(NEW YORK) — Stocks slumped at the open of trading on Monday after a downgrade of U.S. credit triggered a spike in debt yields that threatened to raise borrowing costs throughout the nation’s economy.
The Dow Jones Industrial Average dropped 295 points, or 0.7%, while the S&P 500 fell 0.9%. The tech-heavy Nasdaq plunged 1.2%.
Moody’s, a top ratings agency, cut the U.S. credit rating on Friday, dropping it one notch from the top rating of Aaa to a lower classification of Aa1.
The credit downgrade unleashed a selloff of U.S. debt, sending Treasury yields higher, which in turn raised the cost of U.S. borrowing and stoked investor fears about wider impact across the economy.
“This is a major symbolic move as Moody’s were the last of the major rating agencies to have the U.S. at the top rating,” a Deutsche Bank analyst said in a client note shared with ABC News.
The Treasury selloff sent long-term yields soaring above the level attained in the immediate aftermath of President Donald Trump’s “Liberation Day” tariffs. That spike in yields helped persuade Trump to suspend a major swathe of the tariffs, Trump later said.
The current spike in debt yields coincides with U.S. House Republicans’ push to pass a domestic policy bill that includes broad tax cuts. The nonpartisan Congressional Budget Office warned last month that the bill would raise the nation’s debt, which now stands at about $36 trillion.
(NEW YORK) — Consumer attitudes soured in May for the fourth consecutive month, even as President Donald Trump dialed back some tariffs. The reading came in below the level economists expected.
Shopper sentiment now hovers near its lowest level since a severe bout of inflation three years ago, University of Michigan survey data on Friday showed. Before that, the measure of consumer attitudes hadn’t ever fallen this low.
The monthslong decline in consumer sentiment traces back to inflation fears and recession warnings set off by Trump’s initial rollout of levies.
A trade agreement between the U.S. and China this week slashed tit-for-tat tariffs between the world’s two largest economies and triggered a surge in the stock market. Within days, Wall Street firms softened their forecasts of a recession.
The U.S.-China accord marked the latest softening of Trump’s levies, coming weeks after the White House paused far-reaching “reciprocal tariffs” on dozens of countries. Trump also eased sector-specific tariffs targeting autos, and rolled back duties on some goods from Mexico and Canada.
The drawdown of tariffs coincided with data suggesting the economy remains in solid shape.
Inflation eased slightly last month, dropping to its lowest level since 2021, government data this week showed. Plus, the economy continues to add jobs at a solid pace.
Still, uncertainty looms over the economic outlook.
An array of tariffs remain in place, including an across-the-board 10% levy that applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum.
Even after the pullback, a 30% tariff on China far exceeds the level before Trump took office, posing a risk of price increases for a large swathe of products that includes apparel, toys and some electronics.
Walmart executives on Thursday warned of tariff-driven price increases for perishable imports such as coffee, avocados, bananas and roses, as well as toys and electronics.
Consumers showed signs of weakness last month as retail sales slowed, indicating shoppers may be pulling back as they await possible fallout from tariffs. The trend poses a risk for the wider economy, since consumer spending accounts for roughly two-thirds of economic activity.
The U.S. economy shrank at the outset of this year, registering a sharp drop-off from robust growth over the final months of 2024.
But a surge of imports ahead of Trump’s tariffs likely clouded the figure, since the calculation subtracts imports in an effort to exclude foreign production from the calculation of gross domestic product. Analysts cautioned that a lowering of GDP on account of this trend would not reflect economic weakness.
(NEW YORK) — Inflation cooled in the aftermath of President Donald Trump’s “Liberation Day” levies last month, dropping to a four-year low and defying fears of tariff-driven price hikes, government data this week showed.
Even egg prices — a symbol of rising costs — fell about 10% in April compared to the previous month.
Still, prices for some products continued to soar, including everyday items such as coffee and beef.
It’s normal for some prices to rise at a much faster pace than overall inflation, said Omar Sharif, founder and president of research firm Inflation Insights. The impact, he added, depends on the role such items play in a given person’s finances.
“At the end of the day, what’s important is the weight of the price change in your budget,” Sharif said, noting stubborn price hikes for some goods may be offset by price drops for others.
