Elvira Nabiullina, Russia's top central banker, expressed that concern on Friday when she kept the key interest rate unchanged. Analysts polled by Reuters had expected her to hike rates to 23%.
"Our politics is aimed at prevention of extreme scenarios, which means that we cannot let the economy overheat further," Nabiullina said at a press conference following the rates decision, according to TASS state news agency.
"It is necessary to make sure that overheating subsides. That said, it is necessary to avoid excessive cooling, which is why we keep a close eye on this," she said.
Nabiullina said the central bank kept the interest rate steady as monetary conditions have "tightened even more than was implied by the key rate increase" in October, when the bank raised the rate from 19% to 21%. Russia started the year with its benchmark interest rate at 16%.
"Consequently, lending growth notably slowed down in November," she said. "We will need some time to assess how steady this deceleration in lending is and how the economy is adjusting to the new conditions."
Russian business leaders complain about high interest rates
Nabiullina's comments came as Russia's inflation hovered around 8% in the year to November, compared to the target rate of about 4%. Staples, like the price of butter and potatoes, have shot up this year. But the central bank's three straight rate hikes since June may be working, the top central banker signaled.
"Tough monetary conditions have evolved in the economy, which are to provide for inflation slowdown in coming quarters," she said, per TASS.
Russian business leaders have been complaining about the central bank's high interest rates, which they say are stifling business activities.
Sergei Chemezov, the CEO of the defense conglomerate Rostec, said in October that record-high interest rates were "eating up" the profit from the company's orders.
"If we continue to work like this, then most of our enterprises will go bankrupt," Chemezov said.
Economic cracks in Russia
Even Russian President Vladimir Putin on Thursday acknowledged that his country's economy is not in a good place β and he blamed the central bank and federal government.
The Russian leader said that the central bank could have used instruments other than interest rates to cool the economy and that the federal government could have worked with economic stakeholders to improve supply.
"There are some issues here, namely inflation, a certain overheating of the economy, and the government and the central bank are already tasked with bringing the tempo down," Putin said during his marathon annual press conference.
Price rises had been an "unpleasant and bad" outcome, he said.
Given the sweeping sanctions against Russia's economy, Nabiullina faces a challenging job to keep Russia's seemingly resilient economy going.
Economic cracks are emerging as the Kremlin focuses on shoring up its defense industry for its war in Ukraine β but at the expense of other sectors, Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center fellow wrote on Friday.
Prokopenko, a former Russian central bank official, wrote that growth momentum could stall next year, with social and fiscal challenges developing into crises around 2026.
Federal Reserve Chair Jerome Powell surprised markets on Wednesday evening.
Jacquelyn Martin/AP
The Federal Reserve cut its benchmark interest rate to between 4.25% and 4.5% on Wednesday.
The central bank also projected two cuts next year instead of four, sending stocks tumbling.
Here's how analysts, economists, and other experts reacted to the Fed decision and market reaction.
The Federal Reserve cut its benchmark interest rate on Wednesday to a range of 4.25% to 4.5%, bringing its decline since mid-September to 100 basis points.
Wall Street usually celebrates rate cuts as lowering borrowing costs drives spending, investing, and hiring. Reducing rates also signals inflation is under control, and makes risk assets like stocks relatively more attractive by trimming yields on safer assets like Treasuries.
Yet stocks tanked because Fed officials projected two cuts next year, down from four previously. Fed Chair Jerome Powell also said the central bank expects to ease its monetary policy more slowly in the months ahead.
Here's a roundup of how analysts, economists, strategists, investors, and other experts reacted to the latest Fed decision in their morning research Thursday.
Matt Britzman, senior equity analyst at Hargreaves Lansdown
"US markets played the part of Scrooge on Wednesday, tumbling as the Federal Reserve's hawkish tone dampened holiday cheer.
Investors should see this as a healthy spot of profit-taking rather than an end to the party, after what's been a fantastic run for markets since the US election."
Russ Mould, investment director at AJ Bell
"Markets are normally good at reading the signs, but the sell-off on Wall Street last night would suggest investors had started on the Christmas sherry a bit early and were caught out by the Fed's announcement about where rates might go in 2025.
The 3% drop in the S&P 500 is a wake-up call that US markets are not a one-way ticket to the moon.
The fact futures prices are showing a rebound in the main US equities on Thursday would suggest we are not at the start of a full-blown market correction. Instead, it's more likely that investors are now sitting up and paying more attention to what could go wrong, rather than only focusing on the positives. That's long overdue and a healthy development."
David Rosenberg, founder and president of Rosenberg Research
"This is a Fed that really has no faith in its view at any time and is willingly reactive as opposed to proactive even though its actions affect the economy with long lags.
You would have thought that between the commentary and forecast changes that the world has changed dramatically since the jumbo rate cut just three months ago. It clearly does not take much to cause this Fed to swing its view around. I can guarantee that it will shift again."
Stephen Koopman, senior macro strategist at Rabobank
"'We had a year-end inflation forecast, and it's kind of fallen apart.'
Not exactly the confidence-inspiring line you'd expect from a Fed chair. But Jerome Powell's performance at yesterday's press conference wasn't his finest hour. In what might have been the most uncomfortable showing of his tenure, Powell ceded the stage to the hawks, visibly strained as he tried to sell a strategy he didn't fully appear to endorse.
Powell flagged inflation 'moving sideways' and 'higher uncertainty' around its trajectory. These admissions reveal a central bank increasingly unsure of its footing, with rates markets now expecting just one cut for 2025 (as we do), and with no real consensus on when that final cut would arrive."
Jamie Cox, managing partner for Harris Financial Group
"Markets have a really bad of habit of overreacting to Fed policy moves. The Fed didn't do or say anything that deviated from what the market expected β this seems more like, I'm leaving for Christmas break, so I'll sell and start up next year.
The good news is that this 10-day sell-off should lay the path for a Santa Rally leading into next week."
Chris Zaccarelli, chief investment officer for Northlight Asset Management
"Santa came early and dropped a 25-bps rate cut in the market's stocking but accompanied it with a note saying that there would be coal next year."
The market is forward-looking and ignored the good news of today's rate cut and instead focused on the paucity of rate cuts for next year."
Jochen Stanzl, chief market analyst at CMC Markets.
"What was heard last night from the Fed as an accompaniment to the interest rate cut is a showstopper for the stock market.
The Fed is sending a clear signal that it has almost completed the phase of interest rate cuts. The year 2025 will be a significant break in the Fed's rate-cutting cycle.
The Trump blessing could quickly turn into a curse. If the market expects yields to rise further, it is unlikely that the Fed will intervene against these forces. If inflation data continues to rise in January and February, then that could be it for the interest rate cuts."
Adam Turnquist, chief technical strategist for LPL Financial
"While the Fed is taking all the heat for today's sell-off, a reality check from overbought conditions, deteriorating market breadth, and rising rates was arguably overdue.
Overall, today's FOMC meeting brought back some unwanted clouds of uncertainty over monetary policy next year. At a minimum, market expectations have shifted toward a shallower- and slower-than-anticipated rate-cutting cycle. Technically, the near-term risk remains to the upside for 10-year Treasury yields, creating a likely headwind for stocks."
Jean Boivin, head of the BlackRock Investment Institute
"The Fed has poured cold water on already dwindling market hopes for generous rate cuts in 2025.
Given the risk of resurging inflation from potential trade tariffs and a slowdown in immigration that has been cooling pressure in the labor market, market expectations of only two more cuts in 2025 now seem reasonable.
We expected this policy outcome, so it doesn't change our recently upgraded view on US equities. US stocks can still benefit from AI and other mega forces, from robust economic growth and from broad earnings growth β and we see them outperforming international peers in 2025."
Isaac Stell, investment manager at Wealth Club
"With an economy that's going gangbusters and an incoming president with a fiscally loose agenda, you wonder why the Fed felt it necessary to cut.
Is this to curry favor with the incoming administration or is there a bump in the road the Fed can see that the rest of us are missing."
Michael Brown, senior research strategist at Pepperstone
"The FOMC delivered about as hawkish a cut as they could muster up yesterday, and market participants were not particularly pleased about what they heard.
