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The Dictatorship

Inflation likely rose last month as Trump’s sweeping tariffs boost goods prices

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Inflation likely rose last month as Trump’s sweeping tariffs boost goods prices

WASHINGTON (AP) — Inflation rose last month as the price of gas, groceries and airfares jumped while new data showed applications for unemployment aid soared, putting the Federal Reserve in an increasingly tough spot as it prepares to cut rates at its meeting next week despite persistent price pressures.

Consumer prices increased 2.9% in August from a year earlier, the Labor Department said Thursday, up from 2.7% the previous month and the biggest jump since January. Excluding the volatile food and energy categories, core prices rose 3.1%, the same as in July. Both figures are above the Federal Reserve’s 2% target.

A separate government report Thursday showed that weekly applications for unemployment aid jumped 27,000 to 263,000, the highest in nearly four years. Requests for jobless benefits are a proxy for layoffs. Recent reports have also showed that hiring has weakened dramatically this year and was lower than previously estimated last year.

The data raises the specter of “stagflation,” a trend that last bedeviled the U.S. economy in the 1970s. The term refers to a period of slower growth, higher unemployment along with rising inflation. It is unusual because a weak economy typically keeps inflation in check.

Such a scenario could create major headaches for the Fed as it prepares for a meeting next week, when policymakers are widely expected to cut their short-term rate to about 4.1% from 4.3%. The Fed is under relentless pressure from President Donald Trump to cut rates. At the same time, stubborn inflation while the job market is weakening is difficult for the central bank because they are diverging trends that require polar reactions from Fed policymakers to address.

Typically the Fed would cut its key rate when unemployment rises to spur more spending and growth. Yet it would do the opposite and raise rates — or at least keep them unchanged — in the face of rising inflation.

Last month, Chair Jerome Powell signaled that Fed officials are increasingly concerned about weaker hiring, setting the stage for a rate cut next week. Wall Street investors think there is an 85% chance the Fed will cut twice more after that, according to futures pricing tracked by CME Fedwatch.

“Consumer inflation came in mildly hotter than forecast, but not nearly high enough to prevent the Fed from starting to cut rates next week,” Kathy Bostjancic, chief economist for Nationwide, said. “The labor market is losing steam and reinforces that the Fed needs to start cutting rates next week and that it will be the start of a series of rate reductions.”

FILE- In this Feb. 5, 2018, file photo, the seal of the Board of Governors of the United States Federal Reserve System is displayed in the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington. (AP Photo/Andrew Harnik, File)

FILE- In this Feb. 5, 2018, file photo, the seal of the Board of Governors of the United States Federal Reserve System is displayed in the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington. (AP Photo/Andrew Harnik, File)

Where inflation heads next is a key question for the Fed. While Thursday’s report showed inflation picked up, data released Wednesday suggested prices at the wholesale level are cooling. Economists also noted that a separate measure of inflation that the Fed prefers, which will be released in about two weeks, should come in lower than Thursday’s figures and paint a more benign picture of prices.

On a monthly basis, overall inflation accelerated, rising 0.4% from July to August, faster than the 0.2% pace the previous month. Core prices rose 0.3% for the second straight month.

Many economists and some key members of the Fed think that the current pickup in inflation reflects one-time increases from Trump’s sweeping tariffs and won’t lead to a lasting inflationary trend. They argue that a weaker job market will hold down wages and force companies to keep prices in check.

Subadra Rajappa, head of U.S. rates strategy at Societe Generale, said that while inflation was elevated last month, there were also signs that the cost of services moderated, suggesting that outside of tariffs, prices are cooling.

Yet Joe Brusuelas, chief economist at RSM, a tax and consulting firm, says that higher-income households are still spending sufficiently to push some prices higher, such as hotel and airfare costs, which leapt last month. Such spending could keep inflation stubbornly high even in a weak job market, he said.

“The Fed’s getting ready to cut into a sustained increase in prices,” he said. “Very unusual spot. … we can see tariff induced inflation in a slow, steady and methodical manner.”