Here’s what to know about which prices are still climbing and what’s behind the trend:
Coffee
Coffee prices soared 9.6% in April compared to a year ago, marking inflation four times higher than the overall rate. Instant coffee prices climbed even faster, jumping 13.5% over the past year.
The spike in coffee prices comes down to a dearth of supply alongside robust demand, meaning too many dollars are chasing after too few coffee beans, David Ortega, a food economist at Michigan State University, told ABC News.
Recent droughts in Vietnam and Brazil — two of the world’s largest coffee producers — have restricted global output, Ortega said.
“These price increases are primarily driven by weather shocks,” Ortega added.
Meanwhile, coffee drinkers avail themselves of few alternatives, resulting in consistent demand for the product.
Beef
A spike in beef prices also stems from a supply shortage that traces back to drought conditions, Ortega said.
Ground beef prices soared 10% in April compared to a year ago, while the costs of beef steaks increased 7% over that period, government data showed.
In 2022, a major drought in the beef-producing regions of the U.S. forced cattle herders to sell off more animals than usual, since the drought raised costs for cattle feed, which in turn made it more expensive for ranchers to maintain their herds, Ortega said.
Many of those ranchers, he added, sold off cattle necessary to produce future beef supply.
“The national beef herd is at its lowest level in decades – and demand is strong,” Ortega said. “When those two things meet each other, you get this big rise in prices.”
Car repairs
Car repair prices soared 7.6% in April compared to a year earlier, amounting to inflation three times higher than the overall rate.
The trend owes in large part to the rise of high-tech cars, equipped with features like rearview cameras and traffic sensors, which have added cost to even some routine repairs, Brian Moody, executive editor at Autotrader, told ABC News.
A shortage of workers has exacerbated the cost woes for repair companies as they bolster compensation to attract and retain employees, sending prices higher, Moody added.
“More people want technology in their cars,” Moody said. “That technology requires greater skill to manage and fix, but at the same time, there’s a shortage of technicians and workers.”
Men’s and women’s outerwear Overall apparel prices dropped slightly over the year ending in April, but some items may still deliver sticker shock for spring shoppers.
Prices for men’s outerwear, including suits and sports coats, climbed 5.3% over the year ending in April, which amounts to inflation more than double the overall rate.
Women’s outerwear costs — which include jackets, coats and vests — surged even faster, climbing 6.2%.
Sharif, of Inflation Insights, said the reason for these price increases is murky since they have coincided with a much slower rise in costs for producers of men’s outerwear and an outright drop in production costs for women’s outerwear.
The ample supply of such products means the price hikes likely result from quirks in consumer taste, potentially resulting from the prices commanded by specialty brands, Sharif added.
“Shifting trends in demand may be pushing prices higher,” Sharif said.
(WASHINGTON) — The race to win tickets to an exclusive crypto dinner gala with President Donald Trump at his private golf club in Virginia on May 22 ended with top 220 holders of the Trump meme coin winning invitations to the black tie gala, the coin’s official X account announced Monday.
A “leaderboard” of the top 220 holders appearing on the website did not display the identities of the winners, but it listed numerous wallets that some crypto experts have linked to possible foreign individuals and entities, heightening concerns about potential conflicts of interest arising from the Trump family’s businesses and foreign interests.
According to the meme coin’s website, the top 25 “VIP holders” were also invited to what it described as an “Exclusive Reception before Dinner” and a “Special VIP Tour.”
As the Trump family stands to potentially take in tens of millions of dollars from the coin’s transactions and possibly even more from its ownership of the coin, the price of Trump’s meme coin has been in constant fluctuation over the past three weeks, with numerous supporters and crypto enthusiasts flocking to purchase the coin to secure a seat at the gala while numerous others sell the coin to profit off the hype.
The coin’s price dropped rapidly on Monday as the competition ended, and was priced at $12.59 as of 4 p.m. ET. When the gala competition was first announced last year, the coin’s price jumped by more than 55% and later reached a high of nearly $16.42, according to Coinbase.com.
