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President Trump announced in a Truth Social 网站 that he is extending trade talks with Mexico for another 90 days. Yahoo Finance Washington Correspondent.

President Trump announcing on Truth Social he is extending Mexico's current tariff rates for 90 days to allow more time for trade negotiations with the country. That announcement coming after Trump threatened last month to increase Mexico's country-based duty to 30% starting August 1st. The president's decision coming shortly after he said he would not extend his Friday deadline. Joining us now, Washington correspondent Ben Werschkull. Ben, we were just talking about the countries that have been left out in the cold so to speak. Mexico was one of them, but it seems like they're getting a little more time, but the time that they're getting comes still with these high tariffs attached.

For sure. Yeah. So this is, this is the 90 day pause that Trump announced just a few minutes ago, and it'll, it'll keeps the rates at 25%. So it's not a 5% increase to, to 30%. I do think it's significant that Trump talked about this call as very successful. He had a lot of kind words for Mexican president Claudia Sheinbaum, um, as, as they met this morning to, to kind of work out these deals considering how, how many, how many issues they have to work out over the next 90 days on the border and these other things. Um, other things Trump announced today in this post will be that the 25% headline rate will continue, the 25% auto rate will continue. That's, that's a big one in focus. And then as with all the other deals, the 50% tariffs on steel, aluminum and copper, which is also coming tomorrow, will, will, will stay in place. So those, those rates will stay now. Um, Trump also announced that Mexico has agreed to terminate its non-tariff trade barriers without providing any additional details there. the President Sheinbaum did already respond to confirm this call and to confirm the 90 day pause. What she says she's focused on for the next 90 days is building a long-term deal with President Trump on all these other more complex trade issues.

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The number of Americans filing new applications for unemployment benefits increased marginally last week, suggesting that the labour market remained stable, though it is taking longer for laid-off workers to find new opportunities.

Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 218,000 for the week ended July 26, the Labor Department said on Thursday. Economists polled by Reuters had forecast 224,000 claims for the latest week.

The labour market has slowed, with economists saying uncertainty over where President Donald Trump's tariff levels will eventually settle has left businesses wary of adding headcount. But labour supply has also declined amid the White House's immigration crackdown.

The Federal Reserve on Wednesday left its benchmark interest rate in the 4.25%-4.50% range, resisting pressure from President Donald Trump to lower borrowing costs. Fed chair Jerome Powell told reporters the labour market was in balance. But he added because that was partly due to both demand and supply declining, "we do see downside risk in the labour market."

The central bank cut rates three times in 2024, with the last move coming in December. Most economists expect it to resume policy easing in September.

Employers' hesitancy to increase hiring means there are fewer jobs for those being laid off. Government data on Tuesday showed there were 1.06 job openings for every unemployed person in June compared to 1.33 in January.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, were unchanged at a seasonally adjusted 1.946 million during the week ending July 19, the claims report showed.

The claims data has no bearing on July's employment report, due on Friday as it falls outside the survey period. Non-farm payrolls likely increased by 110,000 jobs last month after rising 147,000 in June, a Reuters survey of economists showed.

The unemployment rate is forecast to rise to 4.2% from 4.1% in June.

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U.S. inflation increased in June as tariffs boosted prices for imported goods like household furniture and recreation products, supporting views that price pressures would pick up in the second half of the year and delay the Federal Reserve from resuming cutting interest rates until at least October.

The report from the Commerce Department on Thursday showed goods prices last month posting their biggest gain since January, with also solid rises in the costs of clothing and footwear. The U.S. central bank on Wednesday left its benchmark interest rate in the 4.25%-4.50% range and Fed Chair Jerome Powell's comments after the decision undercut confidence the central bank would resume policy easing in September as had been widely anticipated by financial markets and some economists."The Fed is unlikely to welcome the inflation dynamics currently taking hold. Rather than converging toward target, inflation is now clearly diverging from it," said Olu Sonola, head of U.S. economic research, Fitch Ratings. "This trajectory is likely to complicate current expectations for a rate cut in September or October."

The personal consumption expenditures (PCE) price index rose 0.3% last month after an upwardly revised 0.2% gain in May, the Commerce Department's Bureau of Economic Analysis said. Economists polled by Reuters had forecast the PCE price index climbing 0.3% following a previously reported 0.1% rise in May.

Prices for furnishings and durable household equipment jumped 1.3%, the biggest gain since March 2022, after increasing 0.6% in May. Recreational goods and vehicles prices shot up 0.9%, the most since February 2024, after being unchanged in May. Prices for clothing and footwear rose 0.4%.

Outside the tariff-sensitive goods, prices for gasoline and other energy products rebounded 0.9% after falling for four consecutive months. Services prices rose 0.2% for a fourth straight month. In the 12 months through June, the PCE price index advanced 2.6% after increasing 2.4% in May.

The data was included in the advance gross domestic product report for the second quarter published on Wednesday, which showed inflation cooling, though remaining above the Fed's 2% target. Economists said businesses were still selling inventory accumulated before President Donald Trump's sweeping import duties came into effect.

They expected a broad increase in goods prices in the second half. Procter & Gamble (PG.N), opens new tab said this week it would raise prices on some products in the U.S. to offset tariff costs.

The U.S. central bank tracks the PCE price measures for monetary policy. Excluding the volatile food and energy components, the PCE price index increased 0.3% last month after rising 0.2% in May. In addition to higher goods prices, the so-called core PCE inflation was lifted by rising costs for healthcare as well as financial services and insurance.

In the 12 months through June, core inflation advanced 2.8% after rising by the same margin in May.

U.S. stocks opened higher. The dollar was trading higher against a basket of currencies. U.S. Treasury yields fell.

CONSUMER SPENDING STEADY

The BEA also reported that consumer spending, which accounts for more than two-thirds of economic activity, rose 0.3% in June after being unchanged in May. The data was also included in the advance GDP report, which showed consumer spending growing at a 1.4% annualized rate after almost stalling in the first quarter.

In the second quarter, economic growth rebounded at a 3.0% rate, boosted by a sharp reduction in the trade deficit because of fewer imports relative to the record surge in the January-March quarter. The economy contracted at a 0.5% pace in the first three months of the year.

Consumer spending remains supported by a stable labor market, with other data from the Labor Department showing initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 218,000 for the week ended July 26.

But a reluctance by employers to increase headcount amid uncertainty over where tariff levels will eventually settle is making it harder for those who lose their jobs to find new opportunities, which could hamper future spending.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, was unchanged at a lofty seasonally adjusted 1.946 million during the week ending July 19, the claims report showed.

The government's closely watched employment report on Friday is expected to show the unemployment rate rising to 4.2% in July from 4.1% in June, according to a Reuters survey of economists.

Economists expect the combination of pressure from tariffs and a slowing labor market will put a brake on consumer spending in the third quarter. Slow growth is likely already in the works as inflation-adjusted consumer spending edged up 0.1% in June after declining 0.2% in May. Precautionary saving could also curb spending. The saving rate was unchanged at 4.5% in June, while personal income re

"The June numbers and revisions to previous data set the economy up for fairly weak consumer spending in the third quarter," said Oren Klachkin, financial markets economist at Nationwide. "With wage growth staying contained, we expect the consumer will continue to look for discounts through the rest of the year."Reporting by Lucia Mutikani, Editing by Chizu Nomiyama and Andrea Ricci

Source: Kitco