Goods prices picked up last month, a sign Trump’s sweeping tariffs are pushing up costs. Gas prices jumped 1.9% just from July to August, the biggest monthly increase since a 4% rise in December. Grocery prices climbed 0.6%, pushed higher by more expensive tomatoes, apples, and beef. Rental costs also increased, rising 0.4%, faster than the previous month.

Clothing costs rose 0.5% just last month, though they are still just slightly more expensive than a year ago. Furniture costs rose 0.3% and are 4.7% higher than a year earlier.

Some restaurant owners have boosted prices to offset the rising costs of food. Cheetie Kumar, who owns Mediterranean eatery Ajja in Raleigh, North Carolina, said she’s facing higher costs on everything ranging from spices she imports from India, coffee and chocolate she gets from Brazil, and soy she gets from Canada.

“Those are things that I cannot source locally, we do source a lot of produce and meat and everything else from local farmers, but I don’t know any nutmeg growers in North Carolina,” she said.

Her overall costs are up about 10% from a year ago, with beef costs up 7%, and much bigger increases for things like coffee, chocolate (300%) and spices (100%).

She’s raised prices on some of her menu items by $1 or $2, but said she’s at the limit of how much she can do so before demand wanes and she stops earning a profit.

Bigger companies are also feeling the pinch.

E.L.F. Cosmetics said this spring that it was raising prices by $1. Last month, however, CFO Mandy Fields said it is no longer certain whether the $1 price increases will be enough to offset rising tariff costs.

Shoppers have yet to feel the big sting that economists had predicted earlier in the year. Many retailers ordered goods ahead of tariffs and have also absorbed a big chunk of the costs rather than passing them along to consumers, who’ve grown increasingly leery of price increases.

But Walmart and other big chains have warned of costs increases as they replenish their inventories, with the full impact of tariffs in effect.

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AP Business Writer Anne D’Innocenzio contributed from New York. AP Business Writer Mae Anderson contributed from Nashville.

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The Dictatorship

Trump orders US military to ‘shoot and kill’ Iranian small boats choking Strait of Hormuz

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Trump orders US military to ‘shoot and kill’ Iranian small boats choking Strait of Hormuz

DUBAI, United Arab Emirates (AP) — President Donald Trump has ordered the U.S. military to “shoot and kill” small Iranian boats that deploy mines in the Strait of Hormuzannouncing the move Thursday a day after Iran again displayed its ability to thwart traffic through the channel.

Trump also announced that a ceasefire in Lebanon would be extended by three weeks.

His post on social media about the small boats came shortly after the U.S. military seized another tanker associated with the smuggling of Iranian oil, ratcheting up a standoff with Tehran over the strait through which 20% of all crude oil and natural gas traded passed during peacetime.

“I have ordered the United States Navy to shoot and kill any boat, small boats though they may be … putting mines in the waters of the Strait of Hormuz,” Trump posted, adding that U.S. minesweepers “are clearing the Strait right now.”

“I am hereby ordering that activity to continue, but at a tripled up level!” he added.

The decision to extend a pause in fighting between Israel and the Hezbollah militant group in Lebanon came during a meeting at the White House between the Israeli and Lebanese ambassadors to the United States.

Meanwhile, it was still unclear when, or if, the U.S. and Iran would meet again in the Pakistani capital, Islamabad, where mediators are trying to bring the countries together to reach a diplomatic deal ending that conflict.

Negotiations initially planned this week have not happened. Iran insists it will not attend until the U.S. ends its blockade on Iranian ports and ships. The White House insists it will not take part until Tehran opens the strait to international traffic.

Pope Leo XIVreturning home from a trip to Africa, urged the U.S. and Iran to return to talks to end the war.

Footage shows US forces on deck of tanker

The Defense Department released video footage of U.S. forces on the deck of the oil tanker Majestic X, which was seized in the Indian Ocean. The ship had been flying a Guyanese flag, though the South American nation of Guyana said it was not registered there

The footage emerged a day after Iran’s paramilitary Revolutionary Guard attacked three cargo ships in the strait, capturing two of them, in an assault that raised new concerns about the safety of shipping through the waterway.