While fluctuations in the Trump coin’s price have resulted in massive profits for a fortunate few, hundreds of thousands of investors have reportedly lost money on the coin. According to CNBC’s reporting of blockchain analytics firm Chainalysis’ data, roughly 764,000 crypto wallets have lost money on Trump meme coin investments, while 58 wallets have made millions from their Trump coin investments.
A White House spokesperson did not immediately respond to a request for comment from ABC News.
Although the coin’s website had earlier advertised a “Special VIP White House tour” for the top 25 coin holders, as of Monday afternoon it simply said “Special VIP tour,” without mentioning the White House. Additionally, the website included a disclaimer saying the tour is being arranged by the Fight Fight Fight LLC, and that the president himself is appearing as a “guest.”
In its social media announcement about the conclusion of the contest, the post also announced a “rewards points program” and the awarding of “exclusive NFTs” for the winners.
According to crypto experts, the wallet of the top coin holder — nicknamed “Sun” and currently holding roughly $16.6 million worth of the Trump meme coin — is owned by a foreign crypto exchange advised by Chinese billionaire Justin Sun, who recently moderated a panel discussion between Eric Trump and Zack Witkoff at a crypto conference in Dubai, where Witkoff announced the other Trump family crypto venture, World Liberty Financial, had partnered in a $2 billion business deal with an Abu Dahbi state-backed investment firm. Justin Sun did not immediately respond to a request for comment from ABC News.
Sun is also one of World Liberty Financials’ biggest investors, purchasing $75 million worth of its coin the day before Trump’s inauguration earlier this year. A month after that investment, SEC lawyers under the Trump administration moved to halt an alleged fraud case against Sun, who along with his companies has denied wrongdoing.
The second top holder, a Singaporean entity identified by crypto experts as likely being MemeCore, and nicknamed “MeCo,” has been more vocal about their race to secure a VIP ticket — publicly soliciting followers to send Trump coin to their wallet so they can achieve “#1 on the $TRUMP leaderboard” and “conquer the entire meme space,” with the promise of returning the tokens after the event.
In all, the top 220 folders hold a total of 13.7 million Trump coins, valued at nearly $14 million as of 4 p.m. ET Monday, according to Coinbase.com.
Notably, 17 out of the top 220 coin holders on the leaderboard, including one in the top 25, appeared to hold zero Trump coin as of Monday afternoon — possibly meaning that they sold their holdings before the contest ended.
Experts say this is possible because the top 220 holders were chosen based on “time weighted holdings,” which were calculated based on “both the amount and duration” of one’s holdings from April 23 through May 12. “The longer you hold, the higher your weighted score becomes,” the website says.
It’s not clear if the zero Trump coin holders will get invited to the event.
(WASHINGTON) — This week’s inflation report will offer a first look at how President Donald Trump’s “Liberation Day” tariff announcement has impacted pricing across the United States.
Trump’s tariff escalation, announced April 2, set off fears among economists and consumers about a possible burst of inflation, since importers typically pass along a share of such taxes in the form of price hikes.
Government data, which will be published Tuesday, is expected to show that pricing has defied such worries – at least for now.
Economists expect prices to have increased 2.3% over the year ending in April, which would mark a slight cooldown from the prior month.
However, many analysts anticipate a rekindling of inflation over the coming months as retailers begin to replenish inventory with goods imported after the tariffs took effect.
Even so, a rollback of some levies since “Liberation Day” may reduce the impact on inflation.
Trump paused a large swath of so-called “reciprocal tariffs” within days of the announcement.
On Monday, Trump temporarily slashed tariffs on China from 145% to 30%.
Levies on China will remain at the reduced rate for 90 days while the two sides negotiate a wider trade agreement, a joint U.S.-China statement said on Monday. China also agreed to temporarily cut its tariffs on U.S. goods from 125% to 10%.
The rollback of levies on Chinese goods is expected to reduce the average cost of tariffs per household this year from $4,900 to $2,800, the Yale Budget Lab found.
Still, the U.S. continues to impose an array of levies that have been issued since Trump took office.
An across-the-board 10% tariff applies to imports from nearly all countries. Additional tariffs have hit auto parts, as well as steel and aluminum. Duties remain for some goods from Mexico and Canada.