It was, though, a little perplexing to see such a violent market reaction to Powell's remarks, particularly considering how 'every man and his dog' had been expecting this sort of a pivot in the run up to the meeting.
It feels, though, as if markets have overreacted to Powell's message, and that we may have reached something of a hawkish extreme here
Consequently, I'd be a dip buyer of equities here, as strong earnings and economic growth should see the path of least resistance continuing to lead to the upside, offsetting the fading impact of the 'Fed Put.'"
The Federal Reserve is expected to cut interest rates this week by 25 basis points.
Inflation has ticked back up in recent months, and economists think the job market is still robust.
The outlook for 2025 is more uncertain while the Fed waits to see how Trump will impact the economy.
The final interest-rate decision of the year is coming this week, and it's likely to give Americans some more financial relief.
On Wednesday, the Federal Open Market Committee is expected to announce another interest-rate cut. As of Monday afternoon,CME FedWatch, which estimates interest-rate changes based on market predictions, forecasts a close to 100% chance the Federal Reserve will cut rates by 25 basis points.
Data out last week showed overall inflation has sped up. The consumer price index's year-over-year growth rate rose from 2.4% in September to 2.6% in October before climbing to 2.7% in November. Core CPI, which excludes volatile food and energy prices, has been holding steady, with a year-over-year change of 3.3% from September to November.
Jerome Powell, chair of the Fed, said at The New York Times' DealBook Conference on December 4 that "we're in a very good place with the economy," but inflation is still not quite where the central bank wants it to be.
"The labor market is better, and the downside risks appear to be less in the labor market, growth is definitely stronger than we thought, and inflation is coming a little higher," Powell said. "So the good news is that we can afford to be a little more cautious as we try to find neutral."
Slower job growth and higher unemployment may add fuel to the argument for continuing to cut, while a tighter-than-expected labor market could lead the central bank to pause while waiting to see if wage growth and inflation speed up.
"I don't think there's that much cause for concern in the labor market data that would lead to them suspending their plan to cut," Julia Pollak, the chief economist at ZipRecruiter, told Business Insider.
Pollak said the quits rate, the latest reading of which was 2.1% in October, is "consistent with a non-inflationary labor market" and that "wage growth at 4% over the year should be sustainable given current productivity growth." Cory Stahle, an economist at the Indeed Hiring Lab, said the US economy continues to add jobs above population growth and has low unemployment.
The unemployment rate increased from 4.1% to 4.2% in November. The three-month average job gain in November was around 173,000, lower than early 2024 but still strong.
"There are still many reasons to be optimistic about the labor market, but also you don't, as a Federal Reserve policymaker, you don't want to wait until things start looking bad to react to that because by then, you might be too late," Stahle said.
The interest rate outlook for 2025 is a bit more uncertain. President-elect Donald Trump has already posed broad tariff threats on key trading partners with the US, including China, Canada, and Mexico. If he implements those tariffs, consumers would likelyface higher prices on impacted goods. The Fed could respond to inflationary trade pressures by once again raising interest rates.
However, Powell has so far declined to comment on any policy changes the Fed would consider in response to Trump's tariff threats, saying during the DealBook conference that too much about what Trump might do with tariffs is unknown.
"We can't really start making policy on that at this time. That is something that lies well into the future. We have to let this play out," Powell said, emphasizing that the Fed is making decisions about what's happening in the economy now and not six months from now.
Still, some economists expect 2025 to be another strong year for the economy. Gregory Daco, the chief economist at EY, said that the US "remains on a solid growth trajectory supported by healthy employment and income growth, robust consumer spending, and strong productivity momentum that is helping tame inflationary pressures."
"We expect these positive dynamics will carry into 2025 allowing the Fed to pursue gradual, but cautious, policy recalibration," Daco said in written commentary.
Several economic experts panned New York Gov. Kathy Hochulβs "inflation refunds" she plans to distribute to qualifying New Yorkers as part of her 2025 State of the State initiative.
Last week, Hochul proposed $3 billion in direct payments to about half of the Empire Stateβs 19 million residents: $300 for single taxpayers making up to $150,000 per year and $500 for joint filers making twice that.
"Because of inflation, New York has generated unprecedented revenues through the sales tax β now, we're returning that cash back to middle class families,"Β Hochul said in a statement announcing the proposal.
However, some economists and economic experts, like Andy Puzder, said the move simply "redistributes [money] to people so the people will vote for them."
"If you really wanted to help everybody, and if you have an excess of sales taxes, then you reduce the sales tax," added Puzder, the former CEO of the parent company of Hardeeβs and Carlβs Jr., CKE Restaurants. "Itβs not difficult math," he added.
Puzder is a lecturer on economics and a senior public policy fellow at Pepperdine University who was considered for Labor secretary in the first Trump administration.
In his work at CKE Restaurants, Puzder increased the average franchise sales volume for the then-struggling Hardeeβs from $715,000 in 2001 to more than $1 million a decade later.
The U.S. economy has been in trouble because of the same types of policies forwarded by Hochul and other tax-and-spend Democrats, he said β adding that President Bidenβs American Rescue Plan was what lit the fuse on nationwide inflation in the first place.
"If you reduce taxes, fewer people will also be leaving the state," he added, as New York shed another population-based House seat and electoral vote in the decennial census.
Puzder noted a few top Democrats have warned their own leaders against such "refunds" from the government, citing former President Bill Clintonβs Treasury chief Lawrence Summers cautioning the Biden administration that similar handouts in 2021 would drive up inflation.
Former Rep. Dave Brat, R-Va., an economist and currently vice provost of Liberty University in Lynchburg, cited Nobel laureate Milton Friedmanβs assertion that inflation is a monetary phenomenon.
Therefore, he said, in Hochulβs case, the better fix for inflation lies not in Albany, but in Manhattan.
"Inflation has to do with how much money the Federal Reserve prints. If she wants to give people money back from the government, thatβs fine β but sheβs in a prominent position in New York in that the Fed has one of its chief desks there and if you want to solve inflation, you go to the Federal Reserve."
He added that $500 for a family is a "trivial, symbolic move against a massive, hidden tax," noting that with an estimated 22% real-inflation rate over the past four years, $500 in 2020 purchasing power is only worth $390.
Brat added that Democratsβ penchant for such "refunds" put Republicans at a consistent political disadvantage because the GOP essentially has to "compete against Santa Claus" handing out presents versus the right warning the public to "eat their spinach."
Economist EJ Antoni echoed some of the sentiment about the refunds being inflationary themselves, saying that what got the U.S. into inflation in the first place was too much government spending.
"So this idea that we're going to add on another government expenditure, you're essentially just creating a feedback loop," Antoni said.
"Now, that's not to say that New York State alone is going to cause inflation. Inflation comes from the federal government, because the federal government is the one that can't create money, can print money out of nothing. But at the same time, you're still talking about increasing the cost of living for New Yorkers, just in a different way," he said.
"Any additional government spending is going to have to be paid for one way or another."
Antoni added he could see such payments to the public "snowballing" into more and more payments down the line, which in turn would lead to higher taxes being needed to fund the handouts.
Antoni also said Hochulβs proposal differs from then-President Donald Trumpβs COVID-era checks, because the latter came during a time people needed "money to survive" amid stay-at-home orders and various shutdowns of job sectors.
"If the issue is that we need to reduce people's cost of living, the best way to do that would just be to reduce their taxes, not have another payment by the government," he said.
Fox News Digital also reached out to the left-leaning Brookings Institution for a further diverse viewpoint on Hochulβs move.