The powerful head of Iran’s judiciary, Gholam Hossein Mohseni Ejeisaid three “violating ships” in the strait were “subject to enforcement” Wednesday.

“The show of strength by the armed forces of Islamic Iran in the Strait of Hormuz is a source of pride,” he wrote Thursday on X, claiming the Americans “lack the courage” to approach the strait.

Ship-tracking data showed the Majestic X in the Indian Ocean between Sri Lanka and Indonesia, roughly the same location as the oil tanker Tifani, seized earlier by American forces. It had been bound for Zhoushan, China.

Majestic X previously was named Phonix and had been sanctioned by the U.S. Treasury Department in 2024 for smuggling Iranian crude oil in contravention of U.S. sanctions against the Islamic Republic.

Guyana said in a statement the Majestic X was not registered in the South American nation.

“While the name of the vessel has changed, the (International Maritime Organization) number remains recorded in the international database as PHONIX. There is no record of this vessel or name in Guyana’s registry. Therefore, the ship is FRAUDULENTLY flying the Guyana flag,” Guyana’s Maritime Administration Department said.

There was no immediate response from Iran about the seizure.

Trump claims leadership rift in Iran

Trump this week extended a ceasefire to give the Iranian leadership more time to come up with a “unified proposal” on ending the war, while maintaining an American blockade of Iranian ports.

In a post Thursday, Trump claimed a leadership rift between moderates and hard-liners was confounding Iran. “Iran is having a very hard time figuring out who their leader is! They just don’t know!” Trump said.

Trump has repeatedly said during the ceasefire that began April 8 that his team is dealing with Iranian officials who want to make a deal, while acknowledging that his decision to kill several top leaders has come with complications.

Iran’s president and its parliament speaker posted statements on social media declaring the country has no hard-liners or moderates.

“We are all Iranians and revolutionaries,” they said.

A spokesperson for the Iranian Foreign Ministry said Trump’s claim of a leadership rift was a “deflection.” Other Iranian officials said on social media that the country was united.

Trump, while speaking to reporters at the White House, pushed back against questions about the conflict exceeding the four-to-six-week timeline that he and aides previously set for the war.

“I don’t want to rush myself,” Trump said, adding that the U.S. “took the country out” militarily in the first four weeks.

“Now all we’re doing is sitting back and seeing what deal” can be made. “And if they don’t want to make a deal, then I’ll finish it up militarily,” Trump said.

He said he would not use a nuclear weapon against Iran.

Meanwhile, three aircraft carriers were in the region after the USS George H.W. Bush arrived in the Indian Ocean. One carrier was in the Arabian Sea and another was in the Red Sea, military officials said.

Talks between Lebanon and Israel lead to truce extension

Trump said a second round of talks between Israel and Lebanon in Washington “went very well” and resulted in a ceasefire extension for Israel and the Hezbollah militant group.

“The United States is going to work with Lebanon in order to help it protect itself from Hezbollah,” Trump said on his Truth Social platform.

The latest war between Israel and Hezbollah started after Israel and the U.S. launched attacks on Iran and the Tehran-backed militants fired rockets into northern Israel. The ceasefire first took effect for a 10-day period starting Friday.

Underscoring the truce’s fragility, Israel’s military said it struck missile launchers in Lebanon that had fired into its borders. Hezbollah said it fired at the Israeli town of Shtula in response to Israeli attacks on the Lebanese village of Yater.

Lebanon’s public health ministry said an Israeli airstrike killed three people further north, in the area of Nabatiya. The Israeli military said it killed three militants who launched a missile toward an Israeli warplane.

Each side has accused the other of breaching the truce.

Trump reiterated that the U.S. continues to demand that Iran stop it’s backing of Iranian-allied militias in the Mideast, including Hezbollah in Lebanon, as part of any deal between Washington and Tehran to end the U.S. war on Iran.

