Treasury Department Faces Major Layoffs

Recently the Treasury Department has announced that they are going to layoff a substantial amount of their workforce. According to the court document, this is a part of the Department of Government Efficiency’s ongoing moves to cut federal employee rolls. Currently, the treasury has more than 100,000 employees. Trevor Norris, the department’s deputy assistant secretary in Human Resources, said that DOGE’s plans will be tailored to every bureau, and will require substantial reductions in force. Three judges have already issued restraining orders to put temporary halts on DOGE’s efforts, and the case gets more complex with the state of Maryland’s refusal to comply with the layoffs. A statement made by a treasury spokesperson made it seem like any decisions about the situation are not final which may mean that they are still considering different measures to reach efficiency. I think it will be interesting to see how these major layoffs will affect our economic future, and if the results they are looking for will actually end up happening. 

Reference:

Treasury Department is set to lay off a ‘substantial’ number of employees, officials says

U.S. Faces ‘Significant Risks’ From Debt

The Congressional Budget Office says that U.S. debt could reach 118% of the economy by 2035 because of rising borrowing and an aging population. Trump’s plan to extend the 2017 tax cuts could make the debt worse, adding trillions to the deficit. While his budget includes cuts to government programs, experts say these won’t fix the long-term debt problem. The U.S. debt, which is currently at $36 trillion, is a result of years of spending and revenue issues and there are growing worries about economic instability and higher borrowing costs. Though Social Security and Medicare are facing funding problems Washington is more focused on tax cuts and spending cuts than fixing these programs.

https://www.nytimes.com/2025/03/27/business/trump-debt-tax-us.html 

Core Inflation at 2.8% for February

 Inflation is up more than expected over February, as the FEDs PCE numbers just came out this morning. The CPE index was up 0.4%, the largest month over month rise since January 2024. Analysts were looking more in the range of 0.3% and 2.7% respectively. Housing prices were a little slower in the period, rising 0.3%. 

The Fed seems like it will be patient with the recent inflationary numbers, as they are not super high over what was expected. They are still expected to wait until September to cut the interest rate, and it is not expected that the numbers will affect that decision. With tariffs beginning to come into effect, some believe that the increased prices from imports are contributing to a slight bump in inflation. Analysts are not expecting this inflation to be long lasting either.

https://www.cnbc.com/2025/03/28/pce-inflation-february-2025-.html

The Impact of Rising Interest Rates on Consumer Spending

Rising interest rates significantly affect consumer spending by increasing borrowing costs and reducing disposable income. Higher rates on loans, mortgages, and credit cards make large purchases less affordable, causing consumers to prioritize saving over spending. This shift is evident in sectors such as housing and durable goods, where higher financing costs deter potential buyers. Additionally, consumer confidence has dropped to a four-year low amid economic uncertainties and rising borrowing costs (The Independent).

While increased interest rates encourage saving by offering better returns on savings accounts and fixed-income investments, they also slow economic growth by reducing short-term spending. The housing market and automobile industry are particularly vulnerable to these changes, as reduced consumer demand affects production and sales. Meanwhile, central banks must carefully balance inflation control with the risk of economic downturns caused by decreased consumer activity.

In conclusion, rising interest rates play a crucial role in shaping consumer behavior and economic health. By influencing borrowing costs, saving habits, and market confidence, these rate adjustments have far-reaching implications. Understanding these dynamics helps policymakers, businesses, and consumers navigate economic cycles more effectively. For more insights on interest rate trends, visit FederalReserve.gov for the latest updates.

Trump announces new auto tariffs in a major trade war escalation

    President Donald Trump announced new 25% tariffs on all imported cars and car parts, effective April 3, as part of his effort to boost U.S. auto manufacturing. The move marks a major escalation in global trade tensions, potentially raising car prices significantly. Parts from Canada and Mexico that comply with the USMCA will initially be exempt, but this could change.

    Major automakers like Ford, GM, and Stellantis are expected to be affected, with their stock prices dropping after the announcement. Industry experts predict production costs could rise by $3,500 to $12,000 per vehicle, and a reduction in vehicle variety may follow. While the United Auto Workers union supports the tariffs, international leaders like Canada’s and the EU’s have signaled possible retaliation. Analysts warn the tariffs may hurt not only foreign carmakers but also U.S. suppliers and consumers, leading to higher prices and reduced availability of lower-cost cars.

https://www.cnn.com/2025/03/26/economy/auto-tariffs-announcement/index.html 

Trump Administration Quietly Lifted Ban on Dominican Sugar Company Over Forced Labor

    The Trump administration has rescinded an order that had blocked a major Dominican sugar producer, Central Romana, from shipping sugar to the United States due to allegations of forced labor at the company. The US Customs and Border Protection website lists the order as “inactive.” Allie Brudney, a senior staff attorney at the US Customs and Broader Protection, states that there has not been "any significant change to warrant any modification to this issue”. The decision to rescind the rule was likely made at the top levels of US Customs and Border Protection because of the sugar producers' powerful ownership. Hilton Beckham, an assistant commissioner for public affairs for Customs and Border Protection, confirmed that the modified order was “documented improvements to labor standards, verified by independent sources” and failed to disclose any of those sources. 