Speaking last week before the rollback of tariffs on China, Federal Reserve Chair Jerome Powell said the economy remains in “solid shape” but warned Trump’s tariff policy could cause higher inflation and an economic slowdown.
“If the large increase in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation and a slowdown of economic growth,” Powell said.
“All of these policies are evolving, however, and their effects on the economy remain highly uncertain,” he added.
Inflation levels are nowhere near 2022’s peak of more than 9% — though it remains slightly higher than the Federal Reserve’s target rate of 2%.
The Fed last week opted to leave interest rates unchanged, keeping borrowing costs elevated as policymakers await the impact of tariffs.
Central bankers will announce their next interest rate decision on June 18. Investors peg an 88% chance of the Fed maintaining interest rates at current levels, according to the CME FedWatch Tool, a measure of market sentiment.
(NEW YORK) — U.S. stocks soared at the open of trading on Monday, just hours after the U.S. and China announced an agreement to slash tariffs for 90 days as the world’s two largest economies negotiate a wider trade deal.
The Dow Jones Industrial Average climbed 1,005 points, or 2.4%, while the S&P 500 jumped 2.7%. The tech-heavy Nasdaq increased 3.8%.
Best Buy, an electronics retailer that previously warned of tariff-induced price hikes, saw shares surge more than 10%.
Tesla, the electric carmaker led by White House advisor Elon Musk, jumped more than 5%.
The U.S. agreed to cut tariffs on Chinese goods from 145% to 30%, while China committed to reduce tariffs on U.S. products from 125% to 10%.
The previous set of sky-high tariffs had threatened a surge in prices and a possible U.S. recession, experts told ABC News.
The move marks the latest rollback of far-reaching tariffs initiated by President Trump during a Rose Garden ceremony on April 2 that the president dubbed “Liberation Day.”
Days after the announcement, Trump suspended so-called “reciprocal tariffs” on dozens of countries.
“Increasingly, it’s as if the last 6 weeks have been a bad dream and never actually happened,” Deutsche Bank told clients on Monday in a memo shared with ABC News.
The U.S.-China accord came two days after an hours-long discussion between U.S. and Chinese officials in Geneva, Switzerland on Saturday.
Jonathan Pingle, chief U.S. economist at Swiss investment bank UBS, on Monday estimated the reduction in U.S. levies on China would bring average U.S. tariffs down from 24% to 14%.
In a statement to ABC News, Pingle described the agreement between the U.S. and China as a “cooling off.”
This is a developing story. Please check back for updates.
(NEW YORK) — A carousel ride and 12 flavors of fudge await shoppers at LARK Toys, a family-owned toy shop outside Minneapolis, Minnesota.
The glee on offer belies the stress behind the counter as President Donald Trump’s 145% tariffs on China, which are set to trigger price increases and product shortages within a matter of a few months, co-owner Kathy Gray told ABC News.
The store imports four out of every five of its products from China, Gray said. A flurry of orders helped amass inventory before the tariffs, Gray added, but the shop lacks the funds and storage space to build up a major stockpile.
“It’s threatening,” Gray said. “This administration isn’t operating with the best intentions of small businesses and regular folks.”
LARK Toys is hardly the only small business that said it’s under strain as a result of Trump’s tariff policy.
Such concern is well-founded, analysts told ABC News, since small businesses typically lack the financial buffer, supply-chain flexibility and political influence of their larger counterparts.
Small businesses make up 99.9% of all U.S. firms, and account for more than two-fifths of the nation’s gross domestic product, according to the U.S. Small Business Administration.
“Many small businesses are quite vulnerable and exposed to changes in trade policy,” Ebehi Iyoha, a professor of business administration at Harvard University, who co-authored the study of small business sentiment, told ABC News.
The Trump administration has touted its achievements in support of small business, citing a cooldown of inflation and robust job growth.
“President Trump has restored optimism and opportunity for our job creators with a pro-growth economic agenda that has already slashed inflation, driven job creation, and delivered record investment,” Kelly Loeffler, Administrator of the Small Business Administration, said in a statement late last month.