Fox News Digital also reached out to Hochul's office for comment but did not receive a response by press time.Β
Small businesses are optimistic about revenue boosts in 2025, when President-elect Donald Trump will kick off his second administration, a U.S. Chamber of Commerce report obtained by Fox News Digital shows.Β
The latest Small Business Index report by MetLife and the U.S. Chamber of Commerce released Monday morning found that seven in 10 small businesses, at 72%, reported they anticipate their revenues to increase next year. Last year, only 65% of businesses reported they anticipated revenue to increase, the data show.Β
"The growing optimism among small business owners since the beginning of the year is a positive sign as we move into 2025 and potentially points to increasing opportunities in the new year," Bradd Chignoli, executive vice president and head of Regional Business & Workforce Engagement at MetLife, said in a press release provided to Fox Digital. "As more and more employers look to increase investment and staff size, it is important to take advantage of the resources available to them, such as voluntary benefits, which can help strengthen their companyβs culture and help attract and retain new talent."Β
The Small Business Index is a collaboration between MetLife and the U.S. Chamber of Commerce that measures small business ownersβ and leadersβ expectations. The survey released Monday was conducted between Oct. 7 β 21, before the election's results, and included responses from 750 small business owners and operators.Β
The majority of business owners, at 70%, reported that holiday shopping is vital to their overall profit, which is slightly down from 2022βs Q4 report that found 79% of business owners reported the same.
The report found that inflation woes are small business ownersβ top concern β as it has been for the last two years, according to the report. This year, however, an increase of business owners reported that both the U.S. economy and their local economies are healthier than they were this time last year.Β
Thirty-two percent of business owners reported the U.S. economy is in better shape than 2023, up from 25% last year, and 38% reported their local economies are healthier than last year, when 30% reported the same.Β
The survey also found that the majority of small business owners, at 51%, reported that red tape β including licensing, certification, and permit requirements β makes it harder for them to grow their operations. While 47% of respondents reported that they spend too much time and energy on complying with regulatory requirements.Β
ββ"Too many regulations cause big headaches for small businesses, even if they feel confident in their ability to comply or have the means to outsource compliance tasks," said Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce. "This quarterβs survey shows these requirements are complex, time-consuming, and often prevent small business owners from focusing on running and growing their businesses."
About 39% of respondents reported that in the last six months alone, they have increased their time and resources on complying with regulations alone, which is up from 33% reporting the same in the last quarter. Compliance with ββtaxes, bookkeeping, payroll and licensing ate up a "ββgreat deal or fair amount" of time for business owners, according to the report.Β
The overall index score for this quarter sits at 69.1, a slight dip from last quarterβs score of 71.2, which was attributed to business ownersβ reporting an increase in time and resources on regulation compliance.Β
Small businesses have been on edge in recent years as inflation spiraled and choked spendersβ pocketbooks. Amid the highly-anticipated election cycle this year, Trump campaigned, in part, on lowering costs for Americans at check-out lines. Trump defeated Vice President Kamala Harris at the ballot box last month, securing 312 electoral votes to Harrisβ 226.
"I am promising low taxes, low regulations, low energy costs, low interest rates, secure borders, low, low crime and surging incomes for citizens of every race, religion, color and creed," Trump said from the campaign trail in September. "My plan will rapidly defeat inflation, quickly bring down prices and reignite explosive economic growth."Β
"I took care of our economy like I would take care of my own company in every decision. I asked, will I create jobs here, or will I be sending jobs overseas? Will it make America richer and stronger, or will it make our country weaker and poorer?" Trump asked. "I always put America first every single time. And when our country was hit by the China virus, we saved the economy. We rescued tens of millions of jobs."Β
Trump recently signaled openness to raising the federal minimum wage, but that's likely to hit GOP resistance.
Jeff Bottari/Zuffa LLC via Getty Images
Trump said in his Person of the Year interview that lowering grocery prices is "very hard."
He said that high food prices were part of why he won the election.
Some economists think Trump's economic plans, like tariffs and deportations, will be inflationary.
President-elect Donald Trump didn't commit to being able to lower grocery prices in his Person of the Year interview with Time Magazine, after flagging the issue as an important part of his win.
Time asked Trump if failing to lower grocery prices, as he said he would do on the campaign trail, would make his presidency a failure.
"I don't think so. Look, they got them up. I'd like to bring them down. It's hard to bring things down once they're up," he said. "You know, it's very hard. But I think that they will."
Trump added that he thinks "energy" and "a better supply chain" will help bring down costs.
The economy consistently ranked as voters' top issue in the presidential election, with inflation in particular at the top of mind. Frustrated with the price of everything from eggs, to meat, to cereal, many voters said they supported Trump because they thought he would lower everyday costs.
On the campaign trail, Trump vowed to lower food prices, saying at a rally on September 23, "Vote Trump and your incomes will soar. Your net worth will skyrocket. Your energy costs and grocery prices will come tumbling down." When talking about groceries in an interview last week, he said that he would "bring those prices way down."
In the interview, Trump said that Democrats lost because of their failure to talk about the economics of voters' daily lives, like the experience of buying groceries. Some economists predict that the president-elect's plans, like mass deportations and broad tariffs, will be inflationary. Walmart, the country's biggest grocery retailer, is among the companies that said it will likely raise prices if Trump enacts his trade agenda.
When asked whether his proposed mass deportations, including for migrant agricultural workers, would spike food prices, Trump said no.
"No, because we're going to let people in, but we have to let them in legally," he said, before moving on to talk about not allowing prisoners into the country.
Inflation ticked up slightly in November, with the consumer price index rising to 2.7% from a year ago, as expected. The food-at-home index rose slightly as well, reaching 1.6% in November compared to 1.1% in October.
Representatives for Trump did not immediately respond to Business Insider's request for comment.
The consumer price index increased 2.7% from a year ago as expected, higher than October's 2.6% rate and the highest reading since July, when the rate was 2.9%.
Matt Colyar, an economist at Moody's Analytics, told Business Insider before the new data was published that an acceleration wouldn't be concerning because November's increase would likely be because of housing inflation. Shelter inflation has mainly been cooling from its peak of over 8% in March last year but is still high compared to the pre-pandemic rate.
"If inflation were to accelerate because prices for cyclical, demand-driven things like hotels, vehicles, airfare, etc. jumped, then policymakers at the Federal Reserve will start to look at the US economy with a bit more caution," Colyar said. "That shouldn't be overstated, however. It takes more than one monthly data point to be a trend and we haven't yet seen that kind of dynamic emerging."
While shelter was the biggest contributor to inflation overall, housing price growth has slowed. "The shelter index increased 4.7 percent over the last year, the smallest 12-month increase since February 2022," a Bureau of Labor Statistics news release on Wednesday said.
Members of the Federal Open Market Committee will meet once more this year next week on December 17 and 18 and will likely announce another interest-rate cut. CME FedWatch showed after the new inflation data was published traders expected a nearly 100% chance of an interest rate cut of 25 basis points next week, up from a nearly 90% chance before the report.
The CPI increased 0.3% over the month in November from October, the same as the forecast and an uptick from October's increase of 0.2%. The news release said that the rise in the shelter index over the month accounted for almost 40% of the overall increase.
Core CPI, which excludes volatile food and energy prices, increased 3.3% from a year ago as expected. That's the same year-over-year rate as in October.
The energy index fell 3.2% year over year in November after declining 4.9% in October. Gas tumbled by 8.1% in November.
The food-at-home index rose 1.6% year-over-year in November after rising 1.1% in October, and the food-away-from-home index increased 3.6% in November after rising 3.8% in October.
Cory Stahle, an economist at the Indeed Hiring Lab, told BI following the jobs report that "there are still many reasons to be optimistic about the labor market," like the layoff rate being less than the pre-pandemic low. However, Stahle added, "As a Federal Reserve policymaker, you don't want to wait until things start looking bad to react to that because then by then you might be too late."
Argentina's president, Javier Milei, has presided over sweeping spending cuts since taking office a year ago.
Tomas Cuesta/Getty Images
Javier Milei became Argentina's president a year ago, partly on a pledge to slash the state.
Elon Musk and Vivek Ramaswamy, co-heads of DOGE, have expressed admiration for Milei's policies.
While his government brought inflation down, his approaches have also triggered a recession.
When Javier Milei took office on December 10, 2023, the firebrand Argentine president inherited an economy in meltdown. Milei promised to take a "chainsaw" to the state.
Since then, he has presided over sweeping spending cuts, fired tens of thousands of public employees, shut down half the country's 18 ministries,Β and devaluedΒ the peso against the dollar by over 50%. He cut state spending by an estimated 31% in his first 10 months alone.