“Yeah, they’ll have to cut that,” Trump said to a reporter’s question about aiding Hezbollah. “That’s a must.”

Threats to shipping persist

Since the Feb. 28 start of the war between Iran, Israel and the United States, over 30 ships have come under attack in the waters of the Persian Gulf, the Strait of Hormuz and the Gulf of Oman.

The threat of attack, rising insurance premiums and other fears have stopped traffic from moving through the strait. Iran’s ability to restrict traffic through the strait, which leads from the Persian Gulf to the open ocean, has proved a major strategic advantage.

Jakob Larsen, the head of maritime security for BIMCO, the largest international association representing shipowners, said in a note Thursday that most shipping companies need a stable ceasefire and assurances from both sides of the conflict that the strait is safe for transit.

The threat of mines, he wrote, was a “particular concern” if traffic might return to normal levels one day.

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Madhani reported from Washington, and Keaten reported from Geneva.

___

This story has corrected that the Majestic X oil tanker had been flying the Guyanese flag not the Guinea flag.

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The Dictatorship

What The Kennedy Center’s Chief Showed Journalists To Prove The Building Really Does Need Renovation

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What The Kennedy Center’s Chief Showed Journalists To Prove The Building Really Does Need Renovation

WASHINGTON (AP) — To President Donald Trumpthe Kennedy Center is a “tired, broken, and dilapidated” building in urgent need of repair. To artists like Jane Fonda and Billy Porterit’s a protest site symbolizing the administration’s effort to reshape the nation’s cultural institutions.

For the Kennedy Center’s new leadership, it’s a gargantuan structure corroded by water damage so severe that steel in some places is tissue-thin.

Matt Floca, the John F. Kennedy Center for the Performing Arts' new executive director and chief operating officer, shows an expansion joint during a media tour intended to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

Matt Floca, the John F. Kennedy Center for the Performing Arts’ new executive director and chief operating officer, shows an expansion joint during a media tour intended to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

Away from the political controversy that has consumed the iconic performing arts venue for the better part of Trump’s second term, Matt Floca, the Kennedy Center’s new executive director and chief operating officerguided a group of journalists through the building on Wednesday. They viewed the outdoor terrace overlooking the Potomac River, along with parking decks, loading docks, an electrical vault and the Opera House stage.

Matt Floca, the John F. Kennedy Center for the Performing Arts' new executive director and chief operating officer, shows aged equipment in the river pump room during a media tour intended to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

Matt Floca, the John F. Kennedy Center for the Performing Arts’ new executive director and chief operating officer, shows aged equipment in the river pump room during a media tour intended to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

A theme emerged at virtually every stop: The water damage was real, apparent in some places through discoloration and pooling. Some pieces of equipment, including several 800-ton chillers that help cool the building, are decades old and in need of replacement.

And the building is so massive — sprawling across more than 1.5 million square feet — that repairs will require time to finish.

Two years of timein fact.

Trump plans to shutter the building for a massive renovation slated to begin in July, supported by nearly $257 million provided by Congress to fund repairs. The institution is expected to turn to private donors to help support refurbishing some of the building’s more exclusive areas, such as lounges.

The Kennedy Center is hardly the first fixture of the Washington skyline to undergo lengthy renovations. The Smithsonian Castle, one of the most recognizable buildings along the National Mall, has been closed for renovations since 2023. The Washington Monument was shrouded in scaffolding from 1998 to 2001 and covered again at points in 2013 and 2014 to repair earthquake damage.

None of those changes, however, were guided so closely by a sitting president.

The president is hands-on with this renovation

Trump, who is also trying to build a ballroom on the grounds of the former East Wing of the White House and is pushing for the construction of a triumphal arch near Arlington Cemetery, is deeply involved in the Kennedy Center plans. That’s in line with the far more hands-on approach he’s taken to the institution during his second term, ousting its previous leadership and replacing it with a handpicked board that named him chairman.

His name is now bolted to the building’s facade along with that of John F. Kennedy, the slain president that the venue memorializes.

