Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.
o President Donald Trump has been relentless in pressuring Federal Reserve chair Jerome Powell to lower interest rates, including in personal attacks on the Fed chair. Powell’s term as Fed chair ends in May 2026 but Trump could have his successor lined up well before then. That leaves concerns that the chair-in-waiting would try to undermine Powell and the wait-and-see approach he has taken since January.
It is clear that Trump wants to name somebody as Powell’s replacement who will lower interest rates. However, guardrails in place limit the next chair’s ability to drastically change the trajectory of the Fed’s monetary policy. They must gain majority of support from the 12-person Federal Open Market Committee for decisions on interest rates and other major changes. [The New York Times]
o Rental car companies are using high-tech AI tools to help it detect small scrapes and scratches. Hertz is one of the companies using the scanning system developed by UVeye. The technology uses high-resolution images from all angles as a vehicle passes through the gate at pickup and return. It then compares those images and flags any discrepancies.
That has left many car renters with unexpected charges on their bills for damages that are picked up by AI but are too small for the naked eye. Hertz and its subsidiaries, Dollar and Thrifty, are using the technology at five airports but plan to expand it to other airports later this year. [The New York Times]
o Food banks are feeling strained, as demand is rising for their services and the federal government has canceled food deliveries and cut millions in annual aid for food banks. Demand for food assistance has increased in recent years due to the end of the pandemic aid programs, as well as the impact of inflation on food prices. That demand plus cuts to food stamps known as the Supplemental Nutrition Assistance Program, or SNAP, in President Donald Trump’s ‘Big, Beautiful Bill’ means that millions of Americans are more likely to go hungry.
A recent Food America survey found that over half of 162 food banks reported rising demand this past April compared to April 2024. However, a pandemic-era program that was slated to distribute an estimated $500 million to food banks to buy produce, dairy products, and meats was cut by the Agriculture Department. SNAP reductions will force people whose benefits are being cut or reduced to turn to pantries for food. [The Wall Street Journal]
o The United States Treasury department reported a $27 billion budget surplus for the month of June, as US customs duty collections collected more than $100 billion stemming from President Donald Trump’s tariffs. The customs duties collected in June is a new record, likely reinforcing Trump’s view of tariffs as a viable revenue source. The $27 billion budget surplus follows a $316 billion budget deficit in May.
With the final day of September marking the end of the government’s fiscal year, customs collections have reached $113.5 billion after nine months – nearly double the prior-year collections. Tariffs are now the fourth-largest revenue source for the US government, behind withheld individual taxes, non-withheld individual taxes, and corporate taxes. [Reuters]
o Some fear that government data on the United States economy is losing its reliability, specifically the data points and benchmarks used to assess the economy’s health. It has led staff at certain agencies to rely more on statistical estimates over hard data, leading to potential volatility. Response rates have fallen, pandemic-driven seasonal quirks and budget strains have made it more challenging to collect and analyze reliable data.
If the integrity of the data is compromised, that could lead to ramifications in policymakers’ view of the economy. In addition, President Donald Trump’s administration is seeking to overhaul long-term benchmarks it sees as flawed, creating consequences for businesses, investors and consumers. The Consumer Price Index – the most widely used benchmark for inflation – Bureau of Labor Statistics acknowledged surveying fewer outlets due to staff shortages in certain cities. That could lead to increased volatility of some of its key components. [The Washington Post]