The measures caught the attention of Elon Musk and Vivek Ramaswamy, the men now charged with a similar task under President-elect Donald Trump.
Last month, Musk said Argentina had made "impressive progress,'" while Ramaswamy said that the US needed "Milei-style cuts on steroids."
Falling inflation
A year into Milei's term in office, BI took a look at the figures.
When Milei took over in December 2023, Argentina's inflation stood atΒ 25.5%, while economic activity had fallenΒ 4.5%Β year over year.
Argentina's inflation rate dropped to 2.7% this October β the lowest level in three years, according to the predicting market website Kalshi.
Ignacio Labaqui, a senior analyst at Medley Global Advisors, a leading macro policy research service, called this a "success" for Milei.
He said that Milei "managed to bring inflation down faster than expected despite starting his term with a 100% increase in the exchange rate and hiking longtime frozen utilities' tariffs β two measures that have an inflationary impact."
However, Facundo Nejamkis, director of Opina Argentina, a political consultancy firm, toldΒ Reuters that Milei's cuts have ignited a "major" recession.
Unemployment up
According to BBVA projections, Argentina's GDP contracted by 3.4% in the first half of 2024, and it is expected to decline by 4% for the full year.
The country's unemployment rate also rose to 7.6% in Q2, up from 6.2% in the same period last year, according to Argentina's statistics agency.
Maria Victoria Murillo, director of the Institute of Latin American Studies at Columbia University, told BI last month that the "deep" recession, while "very painful," has been accepted by Argentinians because inflation was "terrible" and people "do not want to go back."
Meanwhile, according to Argentina's statistics agency, the country's poverty rate rose to 52.9% in the first half of 2024, up from 41.7% in the second half of 2023.
This was the highest rate in 30 years, per a research team at the Observatory of the Argentine Social Debt, which keeps track of key economic indicators.
While acknowledging declining inflation, it said growing poverty was a result of Milei's "shock" economic plan and structural issues, including the devaluation of the peso.
Falling inflation "does not yet translate into a greater capacity for household consumption," it said.
Fiscal balance
There are, however, some signs of recovery.
In the first five months of 2024, Argentina's government achieved a primary fiscal surplus of 1.1% of GDP β its first in 12 years.
This is Milei's "most remarkable achievement," said Labaqui of Medley Global Advisors, who said the fiscal surplus, together with the exchange rate anchor, brought inflation down faster than expected.
BBVA Research, for its part, said that it expects Argentina's GDP to rebound strongly next year, from a 4% deficit in 2024 to 6% in 2025, driven by investments, exports, and private consumption.
Juan Cruz DΓaz, managing director at Cefeidas Group, an international advisory firm, told BI that "one year later, it can be argued that the economic landscape has certainly improved, although there is still a long way to go."
He said that Argentina is still expected to end 2024 with an accumulated inflation of 120%, one of the highest in the world, but a sharp decline from 2023's 211%.
"In addition, Milei has promoted a regime to attract large foreign investments in certain sectors of the economy, with some initiatives already underway," he said.
Cruz DΓaz added that one of the surprising aspects of the last year has been Milei's ability to "keep his public image relatively stable throughout the year, despite having implemented deep cuts in public spending, along with other measures generally considered unpopular and politically costly, such as the elimination of subsidies for energy and other essential services."
This is something that could be of particular interest to Musk and Ramaswamy, as they look at sweeping federal budget cuts in the US.
Labaqui, for his part, said keeping Argentina's current trajectory will depend on whether Milei's party performs "strongly" in next year's legislative elections.
"Inflation certainly is falling at a faster-than-anticipated pace," he said, "and there is an incipient economic rebound, but there is still a lot to do to bring the economy back on track."
President Biden on Tuesday touted that President-elect Trump will inherit the "strongest economy in modern history" when he takes office in January β even as Americans continue to struggle to afford homes and groceries from inflation.
Biden delivered remarks about his "middle-out, bottom-up" economic approach at the Brookings Institution, a public policy think tank in Washington, D.C., claiming there are "a number of quotes" from commentators describing his administrationβs economy as strong.
"President Trump has received the strongest economy in modern history, which is the envy of the world," Biden said.
WhileΒ inflation has eased significantlyΒ since its peak in 2022, grocery prices remain substantially higher than they did before the COVID pandemic swept the globe nearly five years ago.
According to the most recent Consumer Price Index inflation data from the Bureau of Labor Statistics, Americans are spending 22% more on groceries in comparison to when BidenΒ took office nearly four years ago.
Voters said the economy was far and away the top issue facing the country β with 40% saying inflation was the single most important factor in their vote β followed distantly by immigration and abortion, according to theΒ Fox News Voter AnalysisΒ of the 2024 election.
Even Trump noted during an interview with NBC Newsβ "Meet the Press" on Sunday that his White House victory last month came down to the economy.
Meanwhile, Biden held to his belief that Trumpβs potential tariff plan is "a major mistake."
"By all accounts, the incoming administration is determined to return the country to another round of trickle-down economics and another tax cut for the very wealthy," Biden said. "That will not be paid for, or if paid for, is going to have a real cost, once again causing massive deficits or significant cuts in basic programs."Β
When asked in his latest interview if he could guarantee that his tariffs wouldn't force Americans to pay more for items, Trump answered, "I canβt guarantee anything."
Fox News Digitalβs Paul Steinhauser contributed to this report.
"I won on the border, and I won on groceries," the president-elect said in an interview on NBC News' "Meet the Press."
Trump then drilled down on the high grocery prices that millions of Americans are paying as a key reason for his convincing White House victory over Vice President Kamala Harris.
"Very simple word, groceries. Like almost β you know, who uses the word? I started using the word β the groceries. When you buy apples, when you buy bacon, when you buy eggs, they would double and triple the price over a short period of time, and I won an election based on that," Trump emphasized in his interview, which was recorded on Friday and broadcast on Sunday.
While inflation has eased significantly since its peak in 2022, grocery prices remain substantially higher than they did before the COVID pandemic swept the globe nearly five years ago.
According to the most recent Consumer Price Index inflation data from the Bureau of Labor Statistics, Americans are dishing out 22% more for groceries in comparison to what they paid when President Biden took office nearly four years ago.
And voters' frustrations over high grocery prices, as well as other impacts from inflation, benefited Trump as he ran to win back the White House.
Voters said the economy was far and away the top issue facing the country, followed distantly by immigration and abortion, according to the Fox News Voter Analysis of the 2024 election.
And 40% said inflation was the single most important factor in their vote, and they backed Trump by almost two-to-one, according to the Fox News Voter Analysis, which was a survey of more than 110,000 voters and 18,000 nonvoters nationwide. An AP VoteCast, a survey of more than 120,000 registered voters, had similar findings.
On the presidential campaign trail, Trump railed against the Biden/Harris economy and promised to bring down prices.
Β "Grocery prices have skyrocketed," Trump said during an August news conference, as he stood by tables stocked with packaged foods.
"When I win, I will immediately bring prices down, starting on day one," he vowed.
And in his interview on "Meet the Press," Trump pledged that "weβre going to bring those prices way down."
But Trump, in the interview, reiterated that he would follow through on his campaign vow to levy large tariffs on imports from the nation's major trading partners.
During the presidential campaign, Harris argued that Trump's across-the-board tariffs, if implemented, would increase prices on many goods and amounted to a "a sales tax on the American people."
Tariffs are taxes that governments place on goods being imported or exported. They can raise the cost of imported products, making local products more attractive to buy.
Asked in his latest interview if he could guarantee that his tariffs wouldn't force Americans to pay more for items, Trump answered, "I canβt guarantee anything."
Americans over age 65 had a higher inflation rate in 2023 than younger groups, based on the types of things they tended to buy.
Tom Williams/CQ Roll Call/Getty Images
Baby boomers were hit the hardest by inflation in 2023, driven by rising healthcare costs.
Healthcare costs outpaced overall inflation, and they make up a greater share of boomers' budgets compared to younger Americans.
Gen X fared better due to different spending patterns.