Trump last month paused a far-reaching set of so-called “reciprocal tariffs” targeting about 75 countries. At the same time, however, Trump hiked tariffs on China. Additional levies have hit autos, steel and aluminum.
U.S. importers face an average effective tariff rate of 25.2%, the highest since 1909, the Yale Budget Lab found last month.
The rapid shift in trade policy poses an acute risk for small businesses in part because they usually lack a large rainy-day fund, Jane Liu, a professor of economics at the University of Nebraska, Omaha, told ABC News.
A typical small business holds enough cash reserves to last 27 days, a JPMorgan Chase Institute study found in 2020.
“The larger firms have a better cushion,” Liu said.
Small businesses also often face more pressure to raise prices for consumers, which can put them at a disadvantage with large competitors, some analysts said.
Tariffs raise prices for consumers if importers fail to swallow the tax burden by eating into their profits or requesting that a supplier sell the product at a lower rate in order to offset a share of the cost.
Small firms typically retain less capacity to eat profits or make price requests of suppliers, putting them at greater risk of losing out on shoppers due to tariff-related price hikes, Iyoha said.
“If you have a lot of bargaining power with suppliers, you can essentially say, ‘If you don’t eat some of these tariff costs and lower prices, I won’t buy from you,'” Iyoha said. “If you had to guess who has more bargaining power with suppliers, I’m sure you’d guess large businesses.”
In some cases, the Trump administration has granted relief from some tariffs.
Last month, the White House announced an exemption from China tariffs for a range of electronic devices. Days later, Trump said he had “helped” Apple CEO Tim Cook. Trump issued a one-month delay of auto tariffs after pressure from the Big 3 U.S. automakers: Ford, General Motors and Stellantis.
Small businesses typically lack the political influence of their larger counterparts, analysts said.
“Most small businesses don’t have the money or access to the best, most savvy folks able to do this,” Iyoha said.
(WASHINGTON) — President Donald Trump on Friday voiced a willingness to ease tariffs on China, saying on social media it “seems right” to slash levies from 145% to 80%.
The announcement arrives a day before Treasury Secretary Scott Bessent is set to begin trade negotiations with Chinese officials at a meeting in Geneva, Switzerland.
The potential tariff reduction floated by Trump may avert a virtual standstill of trade between the world’s two largest economies, but the move would not substantially ease expected price increases for goods such as clothes, sneakers and toys, analysts told ABC News.
Product shortages would also remain a possibility at the lower tariff rate, they added.
“A tariff of 80% would still have a dramatic effect,” Christian vom Lehn, an economics professor at Brigham Young University, told ABC News. “It would mean a significant impact for consumers.”
Trump last month sharply increased tariffs on China, prompting China to retaliate with 125% tariffs on U.S. goods. The tit-for-tat measures set off a trade war with the third-largest U.S. trade partner, which accounted for nearly $440 billion worth of imports last year.
The tariffs elicited warnings from a slew of companies about the risk of price increases for U.S shoppers.
Toy giant Mattel warned in an earnings report this week of plans to shift some of its supply chain outside China, adding that when necessary it would take “pricing action in its U.S. business.” The move follows similar messages from electronics chain Best Buy as well as Chinese e-commerce retailers Shein and Temu.
Chinese shipments to the U.S. have dropped significantly, falling 21% in April compared to a year earlier, data from China’s General Administration of Customs on Friday showed.
Risks for consumers would continue to linger for two key reasons, analysts said: An 80% tariff would still amount to a punishing tax on imports, while uncertainty about the chance of another policy shift would make it difficult for companies to take full advantage of the lower rate.
Tariffs raise prices for consumers if importers fail to swallow the tax burden by eating into their profits or requesting a supplier sell the product at a lower rate in order to offset a share of the cost.
Under the current 145% tariff on Chinese goods, suppliers and importers face immense pressure as they try to bear some of the tax cost out of concern that higher prices would hurt sales, experts told ABC News. Due to the sky-high tariff, however, many sellers have little choice but to hike prices or risk losses, they added.
Those dynamics would remain in place at an 80% tariff rate, since it would still far exceed many companies’ capacity to offset the added cost with lower profits, Jason Miller, a professor of supply chain management at Michigan State University.