    The company, Central Romana, is the largest landholder and private employer in the Dominican Republic and is partly owned by the Fanjul family, who has been known to be influential in US politics for decades. Many of Central Romana’s workers are Haitian migrants and are uniquely vulnerable due to their lack of citizenship thus unable to seek other employment and fear of deportation. Additionally, these families have been known to be threatened when speaking out about their hardships and evicted from their homes by Central Romana. Since the order to block Central Romana from shipping to the United States “superficial attempts” to remove this order and to avoid remediating their labor practices have occurred. However, their efforts to modify the labor ban have been “substantial” and “deeply concerning” as described by human and labor rights organizations.

Source: https://www.nytimes.com/2025/03/19/business/economy/trump-sugar-forced-labor-ban-lifted.html

Trump's Tariff Threats Continue Towards Venezuelan Oil Purchasers

    On March 24th Donald Trump took to Truth Social to state that any country that purchases oil or gas from Venezuela will have a 25% tariff placed on any trade with the United States. Very few details about the logistics of this have been released, but there are some things we do know. These tariffs on the countries that do business with both Venezuela and the U.S. would begin on April 2nd and would be stacked on top of the already existing tariffs; potentially resulting in a tariff over 25%. 

    In 2024, the highest purchasers of oil from Venezuela were the following in order: China, United States, India, and Spain. This tariff threat is in response to President Trump's belief that Venezuela is sending Tren de Aragua into the United States. They are a Venezuelan gang that has been identified as a foreign terrorist organization by the Trump administration. Many believe that at the root of it all this is another target towards China in this supposed trade war; whom purchased 270,000 barrels of oil per day from Venezuela in 2024.

    The tariffs that Donald Trump so strongly and forcefully threatened during his campaign have not looked as planned during his first months in office. While the tariffs have been strongly threatened, they continue to not be enforced along with being lessened. We do not have the full answers as to why, but some suspect that seeing how poorly the top markets have been performing after the announcements have been a reason. It will be interesting to see whether or not these newly threatened tariffs do get enforced. 

Article: https://www.cnbc.com/2025/03/24/trump-says-any-country-that-purchases-oil-from-venezuela-will-have-to-pay-25percent-tariff-on-trade-with-us.html 

Markets Respond Positively to Change in Tariff Plans

Stock market indices have performed well on Monday in response to optimism that President Trump will soften his stance on tariffs. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite were up 1.42%, 1.76%, and 2.27% respectively. Among the stocks that had good performances were Tesla, Meta Platforms, and Nvidia. While there is still some concern over increasing inflation as well as a possible recession, the outlook has improved due to reports that tariffs will be delayed as well as narrow in scope. It will be interesting to see how President Trump’s announcement of possible tariff “flexibility” will impact consumer sentiment.

https://www.cnbc.com/2025/03/23/stock-market-today-live-updates-.html

Government borrowing higher than expected in Februrary

    In February, UK government borrowing reached £10.7 billion—much higher than the expected £6.5 billion—putting pressure on Chancellor Rachel Reeves ahead of her Spring Statement. The overshoot threatens her fiscal rules, which aim to avoid borrowing for day-to-day spending and reduce debt by 2029/30. Economists warn this could lead to further spending cuts, especially as a previous budget surplus of £9.9 billion may now be gone. Planned measures include welfare reform and reallocation of funds, such as boosting defense spending at the expense of foreign aid. Critics argue the government's approach risks hurting small businesses and public services.

https://www.bbc.com/news/articles/c0jglw54yvyo

CNBC Daily Open: Tariff flexibility sounds good, but also signals uncertainty

 https://www.cnbc.com/2025/03/24/cnbc-daily-open-tariff-flexibility-could-also-mean-uncertainty.html

The article points out how the unpredictable yet flexible tariff policies of the Trump administration are keeping businesses and investors in the dark. Although the administration is eager to safeguard local industries, the uncertain direction has caused issues for most companies to plan their strategy.This unpredictability is making companies cautious, which is leading them to hold back on investments and expansion plans. Uncertainty can slow down economic growth as companies hold back from taking risks if they are uncertain about the terms of trade in the future. The government needs to make the guidelines clearer and more consistent to create a stable economic situation that would boost investment and confidence in the business community.