions between the Treasury and the Fed – including expectations set for Jackson Hole – shape how policy is priced into markets and influence borrowing costs across mortgages, cars, and other loans.
Trump’s push for rate cuts stalls as borrowing costs rise
President Trump pressed the Fed to cut rates, calling it ‘Rocket Fuel’ for growth, but borrowing costs have climbed as the Iran conflict boosts energy prices and inflation. The 10-year yield surpassed 4.7% and 30-year mortgage rates sit around 6.6%, squeezing households and lifting debt service as the government nears $827 billion this year. Fed chair Kevin Warsh says inflation remains hot, and markets expect little relief before the September meeting, complicating Trump’s economic messaging ahead of elections.