“An 80% tariff really doesn’t change things too much,” Miller said.
Trump’s announcement of a potential reduction of the tariff on China came two days after Trump ruled out any such lowering of the tariff level before negotiations.
The developments followed a weeks-long back and forth during which the two sides disputed whether they had already started discussing the tariffs.
The general sense of uncertainty would remain even after U.S. tariffs were to reach 80%, making it difficult for businesses to adapt their supply chains in a manner that would substantially ease costs and, in turn, offer relief for consumers, some analysts said.
“Even at a lower tariff, companies would have to be wondering whether this might go up again or or possibly come down again,” David Andolfatto, an economist at the University of Miami, told ABC News.
If companies could trust the possible 80% tariff level as a long-term policy stance, they may choose to reroute supply chains outside China or even initiate plans for some domestic production, Andolfatto said.
But each trade policy announcement put forward by Trump appears subject to change, Andolfatto said, noting several modifications already undertaken by Trump.
“If anything changes, the Trump administration can unilaterally react and come back to the negotiating table,” Andolfatto added.
For his part, Bessent has referred to the White House approach as a negotiating tactic, describing the policy changes as “strategic uncertainty.”
Testifying before a House subcommittee this week, Bessent said the Trump administration had commenced negotiations with 17 of the top 18 U.S. trade partners, excluding China. Those countries account for the vast majority of U.S. foreign trade, Bessent said.
Trump unveiled the framework for a trade agreement with the United Kingdom on Thursday, marking the first such accord with any nation since the White House suspended some of its far-reaching “Liberation Day” tariffs last month.
“Every country wants to be making deals,” Trump said in the Oval Office on Thursday, noting the upcoming talks between Bessent and Chinese officials.
Mortgage rates have dropped over the early months of 2025, offering homebuyers an opportunity for some borrowing relief if they move ahead with the big-ticket purchase.
The housing market remains sluggish and wider economic uncertainty looms, however. President Donald Trump’s tariffs threaten to upend global trade and tip the U.S. into a downturn, experts said. Federal Reserve Chair Jerome Powell warned on Wednesday of a possible resurgence of inflation, which could trigger higher interest rates.
The mixed signals pose a quandary for homebuyers: Is it the right time to get into the market?
Lower mortgage rates ease the financial pain for prospective homebuyers, presenting an incentive at a moment when it appears unclear whether borrowing costs will drop any further, some analysts told ABC News.
A tight housing market and a cloudy economic outlook may give homebuyers pause, however, as they weigh the large expense with financial conditions in flux, analysts added.
“It’s still a tough environment to find a house,” Lu Liu, a professor at the Wharton School at the University of Pennsylvania, told ABC News. “On the other hand, it’s unclear whether that environment will get any better.”
The average interest rate on a 30-year fixed mortgage stands at 6.76%, marking a decline from 7.04% in January, FreddieMac data shows. The current level of mortgage rates is roughly a percentage point lower than a recent peak attained in the fall of 2023.
Each percentage point decrease in a mortgage rate can save thousands or tens of thousands in additional cost each year, depending on the price of the house, according to Rocket Mortgage.
“Mortgage rates have seen substantial decline,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, told ABC News. “It’s a measurable difference.”
Mortgage rates closely track the yield on a 10-year Treasury bond, or the amount paid to a bondholder annually. Bond yields are shaped in part by expectations of inflation, some experts said.
Since bonds pay a given investor a fixed amount each year, the specter of inflation risks devaluing the asset and in turn makes bonds less attractive. If inflation were to rise, those annual returns would get cut down as price increases erode the purchasing power of the fixed payout.
Bond yields rise as bond prices fall. When a selloff hits and demand for bonds dries up, it sends bond prices lower. In turn, bond yields move higher.
The Fed has cautioned about a possible tariff-induced rise of inflation, which could trigger higher bond yields and, in turn, increased mortgage rates. But a simultaneous slowdown of the economy may complicate potential rate hikes, since high interest rates could worsen a downturn.
“There’s a risk of upward pressure on inflation, which could drive up yields,” Liu said. “Maybe there’s a wait-and-see about a possible economic slowdown, which could lower rates.”
