Newsom says California will intervene if Trump ends federal EV incentives
California Democratic Gov. Gavin Newsom is preparing for a potential clash with President-elect Donald Trump over electric vehicle (EV) incentives. Trump has signaled plans to roll back federal tax credits for EVs, a measure established under the Biden administration’s Inflation Reduction Act.
In response, Newsom has pledged to sustain the $7,500 EV incentive in California regardless of federal policy changes. To achieve this, he’s proposing to revive the state’s rebate program for zero-emission vehicles.
“We will intervene if the Trump administration eliminates the federal tax credit, doubling down on our commitment to clean air and green jobs in California,” Newsom said in a statement. “We’re not turning back on a clean transportation future — we’re going to make it more affordable for people to drive vehicles that don’t pollute.”
The rebate program ran from 2010 until 2023 after President Joe Biden’s tax credit took effect. The program initially provided a $5,000 direct-to-consumer rebate for electric vehicles. It later increased to offer up to the federal incentive of $7,500.
The program funded the purchase of more than 594,000 vehicles and saved an estimated 456 million gallons of fuel, according to state officials.
However, reinstating the program presents fiscal challenges. Just this week, California’s nonpartisan financial advisers warned the state’s current budget has limited capacity for new spending initiatives. Newsom may need to utilize funds from California’s cap-and-trade program, which allows industrial polluters to buy and sell emissions credits.
This can generate as much as $5 billion annually for the state. The funds are later used to underwrite various climate programs.
Meanwhile, Trump will need congressional support to amend or replace the Inflation Reduction Act in order to eliminate the federal EV credits. His transition team has indicated this will be a priority for the incoming administration, likely setting the stage for a conflict over EV policy with Newsom.
Thanksgiving dinner will cost less for the second year despite bird flu
Inflation has been a major topic of discussion in recent years. While the rise in grocery prices has slowed down to a 1% increase over the last 12 months, the price of Thanksgiving dinner fell for the second straight year.
A Thanksgiving meal for 10 people will cost $58.08 in 2024, or $5.81 per person, according to the American Farm Bureau Federation’s 39th annual Thanksgiving dinner survey.
The price of Thanksgiving fell more than 9% since reaching a record high of $64.05 in 2022. That said, the price of a feast for 10 is still 19% higher than before the COVID-19 pandemic. In 2019, it cost $48.91 to feed a group of 10 for the holiday.
Turkey remains the center of any Thanksgiving dinner. The average price of a 16-pound turkey is $25.67, a savings of 6% from last year. Despite the savings, the American Farm Bureau Federation says avian influenza is at play in 2024.
“The American turkey flock is the smallest it’s been since 1985 because of avian influenza, but overall demand has also fallen, resulting in lower prices at the grocery store for families planning a holiday meal,” AFBF economist Bernt Nelson said in a statement.
For those who aren’t fans of turkey, a 4-pound boneless ham will set consumers back $14.79, down $3.23 compared with last year.
Mashed potatoes are the second most popular Thanksgiving side. The price of russet potatoes, which gives the desired fluffy texture, fell nearly $1 to $2.63 per five-pound bag. The third most popular side is sweet potatoes and three pounds will cost $2.93 this year, saving buyers more than $1 over last year.
Campbell’s says green bean casserole is the fourth most popular holiday side. A pound of green beans is down $0.16 in 2024, but cooks will still need to add cream of mushroom soup and crispy fried onions to complete a casserole.
Pumpkin pie is the most popular Thanksgiving dessert, according to readers at The Pioneer Woman. Pumpkin pie mix is $4.15 for a 30-ounce package. That’s down $0.29 compared with last year.
Meanwhile, two pie shells are $3.40, only falling $0.10 since 2023. Pecan pie is the second most popular, followed by apple pie and then chocolate pie. Sweet potato pie did not make the list.
For some parents, child care is more expensive than rent: Report
Kids are expensive. So expensive in fact, many families are pretty much paying a second rent to send their kids to day care.
New data from the Department of Labor shows during 2022, when inflation was the highest it had been in 40 years, families spent between $6,552 and $15,600 on full-day care, depending on where they live. Data from 2022 is the most recent available.