Senior discounts might be particularly handy these days for America's retirees and older workers.
In 2023, those 65 and older experienced the highest inflation rates among age groups based on the items they buy, per an analysis from Wells Fargo economists. The analysis found that mounting healthcare costs, which have outpaced broader inflation, particularly weighed on baby boomers, who areΒ aged 60 to 78.Simultaneously, older Americans did not spend as much on things like gas, where costs deflated.
It's not just healthcare that ate away at boomers' wallets. Business Insider analyzed data from the Bureau of Labor Statistics' annual consumer expenditures survey for 2023, and looked at how Americans 65 and older spent on different categories compared to all households.
Across all age groups, health insurance made up around 5% of annual spending in 2023; for Americans over 65, it was just over 9%. That's likely making a big dent in their finances, with health insurance prices rising nearly 7% year-over-year as of October 2024 per detailed consumer price index data from BLS, more than double the broader year-over-year inflation rate that month of 2.6%.
In addition to spending more on health insurance, Americans over 65 disproportionately spent on healthcare itself in 2023; they devoted 13.4% of their annual spending to healthcare, while Americans of all ages allocated just 8% of their spending on the same expenses. They also outspent other Americans on life and other personal insurance.
Other items those age 65 and up spent more of their incomes on than other age groups saw mounting inflation. For instance, older Americans devoted around 0.2% of their spending to postage β a small expense, but one where prices have grown by nearly 11% year-over-year.
We want to hear from you. Are you an older American with any financial regrets that you would be comfortable sharing with a reporter? Please fill out this quick form.
As boomers aged at home, they also spent a greater chunk of their annual expenditures on maintenance, repairs, insurance, and other expenses. Year-over-year, prices for the repair of household items grew by 5%.
Meanwhile, Gen X households have weathered inflation better than other generations. Wells Fargo's analysis showed that Americans ages 45 to 54 experienced 1.8% inflation year over year, while those 55 to 64 had 1.9% inflation. This is because Gen X, on the whole, spent less of their budgets on items with high price growth like housing and healthcare.
To be sure, a recent Gallup survey of 1,001 adults suggests Americans are doing well in retirement. Gallup found that three in four retirees said they could live comfortably off their savings, compared to less than half of nonretired Americans who expect to have enough for a comfortable retirement.
Still, even wealthier Americans told BI they've been hit hard by inflation.
Over 2,000 older Americans told BI their biggest regrets over the last few months in a voluntary, informal survey. An overwhelming majority said they're worried about their finances. A majority wished they had saved more or invested better for their retirement, as hundreds said they're still working or relying heavily on Social Security to get by.
Hundreds said health conditions, the death of a spouse, and job loss have contributed to less rosy finances. A few dozen said they weren't sure how much to save for retirement and spent too much shortly after retiring, hurting their wallets.
Many said they've cut back on experiences and more expensive purchases to focus on essential goods. Others said they've fallen through the cracks in the nation's social safety net, making too much for government assistance but not enough to feel comfortable.
Are you an older American with any financial regrets that you would be comfortable sharing with a reporter? Please fill out this quick form.
Russian President Vladimir Putin said his country should increase the supply of goods and services to fight inflation.
Getty Images
Russian President Vladimir Putin has urged his government and central bank to curb Russia's 8% inflation rate.
Russia's inflation target is 4%, with interest rates at a record high of 21%.
The high interest rates are pressuring businesses and hurting the cash savings of ordinary people.
Russian President Vladimir Putin appears to be signaling to his government and the central bank to put aside their differences to tackle a critical problem for businesses and regular people alike: inflation.
Russia's inflation rate is 8% compared to a year ago, which Putin acknowledged was "a relatively high level."
"It is imperative to avoid any misalignment in key macroeconomic indicators and prevent sectoral imbalances, which undeniably includes the necessity of controlling inflation," the Russian leader said at an investment forum in Moscow on Wednesday.
Putin doubled down on "coordinated joint efforts" from the Russian government and the central bank to curb inflation, echoing comments he made in August.
"I would like to stress that this is not just a recommendation or a proposal β this is a guide to action, as I see it," he said on Wednesday, adding that the two groups are already coordinating.
Russia's inflation target is 4% and Putin said the country should increase the supply of goods and services to fight inflation, per TASS state news agency. Before the pandemic and war in Ukraine, the country's inflation rate β like that of many peers β was much lower, hitting 3% in December 2019.
Putin's comments come amid recent complaints from Russian business elites that they are sick of propping up the country's economy as interest rates soar to record levels in the country's wartime economy.
In October, Russia's central bank hiked its key interest rate to a high of 21% to tame prices, intensifying criticisms β from business leaders, lobby groups, and the government β against Russian central bank governor Elvira Nabiullina's policies.
Sergei Chemezov, the CEO of the defense conglomerate Rostec, said in October that record-high interest rates were "eating up" the profit from the company's orders.
"If we continue to work like this, then most of our enterprises will go bankrupt," Chemezov said.
One of Russia's top bankers told Reuters late last week that a high interest rate may not help much given high defense expenses and sanctions.
Price raises in Russia are making life very expensive β butter and potatoes cost substantially more than they did at the start of the year β and eating into people's savings.
The cash savings of Russians are now at all-time low of 15.9 trillion rubles, or $151.5 billion, due to high interest rates, VTB β Russia's second-largest lender β said on Wednesday. That figure does not include foreign currency holdings, which VTB estimates are about $94 billion.
Analysts polled by Reuters expect Russia's central bank to raise its key interest rate to 23% at its December 20 meeting. But Nabiullina said it was not predetermined, the news agency reported on Wednesday.
Nabiullina also pushed back on the notion that the central bank's tight monetary would spur a recession.
"Economists of the Central Bank believe the economic potential is on the rise and will continue growing in the next year," she said at Wednesday's forum in Moscow, per TASS.
"This is the result of large-scale investments in the upgrade of the economy during the last three years. If the potential is growing steadily, then this means also more space for demand growth," Nabiullina said.
Russian President Vladimir Putin said there was no reason to panic about the ruble's slide.
REUTERS/Yves Herman
Russian President Vladimir Putin said the ruble's plunge to two-year lows was no cause for panic.
The Russian currency hit its lowest level against the dollar since March 2022 this week.
Analysts say Russia is under pressure from inflation, military spending, and falling oil prices.
Russians shouldn't stress about the ruble tumbling to two-year lows, Vladimir Putin said Thursday. Analysts told Business Insider there was plenty of cause for concern.
The Russian leader told reporters that the "situation is under control" and that "there are absolutely no grounds for panic," according to a Google translation of a report from the RIA Novosti news agency.
Putin attributed the ruble's fluctuations "not only to inflation but also to budget payments and oil prices," along with many seasonal factors.
The Russian currency traded at 114 to the dollar on Wednesday, its weakest level since March 2022, shortly after the Ukraine invasion began. It was about 84 in early August, meaning the currency has depreciated by 36% in under four months. A greenback was worth about 108 rubles on Friday.
Russia's central bank stepped in to shore up the floundering ruble on Wednesday. It suspended purchases of foreign currency on the domestic market for the rest of this year to reduce volatility.
A Wednesday headline in the state newspaper Rossiyskaya Gazeta read, "Panic attack for Russia's currency market." The Kommersant newspaper warned readers to "buckle up your rubles."
The ruble's latest plunge follows the US sanctioning Gazprombank, one of Russia's largest lenders. The restrictions limit the bank's ability to access global financial markets and handle energy payments.
Russia also fired a hypersonic missile into Ukraine last week after its opponent launched missiles at targets inside Russia for the first time. The escalation has raised concerns of further economic disruption.
A weakening ruble benefits Russian exporters by making their goods more competitive in global markets. But it threatens to accelerate inflation by raising the cost of imports, leaving sellers little choice but to increase their prices. Stubborn inflation has already spurred Russia's central bank to raise the main interest rate to 21%, the highest level since 2003.
The Russian economy has suffered from Western sanctions imposed since Putin's invasion of Ukraine, with energy revenue tanking by almost a quarter last year. Other countries, such as India, have snapped up Russian oil instead, tempering the impact of price caps and other penalties.