“It’s very hard to predict,” Liu added.
Homebuyers face another challenge: A slow housing market.
Existing home sales dropped nearly 6% in March compared to the previous month, National Association of Realtors data showed.
The housing market is suffering from a phenomenon known as the “lock in” effect, some experts said.
While mortgage rates have fallen, they remain well above the rates enjoyed by most current homeowners, who may be reluctant to put their homes on the market and risk a much higher rate on their next mortgage.
In turn, the market could continue to suffer from a lack of supply, making options limited and prices sticky.
An influx of new homes has eased some of the supply crunch, but construction of new homes remains well short of demand, Lautz said.
“There’s inventory coming in but it doesn’t mean the inventory-supply crisis is over,” Lautz added. “We know we need a lot more inventory in the U.S.”
Despite these complications, homebuyers may still find it worthwhile to enter the market, some experts said.
Limited supply of homes increases the likelihood that a given purchase will retain or increase its value, offsetting the costs and easing some of the risk, Ken Johnson, a real estate economist at the University of Mississippi.
“Prices should be stable or rise,” Johnson said. “You almost certainly won’t see a crash because we’re woefully short on roofs to live under in the U.S.”
In the event mortgage rates fall even further, homebuyers retain the option of refinancing at the reduced interest rate, Johnson added.
“As some say, ‘You get engaged to the mortgage rate and married to the refinance,'” Johnson said. “People may be looking now because they need to get into a home.”
(FRANKFORT, KY) — Kentucky’s bourbon industry faces potential devastation as President Donald Trump’s latest tariff dispute with Canada threatens to halt $43 million in annual whiskey exports. During Tuesday’s Oval Office meeting with Canadian Prime Minister Mark Carney, Trump maintained his hard stance on tariffs, declaring that Canada would need to make significant concessions to see any relief.
The dispute is part of a broader trade conflict that has particularly impacted American spirits, with Canadian retaliatory tariffs targeting bourbon producers.
Rep. Morgan McGarvey (D-KY), chair of the Congressional Bourbon Caucus, expressed concern about the meeting’s outcomes in an interview with ABC News.
“With Kentucky, Canada is our largest trading partner,” McGarvey said. “We’re going to lose tens of millions of dollars in bourbon sales in Ontario province alone, not to mention the whole country, because of what Trump’s policies are doing.”
The congressman highlighted how the administration’s shifting tariff policies are affecting Kentucky’s distilleries. When asked about conditions for ending the tariffs, Trump indicated there were none, a stance McGarvey found particularly troubling.
“If you’re using tariffs as a negotiating tactic, but then you say there’s nothing you can do to get rid of it, that’s going to be problematic,” McGarvey noted.
McGarvey criticized the administration’s approach to trade policy, highlighting the chaos it has created for local businesses.
“There was one week I was working with the bourbon companies in my district where, quite literally, on Monday, the tariffs were on. On Tuesday, they were off. On Wednesday, they were on. On Thursday, they were off again,” he explained.
The impact extends beyond just sales figures. Kentucky’s bourbon industry supports over 22,500 jobs and contributes $9 billion annually to the state’s economy. The ongoing trade dispute threatens this economic engine, with some distilleries already reporting decreased international orders and considering production cutbacks.
Beyond trade concerns, McGarvey also addressed proposed cuts to Medicare and Medicaid that could impact Kentucky residents.
“The Republican budget that Donald Trump has been pushing will cut Medicaid, 46% of the kids in Kentucky have health insurance through Medicaid,” he said, emphasizing that Kentucky receives more federal Medicaid dollars than its entire state budget.
The congressman, who serves on the Veterans Affairs Committee, also expressed strong opposition to recently announced VA staffing cuts.
“Cutting 80,000 people from the VA workforce is not going to help our veterans access their benefits,” McGarvey stated. “We made them a promise, both a legal and a moral obligation, that we would take care of them after their service.”
As negotiations continue with Canada, uncertainty remains about whether a deal can be reached before the 90-day pause expires. McGarvey and his colleagues continue to push for what he calls “serious, certain strategic trade policies that are beneficial to American workers and consumers.”