The Labor Department noted that the upper range is more than 2022’s median annual rent, which was $15,216. The agency said households typically spend between 9% and 16% of their annual income on day care per child.
The Labor Department estimated more than 13 million of the nation’s roughly 63 million parents rely on paid child care providers.
According to the report, costs also tend to be higher for families with infants. It’s also more expensive for those living in larger counties or using center-based rather than home-based care.
Republicans feel good about the economy now that Trump has won
For the first time in four years, Republicans are feeling good about the economy. Economically speaking, only one thing has changed.
There’s a distinct difference in reports of consumer confidence along political lines since President-elect Donald Trump was declared the winner of the presidential election.
The latest consumer sentiment survey from the University of Michigan out Friday, Nov. 22, shows Republicans are feeling pretty peachy about economic expectations moving forward while sentiments from Democrats took a dive. It’s a mirror image of what happened after the 2020 election when President Joe Biden beat out President Donald Trump.
The latest data point confirms other sentiment surveys since Trump was declared the winner on Nov. 6.
In a Morning Consult survey, which shows five-day moving averages, there’s been an immediate shift in political lines since Trump won. As soon as Trump won, Republicans moved from negative into positive territory regarding the economy. However, Democrats slid from more positive to closer to the negative threshold.
Consumer sentiment has historically been a key indicator of the health of the economy. Consumer spending makes up two-thirds of the country’s economic growth, and people spend money when they’re feeling good about economic conditions, so businesses look at consumer sentiment to see how fast the wheels are turning.
In recent years, though, this measure has gotten increasingly political, as this election shows. That may make it a less reliable look at true economic conditions.
Overall, consumer sentiment measured by the University of Michigan is up slightly in November and up 17% over the past year, but sentiment is still far from its pre-pandemic levels. Expectations for the economy are up more than 35% in the past year, likely driven at least in part by lowering inflation.
US’ 4 largest frozen spud producers accused of forming ‘potato cartel’
As reported on Wednesday, Nov. 20, just ahead of the Thanksgiving holiday, the United States’ four leading producers of frozen spuds are in hot water. A handful of federal lawsuits filed this week accuse the companies of forming a “potato cartel.”
Court documents allege that the potato producers coordinated prices through a third-party data company.
The lawsuits claim Cavendish Farms, McCain Foods, JR Simplot, Lamb Weston and the National Potato Promotion Board conspired to fix and manipulate prices for frozen potatoes in the United States.
Prosecutors say that the companies formed a cartel by having equal “access to each other’s data on pricing and other sensitive information, as well as a direct line of communication to each other.” They added that this allowed the companies to raise prices in a concerted arrangement, which violated U.S. antitrust laws.
The lawsuits assert that the price coordination was made possible through a market data aggregator, which in one of the lawsuits, is alleged to be the research firm Circana.
These companies reportedly control more than 95% of the frozen potato market and attorneys say they used their market dominance to increase prices by nearly 50% in a two-year span.
A McCain Foods spokesperson denied the allegations that the company broke antitrust laws and vowed to fight all lawsuits leveled against the company. The other companies involved in the lawsuits have yet to respond as of the publishing of this report.
Progress or poverty? Patience running out for Argentina’s Milei 1 year in
Javier Milei promised pain for the people of Argentina, and they elected him president anyway, with the highest share of votes since Argentina’s return to democracy. One year removed from his resounding victory, are Argentines already running out of patience with Milei?
He’s still the most popular political leader in the inflation-ravaged nation, but popularity is fleeting. Now, more than half the country disapproves of how Milei is running Argentina, up from 48% in January.
More than half the country also lives in poverty. In Milei’s first six months in office, the poverty rate has spiked from 42% to 53%.
“It’s one long Groundhog Day over there,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics and expert on Argentina. “I’m a bit of an outlier, opinion-wise, in terms of what Milei has done. I know that most economists, or at least a lot of economists, think that he’s doing a great job, but my grading for him would be a four [out of 10] at best.”
“I would put maybe seven or eight,” said Martin Castellano, head of Latin America research at the Institute of International Finance. “They have done significant progress in terms of stabilizing the economy.”