Mounting pressure on Russia
Robin Brooks, a senior fellow focused on the global economy and development at the Brookings Institution, posted on X that the ruble's collapse shows how vulnerable Russia is to sanctions.
He also said the European Union's reluctance to impose certain penalties might have staved off economic disaster in Russia.
The collapse of Russia's Ruble (black) is a reminder how badly the EU failed on Russia. It follows the recent US sanctioning of Gazprombank, which the EU opposed for a long time. Russia could have been sent into deep financial crisis 2 years ago. The EU didn't let that happen... pic.twitter.com/XbOwqiABRd
George Pavel at the trading platform Naga.com told BI the ruble's dive had been driven by rising inflation and a widening budget deficit fueled by heavy military spending.
"Russia's economic path looks unsustainable barring major changes," he said, ticking off concerns such as slowing growth, stubborn inflation, a tight labor market, and the massive cost of the Ukraine war.
Brent crude is trading at just over $70 a barrel, and sliding oil prices pose an existential threat to Russia, said Kathleen Brooks, research director at XTB.
"Russian income is shrinking at the same time as defense spending is surging as the war with Ukraine enters a more intense phase," Brooks said. "While President Trump may go some way to ending the Russia-Ukraine war, his policy on energy and plans to get the US pumping even more oil could weigh on the oil price further in 2025, which is bad news for Russia."
Donald Trump has vowed to impose tariffs on imports from Mexico and Canada as well as China.
Jacquelyn Martin/AP Photo
President-elect Donald Trump has threatened to slap tariffs on goods from Mexico, Canada, and China.
Tariffs raise money but may also affect prices and employment, and they can lead to trade wars.
Here's a guide to tariffs, including who pays them, how they work, and how they affect the economy.
Tariffs are back in the spotlight after President-elect Donald Trump pledged to impose 25% tariffs on goods from Mexico and Canada and an additional 10% duty on goods from China, unless those countries stop the flow of illegal immigration and narcotics into the US.
Trump's tariff threat could be a negotiating ploy to win better terms with America's three biggest trading partners. But if the tariffs are imposed, they could affect prices, employment, and the broader US economy β especially given the risk that China, Canada, and Mexico may retaliate with tariffs, triggering a trade war.
Here's what you should know about tariffs and why they matter.
Tariffs date back more than 200 years and were historically used by authorities to raise money. The US government collected most of its revenue from tariffs before introducing an income tax in the early 1900s.
Authorities now use tariffs primarily to protect domestic industries from foreign competition and punish trading partners for bad behavior.
There are four types of tariffs:
An ad valorem tariff is calculated based on the value of the good. If an imported product is worth $10 and the tariff is 10%, the importer has to pay $1.
A specific tariff is imposed on a per-unit basis, so the value of the item doesn't matter. An importer might have to pay $1 for every pound of cocoa beans it brings into the country, whether it brings in 10 bags or 1,000.
A compound tariff combines elements of ad valorem and specific tariffs. The tariff on an imported item could be $1 per pound or 5% of its value, depending on which generates more revenue.
A mixed tariff applies both an ad valorem and a specific tariff, meaning an importer might have to pay $5 a pound and 10% of its value as well.
Who pays tariffs? How do they work?
The news that Trump threatened Canada with tariffs, along with Mexico and China, has made it important to understand who pays tariffs and how they work.
In the US, the simple answer is that the person or business importing the tariffed product into the US pays the tariff, and the money is paid to the US Treasury.
For example, if General Motors imports parts from its factories in Mexico and assembles its cars in the US, it would have to pay tariffs to bring in those parts.
Customs and Border Protection agents collect tariffs at 328 ports of entry, including docks, airports, and border crossings.
Trade between Mexico and the US is likely to be affected by higher tariffs.
REUTERS/Jose Luis Gonzalez
How do tariffs affect prices and the economy?
Tariffs raise costs for importers, and to protect their profit margins, importers typically pass on those costs by charging higher prices to their domestic customers β whether they're companies or consumers.
Those price hikes can benefit domestic producers because the hikes make their goods relatively cheaper to bring to market than imported alternatives. For example, they might make it easier for US apparel manufacturers to compete with Chinese fast-fashion companies such as Shein and Temu.
Tariffs can also spur foreign producers to drop their prices to try to keep their products competitive, hurting their domestic industry and their country's economy, and partly offsetting the upward pressure on prices from tariffs.
The countries involved may also trade lower volumes of the product if both supply and demand fall in response to the tariffs.
A 2019 research paper on the initial impact of Trump's first-term tariffs found they fully passed through into the domestic prices of imported goods β and hurt consumer choice by reducing the availability of imported varieties.
Tariffs are frequently pitched as a tool to protect domestic jobs. A National Bureau of Economic Research working paper published in January found that the 2018-2019 trade war did not affect employment in newly protected sectors. The study also found that retaliatory tariffs from other countries contributed to job losses in domestic sectors such as agriculture and were only partly mitigated by federal subsidies.
Advantages of tariffs can include stronger domestic industries, increased government revenue, and pressure on other countries to stop unfair trading practices and help address issues such as illegal immigration and the drug trade.
Disadvantages can include tariffs' effects on consumers in terms of higher prices and reduced choice, plus the risk of retaliatory tariffs that could lead to employment losses in some industries and a full-blown trade war.
Moreover, a study published in The Economic Journal in 2021 found that retaliatory tariffs "disproportionately targeted more Republican areas," suggesting they were aimed at Trump's base to try to maximize their political power.
How Trump's tariff plan would work
Trump is no stranger to using tariffs. He called himself "Tariff Man" during his first term for imposing tariffs on products such as steel and aluminum plus a wide range of Chinese goods.
He replaced the North American Free Trade AgreementΒ with the United States-Mexico-Canada Agreement in his first term, allowing most goods to continue freely passing between those countries.
That would change if Trump goes ahead with sweeping tariffs on Mexican and Canadian goods. Products passing into the US from its northern and southern borders would be subject to duties, and the money collected would flow to the US Treasury.
A key question is whether the tariffs would result in higher inflation. Inflation, or the annualized pace of price increases, hit a 40-year high of more than 9% in 2022, spurring the Federal Reserve to raise interest rates from nearly zero to above 5% in less than 18 months.
Inflation has dropped below 3% in recent months, freeing the Fed to begin cutting rates. The question is whether Trump's tariffs would cause price growth to accelerate again and delay further rate cuts β especially as people's deep concerns about higher living costs was a key reason they reelected him.
Economist Nouriel Roubini is known as "Dr. Doom" for his bearish takes on the economy.
John Lamparski/Getty Images for Concordia Summit
Nouriel Roubini thinks higher inflation and slower growth are coming on the back of Trump's policies.
He pointed to Trump's plans to levy steep tariffs and deport millions, which could stoke price growth.
The pace of inflation could nearly double to 5% in the coming years, Roubini speculated.
Trump's policies are raising the risk for a handful of troubling economic consequences, according to one of Wall Street's most pessimistic forecasters.
Nouriel Roubini β also known as "Dr. Doom" for his bombastic and frequently bearish takes on the economy β said he believes some of Trump's policies could raise prices and slow growth in the US. That could involve inflation rising as high as 5% in the coming years,
he said speaking to Bloomberg on Wednesday, about double the current pace of price growth in the US.
Roubini said interest ratesΒ could also rise due to Trump's economic agenda. He predicted that long-end bond yields, which partly reflect interest rate expectations in the economy, could reach as high as 8%.
"Some of the economic policies may lead to higher economic growth," Roubini said, pointing to Trump's push to loosen regulation and slash the corporate tax rate. "But unfortunately, many of the other policies have the implication of higher inflation and lower economic growth."
Roubini pointed in particular to Trump's tariff plan, with the president-elect vowing to levy steep tariffs on goods from Mexico, Canada, and China, and a 10%-20% blanket tariff on most US imports. Experts have said the cost of tariffs could be passed onto buyers, with some businesses already floating future price increases.
Trump has also promised to slash corporate taxes and eliminateΒ taxesΒ in other areas, such as income from tips, overtime, and Social Security benefits. Roubini suggested that could spell trouble given the overarching picture of the US debt, as debt is inherently inflationary.