The John F. Kennedy Center for the Performing Arts is seen following a media tour intended to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

The John F. Kennedy Center for the Performing Arts is seen following a media tour intended to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

“It’s a public building, and I completely acknowledge that, but the president is really great at this, and I think his input is invaluable,” Floca said. “He’s in the details, and it’s amazing. I really respect the input he’s given.”

As Trump tightened his grip on the building, artists abandoned the institution in droves, prompting concern that the closure is more of an effort to cover for plunging sales. The Kennedy Center hasn’t released sales figures.

Floca considered doing the repairs individually but insisted it was his recommendation to Trump to close the building and move forward with the renovation all at once.

“When the President asked: ‘How do you make these projects the best? How do you make them really excellent and deliver them efficiently?’ my recommendation was you close the building and you do everything over a definite period of time, two years,” he said.

He acknowledged that once the building is closed, staffing will be “pretty bare bones.”

“We’re working on all of those plans now and exactly what those numbers will be after July,” he said. “And we will staff up before reopening.”

Still, the tour offered the institution something of a reset opportunity after more than a year of tumult, demonstrating the need for repairs while easing some fears. A bipartisan group of lawmakers and their staff, along with representatives for Washington Mayor Muriel Bowser and some corporate and individual donors, have received a similar walk-through.

There will be scaffolding around the building but the construction won’t be so dramatic that someone could see through the building. That’s notable considering Trump has suggested the steel supporting the structure could be “ fully exposed.”

It’s not entirely clear how much change will be apparent to the general public once the Kennedy Center reopens. Much of the structural repair, which will unfold during the renovation’s first year, will happen in the building’s private core.

The venue’s more public elements, including the red-on-red decor of the Opera House, are expected to be maintained, though with some updating. There aren’t plans at the moment to change the presidential boxes.

The Opera House seats are seen at the John F. Kennedy Center for the Performing Arts during a media tour intended to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

The Opera House seats are seen at the John F. Kennedy Center for the Performing Arts during a media tour intended to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

Quotes attributed to Kennedy will stay on the building’s walls and the famous bust of the former president that sits outside the Opera House will be there again when the building reopens.

“I can’t think of any JFK changes,” Floca said.

An eight foot tall bronze bust of President John F. Kennedy is seen in the Grand Foyer of the John F. Kennedy Center for the Performing Arts during a media tour to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

An eight foot tall bronze bust of President John F. Kennedy is seen in the Grand Foyer of the John F. Kennedy Center for the Performing Arts during a media tour to show building damage, Wednesday, April 22, 2026, in Washington. (AP Photo/Julia Demaree Nikhinson)

It’s unclear, however, whether there will be additional tributes to Trump, who will be in the final months of his presidency when the public can return to the building.

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The Dictatorship

Trump threats against Iran are a boon for prediction markets, including some backed by his son

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Trump threats against Iran are a boon for prediction markets, including some backed by his son

NEW YORK (AP) — Will President Donald Trump send troops into Iran? Will he rename the Strait of Hormuz after himself? Will he post again praising Allah?

No one knows the answers, but online betting companies that allow people to wager on Trump policies and statements are profiting — including some backed by his oldest son.

Prediction markets love the president’s unpredictability, his need to keep people guessing about his next move or social media post, leading to more wagers in these betting venues and more fees for them. That includes Polymarket, a company Donald Trump Jr. has a stake in, and Kalshi, a company he advises.

These sites have to come up with new betting lines on current events everyday, and Trump Jr.’s famously fickle father has proven to be a rich source of will-he-or-won’t-he questions.

When a wagering event on Polymarket asked whether Trump was likely to send troops into Iran, nearly 100,000 bets were placed on April 8, leading to the biggest trading day of the year up to then.

And Trump’s policies and social media comments generate bets beyond the war-related ones: Who will Trump back to run Venezuela? Will his insults of Pope Leo XIV continue? Will he seize Greenland?