Milei inherited a terrible economy: hyperinflation in the triple digits, the poverty rate double what it was six years before, and a country on the brink of another economic crisis. Milei promised shock therapy and Argentina signed up.
“The shock therapy approach that Milei implemented was in large part because of the failure of the gradualist approach,” de Bolle said. “But the risk with the shock therapy approach is always that you know things are going to get very bad, and it’s still going to take a very long time for them to improve if they do improve.”
When Milei first took office, he devalued the country’s currency while at the same time removing price controls and federal subsidies his people had come to rely on. That led to a surge in inflation while, at the same time, taking away safety nets.
“You’re playing with fire in a sense because you’re doing all of these things at once,” de Bolle said. “They’re all going to hit the population in one go. That, I think, was correctly communicated to people, and I think they understood it, which is why they’ve been able to hold on to these policies for as long as they have, but now patience is running out.”
“Given that his support in Congress is quite limited, it’s important for him to keep the popular support,” Castellano pointed out.
“If things do not improve very quickly, we are going to be seeing people out in the streets protesting again, and we’re going to see social upheaval, and we’re going to see political upheaval,” de Bolle said. “That is how it usually plays out, and there’s no reason why this time will be any different from what it has been in the past.”
The protests have already begun. In October, hundreds of thousands of students took to the streets against budget cuts at public universities, where the salaries of most teachers now fall below the poverty line.
“We are losing a lot of people that we cannot replace because they do not get enough to make a living,” University of Buenos Aires professor Nicolas Sirolli told Reuters.
State workers went on strike the same month, demanding better wages and denouncing Milei’s economic policies. The walkout coincided with a transportation worker strike, which ground the country to a halt.
“The perception is one where, ‘No, there’s no improvement here. They keep telling us that things are improving, but things are really not improving because I look at my purchasing power, and it’s going down,’” de Bolle said.
For the most part, wages in Argentina aren’t budging while inflation continues to soar. Spurred by Milei’s shock therapy, annual inflation reached nearly 300% in April. But for six straight months, that annual rate has worked its way down, though it’s still nearly 200% and higher than when Milei was elected. But in October, monthly inflation dipped below 3%, the lowest monthly price increase in the country in nearly three years.
“I think that the progress on the inflation front has been quite, quite remarkable, and we will see inflation declining further in the coming months as particularly those high readings from last year are out of the picture,” Castellano said.
On top of it all, the economy is still in a recession and pushing deeper than expected. Estimates now have the economy contracting about 4% this year. But BBVA Research expects a 6% rebound next year, driven by investments, exports and private consumption. Milei’s budget projects a 5% expansion with inflation a little over 18% by the end of 2025. It hasn’t been that low since the mid-2010s.
From the outside, there are many bright spots in what Milei has achieved so far. And his friendship with President-elect Donald Trump gives him an important international ally. But the view is mixed within the country’s borders.
“People are starting to do the mental calculation of what these policies have effectively cost them to date from the time that they were adopted, and then they’re looking ahead and doing the calculation of, ‘Well, when can I expect an improvement? I just can’t see it,’” de Bolle said. “And therefore, you get this turning point from relative optimism or cautionary optimism into pessimism.”
While Argentines voted for change, patience is wearing thin. But experts say measurable change is around the corner.
“The worst of the adjustment is behind,” Castellano said. “But I think fine-tuning and improving, particularly on the political front, is going to be more important, increasingly important, in the coming months.”
Simply put, Milei doesn’t have a lot of support in Congress, especially for his unpopular policies. His party holds a minority in both chambers, and the 2025 midterms will serve as a referendum on his progress.
“That is why I ask you to move forward with faith and confidence,” Milei told a crowd of supporters. “Because from now on, we will only have good news, and in 2025, we will give an electoral blow.”
Used car prices come down as Americans hang on to cars longer
The price of used or pre-owned cars dropped by 6.2% in the first three quarters of 2024. According to Edmunds.com, the average price is now $27,000.
This marks a significant change from 2022 when inflation was soaring and the average price of a used car was greater than $30,000. Experts say there’s now an abundant supply of used cars on the market, helping to push prices down.