Trump's agenda could raise the national debt by as much as $15.5 trillion from 2026 through 2035, according to an analysis from the Committee for Responsible Federal Budget.
Trump's plan to carry out mass deportations could also impact the outlook for inflation and growth, Roubini noted, given that immigration has bolstered the workforce and helped tame inflation.
"So definitely mass deportation is stagflationary," he added.
Roubini has repeatedly warned that Trump's second term in office could raise the risk ofΒ stagflation, a scenario involving stubborn prices, sluggish economic growth, and steep unemployment. Some analysts describe the situation as even worse than aΒ recession due to the chaos that unfolded the last time the US was in the midst of a stagflationary crisis.
Other forecasters have also warned of the potential for higher inflation in Trump's second term. Deutsche Bank analysts floated a potential inflation increase in 2025, adding it was possible the Fed may not lower interest rates to keep high prices in check.
Trump, though, has repeatedly disputed the idea that his policies are inflationary and said he would lower prices for Americans. He enacted tariffs in his first term as president without a significant inflation increase, but experts say that his policies this time around are far more wide-reaching, explaining the difference in inflation forecasts.
"Trump will once again cut taxes and unleash American energy to lower prices on groceries and other goods when we send him back to the White House," Taylor Rogers, a spokesperson from the Republican National Committee, previously told BI.
Business magnate Elon Musk, who has been sounding the alarm about America's gargantuan, ever-expanding national debt, claimed that many people are unaware of the problem.
"A significant % of people donβt even know that there is such a thing as a national debt!" Musk declared in a post on X.
"Those that do often donβt know how big it is or that our interest payments now exceed what we spend on our military. Only a small % understand that government overspending causes inflation," he added.
"America is going bankrupt fast," Musk warned in another post.
"The excess government spending is what causes inflation! ALL government spending is taxation. This is a very important concept to appreciate. It is either direct taxation, like income tax, or indirect via inflation due to increasing the money supply," he asserted in a tweet earlier this month.
In another post, Musk said, "If we don't tackle the national debt, all tax revenue will go to paying interest and there will be nothing left for anything else."
If the issue isn't addressed "the dollar will be worth nothing," Musk warned in a tweet earlier this year.
President-elect Trump tapped Musk and former GOP presidential primary candidate Vivek Ramaswamy to helm the Department of Government Efficiency (DOGE), an effort meant to root out government waste.
Trump said in a statement that DOGE "will provide advice and guidance from outside of Government, and will partner with the White House and Office of Management & Budget to drive large scale structural reform, and create an entrepreneurial approach to Government never seen before."
In a Wall Street Journal opinion piece, Musk and Ramaswamy noted that they will work "as outside volunteers, not federal officials or employees."
Despite raising menu prices, Chipotle reported a strong 3rd quarter, contrary to other fast food chains.
jetcityimage/iStock
Chipotle is considering raising prices due to the rising cost of avocados, queso, and sour cream.
New CFO Adam Rymer aims to keep menu items affordable despite cost pressures, the Wall Street Journal reported.
Chipotle's sales rose 6% last quarter, showing resilience amid fast food price hikes.
Chipotle's new chief finance officer is eager to keep menu items affordable for cash-strapped customers, but has warned that prices could rise as the cost of raw materials keeps going up.
Executives at the Mexican grill chain are contemplating raising prices further as costs have risen for avocados, queso, and sour cream, according to a Wall Street Journal report.
Chipotle has not yet decided when any price increase might kick in, or how significant the rise would be, the Journal reported.
Adam Rymer started as finance chief at Chipotle in October. In his 15 years at the company, he has held various roles, including vice president of finance and compensation analyst.
Rymer was initially due to become CFO in January but instead took the position three months early after previous Chipotle boss Brian Niccol exited in August to become CEO of Starbucks. Niccol was replaced in the interim by Scott Boatwright, who served as chief operating officer beforehand.
Despite the potential for higher menu prices, Chipotle remains a better value option for customers than similar alternatives, Rymer said, per the Journal.
Unlike some fast food firms, whose sales have taken a tumble as customers have cut back, Chipotle has shown resilience.
In its most recent quarter, the company's same-store sales rose 6% compared to the same period last year. Revenue grew 13% to $2.8 billion year over year.
Chipotle did not immediately respond to a request for comment from Business Insider, made outside regular working hours.
Donald Trump's latest tariff threats have set alarm bells ringing on Wall Street.
The president-elect said he would impose tariffs on exports from Mexico and Canada, as well as China.
Analysts warned of a trade war, volatility, steeper inflation, and a flight to safety in markets.
Donald Trump rattled financial markets late Monday by warning he would slap 25% tariffs on Mexican and Canadian exports to the US until the flow of illicit drugs and illegal migrants into America stops. He also said he'd impose another 10% tariff on imports from China until the drug problem is resolved, in addition to the 60% he proposed during the election campaign.
Analysts said the president-elect's latest threats could presage tariffs on other countries' exports and escalate into a full-scale trade war. They also said it could fuel volatile trading and a flight to haven assets in markets. There's also the threat of stoking inflation, meaning interest rates stay higher for longer.
Here's what analysts and commentators are saying:
George Saravelos, global cohead of FX research at Deutsche Bank
"Free trade agreements are not safe.Canada and Mexico are part of the USMCA which was negotiated by Trump himself. It is clear that even countries with existing agreements with the US can be subject to tariffs.
"The softer the market reaction, the greater the likelihood of more tariffs.The equity market reaction has so far been very benign, we would argue likely on the back of the transactional interpretation. That US domestic small-caps have been leading the recent market rally also helps reduce the impact. The first Trump administration showed that the more benign the market reaction, the greater the likelihood of further escalation."
Dan Coatsworth, investment analyst at AJ Bell
"If those tariffs are at the top of his agenda, there is now an elevated risk they will be closely followed by punishing tariffs on other countries. Trump clearly wants to make his mark and show he's the boss.
"There has been a view among some investors that Trump's tariff talk was a negotiating tactic, a threat rather than a promise. That might still end up the case, but it's clear that the president-elect has no intention of backing down for now."
Matt Britzman, senior equity analyst at Hargreaves Lansdown
"European equity markets braced for a sharp drop on Tuesday as Trump's tariff threats against China, Mexico, and Canada sent shockwaves through global sentiment.
"The president-elect's scorched-earth approach has stoked fears of a trade war, with investors increasingly wary that Europe could be next in his crosshairs."
Nigel Green, CEO of deVere Group
"These tariffs will not only drive up costs for companies but also fuel inflation, which could lead to further tightening of monetary policy.
"Markets hate uncertainty, and the prospect of a full-blown trade war will send investors scrambling to reassess their exposure."
Mark Haefele, chief investment officer of UBS Global Wealth Management
"While investors are once again on edge following Trump's latest tariff threats, we think markets also recognize that the risks of higher inflation and interest rates are implicit constraints on his policy agenda, with eventual policy outcomes potentially less inflationary than some investors previously feared.
"We see further volatility ahead, but we also expect US Treasury yields to fall in the year ahead following a 65-basis-point rise over the past two months."
Ruben Ferreira, FlowCommunity
"The medium to long-term outlook could shift if trade tensions escalate, potentially disrupting international trade relations.
"Such developments may heighten market uncertainty, driving increased demand for safe-haven assets such as gold as investors seek protection against market risks and economic instability."
Julie Herron drove by the Aldi near her home in Nashville for years before she went in. She usually shopped at Publix, but in 2021, when inflation was sending grocery prices soaring, her curiosity got the better of her. She was shocked at what she found in Aldi.
Everything there was cheap, she said. The store also had cool products, like a variety of German cheeses and $1.59 makeup-removal wipes she said were "superior, honestly," to a comparable $20 product at Sephora.
Aldi has become Herron's go-to store. "My friends say that they call me the 'Aldi Queen,'" Herron, a retired elementary-school teacher, told me. "I go every week."