“Trump is the guy. He makes the market possible,” said Kwok Ping Tsang, a Virginia Tech economist who has studied Polymarket. “He’s so unpredictable.”

Sports wagers make up the largest portion of the volume on prediction markets, but politics runs a close second, according to crypto analysis firm Dune.

People are also betting “Yes” or “No” on all kinds of other things — the price of gold, the winner of “Survivor,” even the weather. The cost of the wager, in cents per dollar, reflects the number of people making the same bet, with a price of 49 cents for “Yes,” for instance, reflecting 49% odds.

The betting has drawn bipartisan criticism for inviting insider trading but the president seems to be a big fan, applying a light regulatory touch and helping the industry expand. His family company, the Trump Organization, is even working on opening its own prediction market, called Truth Predict.

One of the biggest fee generators lately has been Trump’s approach to the Iran war, notably his Truth Social post on April 5 demanding the country “Open the F—- Strait.”

Trading on Polymarket soared with “Yes” or “No” wagers on whether an invasion was imminent, according to Dune, only to be surpassed on April 7 by betting on another question — Will there be a ceasefire? — when Trump posted ominously that a “whole civilization will die tonight.”

In total, 413 million bets on the Iran war were made risking more than $100 million from Sunday, April 5, through Wednesday, April 8, the day after Trump announced a ceasefire, according to Dune.

In a report after the surge, Dune called Trump an “unpredictability machine” and marveled at how his “governing-by-tweet” style sends trading volumes soaring.

Asked whether the president’s son should be profiting from a business benefitting from his father’s actions, a Trump Jr. spokesman called the question “fact-free Democratic propaganda.”

“Don does not interface with the federal government as part of his role with any company that he invests in or advises and has no influence or involvement with administration policies relating to prediction markets,” said the spokesman, Andrew Surabian.

Polymarket didn’t respond to a request for comment.

The betting venues have jumped in popularity since Trump was reelected in November 2024 in part because they correctly predicted, unlike many pundits, that he would win decisively.

Since then the Trump administration has sued states trying to ban prediction markets under no-gambling laws. The head of the industry’s chief regulator, the Commodity Futures Trading Commission, has even promoted the business publicly, calling the online bets in a Wall Street Journal op-ed “exciting products.”

Benefiting particularly has been Polymarket, which was banned from operating anywhere in the U.S. in 2022 after the Biden administration fined it for running an unregistered exchange. It recently got permission to return, and its value has soared.

The company is now worth $9.6 billion, according to research firm PitchBook, a nearly tenfold increase in eight months since a venture capital fund in which Trump Jr. is a partner last invested.

Just how much Trump Jr. is benefiting from the increase in value is unclear because Polymarket is private and doesn’t release ownership stakes. Kalshi, which took on Trump Jr. as an adviser last year, is also private.

As for profiting off turmoil and war, Trump Jr. has other possible ways besides the prediction markets.

Through his venture capital fund he also owns pieces of aerospace, defense and technology companies seeking Pentagon contracts and other federal agency dollars. Separately, he and his brother, Eric, just struck a deal giving them stakes in a military drone maker not just selling to the U.S. forces but also pitching to Gulf countries under Iranian attack and beholden to their father for U.S. military protection in a war he started.

Asked last month about the drone company potentially profiting off his father’s position as president, Eric Trump sent The Associated Press a statement saying, “I am incredibly proud to invest in companies I believe in.”

Critics in Congress, virtually all Democrats, have decried what they believe is blatant profiting off the presidency, and are waiting for the midterms to do something about it, possibly voting for impeachment.

But whether that happens is anyone’s guess — or to be more specific, tens of thousands of guesses.

In Polymarket trading, those betting that Trump would get impeached by the end of his term were putting the chances at 13% at the start of the year. But that has changed dramatically after his “civilization wipe out” threat and calls from Democrats to oust him from office.

By Tuesday, the odds had jumped to 66%.

——

AP reporters Ken Sweet in New York and Christopher Keller in Albuquerque, N.M., contributed to this story.

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