Americans are also driving their cars longer. That means more cars on the road are older and people aren’t shopping for cars as frequently. Interest rates on car loans are still relatively high, giving potential buyers reason to reconsider purchasing a car.
Market watchers also say it’s not beneficial to trade in for a newer model since used cars depreciate in value.
As for new cars, the average prices of a new car is around $47,000. That price has held steady for the past few years.
Many automakers have cut production of their lower-priced economy cars and are instead focused on selling high-end models to consumers.
Trump 1.0’s China tariffs didn’t result in high inflation. Why 2.0 is different.
Annual consumer price inflation in October heated up a hair at 2.6%, bringing concern disinflation may have stagnated too far away from the Federal Reserve’s 2% target. In September, consumer prices rose 2.4% on an annual basis.
Bank of America economists said ahead of Wednesday’s report, “Inflation is moving sideways after a period of substantial disinflation.”
“I think people are worried that we’re not just sideways, we’re plateauing, and that we’re going to go back up,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics.
While the price of goods has gone down over the past year, services inflation is driving overall consumer prices higher. That said, both categories could see inflationary pressures in 2025.
Tariffs would certainly be No. 1 on my list for what’s going to be inflationary.
Mary Lovely, senior fellow, Peterson Institute for International Economics
“A lot of President-elect Trump’s program is, in fact, expansionary. [That’s] one reason why we’re worried about inflation,” Lovely said. “If the economy is growing well, people’s incomes are rising; firms may feel more comfortable passing those [costs] along, even preemptively.”
Lovely said Trump’s deportation policy would affect the size of the labor market and wages, putting inflationary pressures on places where undocumented workers typically fill jobs. But another policy takes the top spot.
“Tariffs would certainly be No. 1 on my list for what’s going to be inflationary,” Lovely said.
Trump’s campaign has argued many things related to his tariff policies that go against this statement. He and the campaign point to his first term and China tariffs that they say didn’t contribute to inflation. He has also long argued that foreign countries, not Americans, bear the cost of tariffs.
President Trump can come in and have a pretty clear runway to put tariffs on China. The 10% across the board is a much harder thing.
Mary Lovely, senior fellow, Peterson Institute for International Economics
In Trump 2.0, the president-elect has proposed 60% tariffs on China and 10%-20% across-the-board tariffs on other trade partners.
For a closer look at the impact of these proposals and why a second trade war may play out differently than Trump’s first term, Straight Arrow News interviewed Lovely, an expert on U.S.-China trade relations.
The following transcript has been edited for length and clarity. Watch the interview in the video above.
Mary Lovely: My research focuses on U.S.-China trade flows and trade relations and also on the Chinese economy. Obviously, with this being an election year, I’ve done a lot of work on tariffs and what they might mean for consumer prices, for who pays the tax burden, especially as President-elect Trump has talked about replacing some of the income tax with tariff revenue.
Simone Del Rosario: And Trump has proposed a lot of tax cuts. Several things on his proposal list are, in nature, inflationary. Tax cuts, increased spending in the private sector, and then, of course, tariffs,
Mary Lovely: Yes, of course. Tariffs would certainly be No. 1 on my list for what’s going to be inflationary. He’s promising them at high rates, so on China, 60%, and we can talk about which goods and services is that really going to affect. And he’s promised them quickly, so we may see them as early as Q2 of next year. People know that’s coming, and that will be built into expectations for prices and rates.
Simone Del Rosario: Would you expect companies to be raising prices ahead of President-elect Trump even going into office?
Mary Lovely: I think that companies want to raise prices when they feel consumers are able to accept them. So it may be when they’re bringing out a new model, or when they’re just refreshing their price list for customers, if they’re dealing with industrial customers or if they think the economy is moving ahead really well. And we may see the economy growing a little bit faster – it’s already doing really well – but a lot of President-elect Trump’s program is, in fact, expansionary; one reason why we’re worried about inflation. And so if the economy is growing well, people’s incomes are rising, firms may feel more comfortable passing those along, even preemptively.