As grocery prices have jumped by double digits over the past few years, people have felt the sting. For many, Aldi has been a source of solace. A recent Motley Fool analysis found that a basket of 20 products that cost about $65 at Aldi was $11 more at Kroger and about $54 more at Whole Foods. Though Aldi isn't the biggest grocery chain in the US β according to Euromonitor, it captured just 1.4% of US grocery sales last year, compared with Walmart's 25% β it offers a lot of things shoppers are looking for these days: organic meat, store brands, and a quick shopping trip. As a result, it has attracted loyal fans who proudly sport Aldi-branded tote bags, pants, and flip-flops. And it's the fastest-growing grocery chain in America by new store openings, a title it has held for five years, according to the real-estate services company JLL.
The US grocery business is ruthless. Competition is fierce, and profit margins are slim. Many have tried and failed to find success. So how did a German grocery chain find such a ravenous following in America?
From its start in Germany after World War II, Aldi's founders, Theo and Karl Albrecht, were singularly focused on keeping prices low. The brothers expanded their family-run store into a chain of 77 stores in Germany by 1954 with the aim of minimizing expenses and maximizing profit. They didn't advertise. They offered only shelf-stable items that sold well, eliminating the need to buy and run refrigerators. Shoppers even picked their own items off the shelves β a radical concept at a time when German shoppers were used to being served at a counter.
When Aldi opened its first US store in Iowa City, Iowa, in 1976, it used a similar approach. A newspaper ad at the time proclaimed that the store had "no perishables," "no fancy shelving," and "no fancy floor." It promised lower prices for a variety of items, from baby shampoo to salad dressing. The ad estimated that the cost of a basket of goods at Aldi was 18% less than at a rival.
Though that store ended up closing in 1977, Aldi kept working to perfect its formula for American shoppers, largely by going smaller. The Iowa City store was about 40,000 square feet β close in size to a typical modern US supermarket β but the hundreds of stores Aldi opened in the next two decades were just about 10,000 square feet. This meant that Aldi could carry only a fraction of the items that its supermarket rivals could, but it had a solution: Go smaller with selection, too. Instead of stocking a dozen types of ketchup, it sold only one or two. The model caught on, and by 2004 the chain had 700 locations across the country.
Twenty-five years ago, the people who went to Aldi were just looking to save money. Now it's very hip to go to Aldi.
Over the years Aldi has found clever ways to become even more efficient. Today, for instance, produce like apples, oranges, and broccoli are sold in prepackaged units to save time weighing and pricing each item. Many shelf-stable items are put on the sales floor in the same cartons they arrived in. Employees often rotate between ringing up customers and stocking shelves. To get a shopping cart, customers have to provide a quarter, which they get back when they return the cart β a system that saves the company from needing parking-lot attendants to round up carts. Though shoppers must bring their own bags and pack them themselves, the prepackaged produce and large barcodes on products contribute to a speedy process.
A September study of grocery prices in Charlotte, North Carolina, by analysts at Bank of America found that while Aldi had raised prices by more than other grocers over the previous year, it was still cheaper than local Walmarts (which were cheaper than Kroger-owned chains and Whole Foods).
Aldi now has about 2,400 stores in the US, with another 800 planned for the next four years. Foot-traffic data from the location-data company Placer.ai indicates that the number of shoppers who visited Aldi stores in the spring of 2022 increased from the same period in 2019. This year, foot traffic at Aldi's stores has grown by 10% to 18% each month compared with 2023, more than double the rise among traditional grocery stores.
Sumone Udono, a trucker based in Wisconsin, has frequented an Aldi that's a 10-minute walk from her home for decades. She buys everything from the brand's organic pistachios to the spices she estimates would cost double at a traditional supermarket.
Selling others on Aldi, though, wasn't always easy. She recalled that in the early 2000s, when she ran a concession stand at her kids' baseball games, she tried to convince the other parents to replace Oscar Mayer hot dogs with the Aldi equivalent to lower prices. The parents were hesitant but ultimately agreed to sell both and see how it went. The Aldi dogs ended up outselling the name-brand ones.
Relying on store brands is one of the most successful cost-cutting tactics Aldi has implemented. Aldi says roughly 90% of the items in its stores are from the grocer's own brands. For comparison, about 20% of groceries sold in the US last year were store brands, according to the Food Marketing Institute.
These days, Gen Z and millennial customers are less likely to care about brand and more likely to prioritize price.
Scott Patton, a vice president of national buying and customer interaction at Aldi USA, said that having so many private-label products saved the company costs associated with national brands, such as advertising fees. It also gives Aldi more of a say in how products are created β for instance, Aldi worked with one of its mandarin-orange suppliers to reduce the amount of plastic in its packaging, a move which helped save Aldi money, Patton said. Costco and Trader Joe's similarly use store brands to cut costs.
Patton said that relying so much on its store brands increases the pressure for Aldi to find just the right items. "If we don't have the right quality at the right price for the consumer, there's not another option for them to pick from."
To accomplish that, he said Aldi tests about 35,000 products a year. In some cases Aldi has found success designing its products to resemble more-familiar brands. For example, it sells Clancy's nacho-cheese-flavored tortilla chips, which come in a red bag with a triangle logo reminiscent of Doritos, and L'oven Hawaiian sweet rolls, which are comparable to King's Hawaiian rolls.
Phil Lempert, a food industry analyst and editor of the website Supermarket Guru, said that many shoppers used to look down on store brands. "For my parents, there was a stigma." But these days, Gen Z and millennial customers are less likely to care about brand and more likely to prioritize price.
It helps that many Aldi-brand products don't seem generic and boring. It stocks brioche, Dutch Emmental cheese, and chili-lime cashews. "It's a German company, so they have a lot of international products, especially cheese," Herron said.
She's a fan of what's known as Aldi's "Aisle of Shame" β or as the store calls it, the Aldi Finds aisle, a section in the center of most Aldi stores with miscellaneous low-cost nonfood items that change every Wednesday. The aisle's items have included rugs and Dutch ovens β and it has garnered a loyal following. The Facebook group Aldi Aisle of Shame Community has 1.5 million members, the most active of whom post photos of their finds. Recently, fall-themed scented candles were making a splash. In October, the hit find was a pressure-point massage cane.
To cash in on the growing fan base, Aldi has released two collections of branded apparel and accessories. Last fall's selection β "Aldi-das," as some on TikTok call it β included canvas slip-on shoes, travel mugs, and a backpack. Lempert said it's a big change from the Aldi of the 1970s. "Twenty-five years ago, the people who went to Aldi were just looking to save money," he said. "Now it's very hip to go to Aldi."
In 2023, Aldi agreed to buy 400 stores from Southeastern Grocers, including many run by Winn-Dixie, a Florida chain that became a household name in the South during the 20th century. Analysts at the consumer-data firm Dunnhumby said the acquisition should "raise alarm bells for retailers not only in the Southeast but throughout the US."
Of course, Aldi's expansion faces headwinds. Americans have lots of choices for where they shop, and recent entrants like Amazon and Lidl, another discount chain based in Germany that launched in the US in 2017, are competing for market share.
Devout Aldi fans might don their branded windbreakers and dart straight to the nearest Aldi, but most Americans just head to whichever store is closest, said Zak Stambor, a senior analyst who covers retail and e-commerce for EMARKETER, a sister company of Business Insider. "Even if I want to save money on groceries and I fit the demographics of the Aldi customer, if I have to drive 15, 20, or 25 minutes to an Aldi, I'm not likely to do that on a regular basis," he said. Twelve states, including Washington and Colorado, don't have an Aldi.
Then there's the fact that grocery-price inflation, which has pushed many people toward the discount grocer, slowed to 1% in the year that ended in October β though, inflation may return if the Trump administration enacts new tariffs. Walmart recently said it planned to raise prices if Trump's tariffs are implemented.
Lempert, the grocery analyst, thinks Aldi's growth is only getting started. He has met the CEO of Aldi USA, Jason Hart, and toured the company's American headquarters in Illinois. He expects to see even more Aldi stores opening. "By the end of this decade," he said, "they'll probably have 4,000 or 5,000 stores."
Alex Bitter is a senior retail reporter at Business Insider.
