Trump administration will lower tariffs on China
President Donald Trump met with Chinese President Xi Jinping in South Korea on Thursday and left the meeting vowing to lower tariffs imposed on the nation from 57% to 47%. Trump said he made the decision to lower the rate after Xi pledged to reduce the amount of fentanyl flowing into the United States.
Chinese officials also agreed to restart purchasing soybeans from the U.S., which they had halted in May during a trade war between the nations. Both nations also agreed to suspend fees for a year on ships that dock at each other’s ports.
While departing South Korea, Trump told reporters aboard Air Force One that the meeting with Xi had gone well.
Renewed U.S.-China trade relations mark a welcome sign for the economy because it suggests lower prices may be coming for items that American consumers purchase but are made in China — including household appliances, ceramic tiles, furniture, and fixtures.
The 'wealth effect' is driving consumer spending, study finds
Some Americans are still tapping into the wealth they grew during the coronavirus pandemic — particularly in the stock market — and that growth is helping fuel consumer spending today, according to an economic report released this week.
The report, from Oxford Economics, studied the so-called "wealth effect." The report found that for every 1% increase in stock market wealth Americans saw, the nation's consumer spending has climbed 0.05%. In other words, for every dollar Americans gained from the stock market, they then spent a nickel, Oxford Economics said.
"Since the onset of the COVID-19 pandemic, significant gains in net wealth have driven almost a third of the increase in consumer spending," the report concluded.
The rise in wealth from some Americans has major implications for retailers and the real estate market, the report noted.
"As households see their wealth rise, they turn more sanguine about their personal financial situation and are more inclined to loosen their purse strings," Oxford Lead U.S. economist Bernard Yaros wrote in the report released Monday. "Increases in wealth will also propel spending by allowing homeowners to extract more equity from their houses or to liquidate appreciated stocks to fund their current consumption."
Federal shutdown could cost US economy billions
The U.S. federal government shutdown could cost the economy $14 billion, depending on its duration, according to the Congressional Budget Office.
Now entering its fourth week, the shutdown is projected to reduce gross domestic product by $7 billion by the end of 2026, primarily due to furloughed federal employees working fewer weeks, the CBO reported.
"The longer the shutdown persists, the greater the economic toll," Phillip Swagel, CBO director, wrote in a letter to the House Budget Committee chairman, Jodey Arrington (R-Texas).
A six-week shutdown would result in a $11 billion hit to the economy, while an eight-week shutdown would push the cost to $14 billion, Swagel added.
The shutdown began Oct. 1, after Senate Republicans and Democrats failed to agree on a short-term funding measure to keep the government operating.
Fannie Mae lays off staff
Fannie Mae slashed 62 jobs on Thursday across its operations, technology and diversity teams as part of an ongoing strategy Federal Housing Finance Agency Director Bill Pulte has implemented to reduce positions not related to the enterprise’s core activities.
In a post on X on Thursday, Pulte said Fannie Mae “executed a standard business layoff of over 62 people, across the COO, Information Technology, 'DEI', and other divisions." He added that the company, like any business, "must eliminate positions that are not core, or otherwise, to mortgages and new home sales."
Fannie and Freddie Mac have been under the conservatorship of the Federal Housing Finance Agency since the Great Recession. Fannie and Freddie buy mortgages from banks and other lenders, then bundle those loans into mortgage-backed securities that can be sold to investors. Both have been under federal conservatorship since the 2008 financial crisis
The recent terminations follow a series of leadership changes at the mortgage giant.