Simone Del Rosario: We know that President-elect Trump is promising big tariffs. This has been a cornerstone of his economic policy. I’ve talked to a lot of economists on all sides of the aisle, and some people are saying, ‘Well, I think he’ll end up doing something more targeted.’ Based on what he’s told us, he wants across-the-board tariffs, and he wants really high tariffs on China and perhaps Mexico as well. That said, what are you expecting the tariff landscape to be like? Do you expect it to be as high as his campaign promises? Do you expect there to be a little bit of moderation in what happens? What are you expecting?
Mary Lovely: This is a great question, Simone, and I think we’re all trying to look into the crystal ball and make some guesses here, right? Because there’s a lot of factors that will go into what he actually does. A lot of people also say he’s a dealmaker, so we may see him threatening these tariffs but not actually carrying them out. Given the people that he’s beginning to appoint and reports [of Trump wanting Robert Lighthizer to be his trade czar], who was his trade representative in the first term, we expect tariffs will be right at the top of the menu.
Regarding the tariffs on China, where former President Trump, as candidate Trump, promised a flat 60, I expect we’ll see action quite quickly, and that is because he’ll tack these on to the original Section 301 case against China. That was the legal authority that gave him the power to put those tariffs on starting back in 2018. Some folks may remember a couple of months ago, President Biden put 100% tariffs on Chinese EV imports, and that was done under the same authority, even though EVs had nothing to do with the original 301 case.
So President Trump can come in and have a pretty clear runway to put tariffs on China. The 10% across the board is a much harder thing. He is likely to have control of both houses in Congress. Congress ultimately has the power to tax. He may have to get authority from Congress to do that. It is quite unusual for us to start raising tariffs across the board on allies like Great Britain, Japan and South Korea. It’s a whole different kettle of fish.
Simone Del Rosario: Let’s focus on the China aspect for a little bit. We’ve heard from Trump’s campaign that these tariffs are not going to raise inflation. They point to his first term and say, ‘Look, we already did this. We already put tariffs on China. You all said it was going to raise inflation and it didn’t.’ So should we believe that?
Mary Lovely: No. That was an easy question.
Simone Del Rosario: And why is this different?
Mary Lovely: Basically what we do is we look at the prices of things when they come across the border, and we say, ‘Are these higher? Are they higher by the amount of the tariff?’ And the answer is, the price that we paid the foreign exporter, i.e. the Chinese manufacturer, didn’t change, and then we paid the tax. So the answer is, every study found that the importer paid 100% of the new tax.
Now was all of that passed through to the final consumer? Well, that’s a long road, because a lot of these products that we get from China are inputs, things that manufacturers use, so something like a small electric motor that’s then used in a a metal fishing boat, for example, little boat you might take out with your dad or your granddad to fish. That boat has content in it that comes from China, and we all know that, and those prices go up, and then it gets reflected in the alternate price. So we have to track it through that complicated route. Even goods that come across the border seem simple. They’re going to go on the shelf in Target or WalMart, but then we get retailing costs on top.
Some of that was passed through right away to consumers, and some wasn’t. Companies have to decide, ‘Do I take a little bit of profit, don’t turn away my customers, make sure they keep coming to my store, or do I pass it all through now because I really don’t have the ability to bear it myself?’ And what we saw was it was partial pass through to consumers, but that whole process was really shortcut by the pandemic.
So what will happen in the long run is – we don’t have good information from the Trump One tariffs, butwe do know that those costs were paid by Americans somewhere along the value chain. So I think that saying that it’s foreigners who pay it is just simply not supported by any evidence. It’s sort of wishful thinking.
There’s another part to this, which I think may be less well appreciated by folks, which is that not only is most of what we get from China used by U.S. manufacturers, and the higher costs hurt them, and we have documented evidence that it led to layoffs in companies that used a lot or a decrease in employment in a lot of places that used a lot of these inputs, but a lot of the bundle is electronics and things like laptops, cellphones, game systems, your Apple Watch, and these were not taxed at all. So if he’s talking about a flat 60%, it’s going to go on these consumer electronics. And it’s going to be huge. Some things are already taxed at 25, you’re going to see it’s an incremental tax. It’s going to be a huge tax. And so that makes me think that maybe he might back off a bit, or do it in stages.
Simone Del Rosario: We are already hearing companies look to this new reality and see how to move forward. AutoZone’s CEO told analysts they’d raise the prices ahead of tariffs. Other companies are saying, ‘We’ll wait for the policy, but yes, then we’re still going to have to raise prices.’ Steve Madden said that they were going to cut the amount of goods they were importing from China and rely more heavily on different partners. Part of tariff policy is adjusting trade relationships. So do you think that these Trump tariffs will, in turn, bring manufacturing back to the United States or take it away from China?
Mary Lovely: Well, I think it will take it away from China. We did see a decrease in the U.S. purchases of goods that were taxed. That makes sense, right? You put a tax on one store, you go to another store, but we saw most of that stuff move to other countries and we had to pay higher prices for it, because they’re just not as good at making it or they had to create a factory out of nothing. So it went to Vietnam. It went to Thailand. Very little of it came back to the United States. And that’s because you think about the products that are being made: Do you think that you can make a table cloth, T-shirts, in the U.S. and pay a living us wage and still compete with something from Bangladesh or Vietnam? The answer is no, you can’t.
So we are going to see higher prices, we’re not going to see a lot of jobs. Now, if he goes to 60%, some companies will come back, absolutely, or we’ll get foreign investment in the United States. And that’s another reason why we might see higher inflation, because we’re going to see some foreign investment in the United States.
People will say that’s the tariffs creating jobs, yes, but it’s going to be at much higher prices, which means that you won’t be able to buy something else. That’s the part that I think is more difficult to grasp, the idea that if I have to spend a lot more buying apparel, buying clothes for my kids, well then I can’t spend it at the grocery store. I can’t spend it on local services like eating out. And we’ve traced through that and on net, the tariffs are job losers. There’s just no way around the evidence.
Now people are okay with that, because, as you mentioned, part of the idea is to move supply chains away and reduce our dependence on China. It’s true, it’s an important goal, but it’s going to be costly, and we shouldn’t pretend that it’s all sunshine, it’s going to be lower prices and more jobs, because it just doesn’t make sense economically, that that’s how it will happen.
Simone Del Rosario: And would China retaliate? What would that look like and how would that affect us?
Mary Lovely: Well, if China retaliates, obviously it’s going to make it harder for U.S. companies to sell abroad, and the U.S. is the second largest manufactured good exporter in the world. We haven’t talked a lot in this election about how we are actually an export superpower, so that will make it harder for U.S. companies. How China retaliates is really hard to guess. Last time they did a bit of tit for tat, and we may see that. I think if President Trump goes ahead with tariffs, broad based, 10%, 20%, on our friends and allies included, we will see swifter retaliation.
Everyone has been calling President Trump, polishing up their golf games, trying to make nice, hoping that this doesn’t come. And I think we’ll see an awful lot of diplomatic activity before that. But in the end, if we do go through and actually levy those tariffs, I think we will see retaliation. We’ll have to, because these countries can’t let the U.S. do this without making it clear that they protest.
Simone Del Rosario: Given everything you’ve laid out, I’m hearing very clearly that prices are going to be going up. Should the Fed be moving accordingly and stop cutting its rate in anticipation that there are going to be inflationary pressures coming? Because multiple parts of his policies suggest that.
Mary Lovely: Even if they do cut, we’re likely to see rate increases in 2025. Lots of the Trump program, the tax cuts, as I mentioned, more foreign investment into the United States, the deportations, which will hurt on the supply side, all point in one direction, which is higher inflation.
Inflation heats back up to 2.6% as housing drives consumer price increase
Consumer price inflation heated up slightly in October 2024, coming in at 2.6% annually, compared with 2.4% in September. Monthly prices rose 0.2% from September, according to data released by the Bureau of Labor Statistics Wednesday, Nov. 13.
Core inflation, which removes more volatile food and energy prices, rose 3.3% annually and 0.3% compared with September. Both headline and core inflation came in line with expectations, according to FactSet. However, the rate of inflation did tick up slightly from September’s report.
The cost of shelter rose 4.9% annually and 0.4% since September. Shelter accounts for more than 65% of the rise in annual core inflation, BLS reported.
First-time buyers dropped to 24% between July 2023 and June 2024, a record low. That’s down from 32% a year earlier, according to the National Association of Realtors’ 2024 profile of home buyers and sellers, released last week. The average age of first-time buyers rose to 38 years old from 35 years old.
Meanwhile, the food index rose just 2.1% annually and ticked up 0.2% since September. Food at home, or groceries, rose 1.1% for the month.
“Five of the six major grocery store food group indexes increased in October,” BLS wrote. “The cereals and bakery products index increased 1.0 percent over the month as the bread index advanced 1.9 percent. The index for dairy and related products also increased 1.0 percent in October. The fruits and vegetables index increased 0.4 percent over the month, as did the nonalcoholic beverages index.”
The overall energy index fell 4.9% as Americans spent less on gasoline. The price of new vehicles fell 1.3% annually, while used vehicles fell 3.4% compared with the same month last year. Vehicles were a major driver of the post-pandemic inflationary episode.
The Federal Reserve’s dual mandate is to control price inflation and maintain full employment. Inflation has yet to hit its target of 2%. The latest report comes less than a week after the Fed cut its benchmark interest rate by 25 basis points. The federal funds rate now sits at 4.5% to 4.75%. Markets expect the central bank will make another cut of 25 bps when it meets in December.
Bitcoin breaks $85,000. What has Trump promised to do with crypto?
In the days since Donald Trump became president-elect, markets have been breaking records. Cryptocurrency stalwart Bitcoin is on a tear. But how did Trump go from saying, “It seems like a scam,” to being a catalyst for huge growth?
When it comes to markets, the Dow Jones Industrial Average is up roughly 6%, while the S&P 500 is up around 5%. Neither compares to the 16% surge by Bitcoin, which has the cryptocurrency hitting record highs and eclipsing $85,000.
“One of the most important things is we have the first Bitcoin president,” Anthony Pompliano, the CEO and founder of Professional Capital Management told CNBC the morning after the election. “President Trump ran on a campaign point that he was going to protect Bitcoin.”
While Trump may have been cold on Bitcoin back in 2021, this summer he went into the lion’s den to make the case that he would be a Bitcoin president.
“I’m laying out my plan to ensure that the United States will be the crypto capital of the planet and the Bitcoin superpower of the world,” Trump said while addressing Bitcoin2024 in July. “I will get it done.”
As any industry would, cryptocurrency is surging on the prospect of fewer roadblocks and regulations preventing widespread adoption.
“On day one, I will fire Gary Gensler and hire a new SEC chairman,” Trump said in July. “I will appoint a new SEC chairman who believes America should build the future, not block the future, which is what they’re doing.”
Gary Gensler’s perceived “war” on crypto is effectively over. As head of the SEC, Gensler has attempted to bring cryptocurrency under the same regulatory scrutiny as other securities.
And while crypto has seen more mainstream adoption in the past few years, like being able to trade Bitcoin ETFs, critics say that’s no thanks to the Biden administration.
“It wasn’t that the Biden administration said, ‘Hey, let’s do an ETF,’” former Commodity Futures Trading Commission Chair J. Christopher Giancarlo told Straight Arrow News in July. “They were forced into it by court action that ruled that their refusal to grant the ETF was arbitrary and capricious. And even the chairman of the SEC admitted they were forced into it. So it wasn’t that they were putting their front foot forward. They were actually putting their front foot backward until the courts ruled against them.
“I don’t think crypto was political until this administration [took] a very repressive, suppressive approach, both in terms of regulation by enforcement, by what people call Operation Chokepoint 2.0, by restricting banking services to this industry,” he continued. “I think that’s what created a political opening. Politics abhors a vacuum. If one party is going to create an opening, the other party is going to seize it.”
Republicans have done just that. Trump said his administration will, “Keep 100% of all the Bitcoin the U.S. Government currently holds or acquires into the future.”
It’s not just the friendlier stance that’s giving investors hope. Noelle Acheson, who writes the newsletter “Crypto is Macro Now,” pointed to some market fundamentals behind the surge.
“The likelihood of a pickup in inflation just got even higher – tax cuts, the deportation of immigrants, and tariffs are all likely to push up spending, wages and the price of basic goods. Leaving the political impact of that aside for a second (it could be harsh), it adds to the tailwinds propelling crypto and gold,” she wrote on November 9.
