US: Trump Endorses House GOP Reconciliation Strategy
Feb-19 14:44
US President Donald Trump has issued a statement on Truth Social endorsing the House of Representatives in its showdown with the Senate over the optimum strategy to legislate the Republican agenda.
Trump: "The House and Senate are doing a SPECTACULAR job of working together as one unified, and unbeatable, TEAM, however, unlike the [Senate Budget Committee Chair] Lindsey Graham version of the very important Legislation currently being discussed, the House Resolution implements my FULL America First Agenda, EVERYTHING, not just parts of it! We need both Chambers to pass the House Budget to “kickstart” the Reconciliation process, and move all of our priorities to the concept of, “ONE BIG BEAUTIFUL BILL.” It will, without question, MAKE AMERICA GREAT AGAIN!"
Although Trump has previously backed the House's single-bill strategy, today's statement is the most forceful suggestion yet that the Senate should abandon attempts to pass a narrower border security, defence, and energy bill quickly, before turning attention to Trump's tax agenda later in the year.
House Speaker Mike Johnson (R-LA) is eyeing next week for a floor vote on a budget resolution to underpin his 'mega bill', which includes an extension to Trump's 2017 tax cuts, deep cuts to government spending, and a debt ceiling hike. Trump's backing may provide more time for Johnson to resolve differences with moderates and deficit hawks continue to express concerns with the scope of the package.
For more analysis on the reconciliation agenda, see today's edition of the MNI US Daily Brief.
US DATA: Stagflationary NY Fed Services Report Shows Signs Of Tariff Impact
Feb-19 14:39
For a second day, a New York regional Fed survey showed significant weakness in the details in February. The NY Fed's Business Leaders Survey, which covers service firms in New York State, northern New Jersey and southwestern Connecticut, saw the headline business activity drop to a 14-month low -10.5 (-5.6 prior, no consensus).
But more worrying were some of the peripheral indicators, which may imply that tariff threats on Mexico and neighboring Canada hurt services sector confidence and are fueling concerns over supply chains and inflation (the survey was conducted between Feb 3 and Feb 11, so began just as President Trump agreed a 30-day pause on imposing tariffs on those countries):
The business climate index fell to -35.6 (a 14-month low, from -21.8), which the NY Fed reports is "suggesting the business climate was considerably worse than normal."
6-month ahead expectations also pulled back: overall business activity by 8.7 points to 21.6 (4-month low), and business climate by 16.8 points to -3.6 (5-month low)
The future supply availability index fell 25.3 points to -20.7 - around one-third of firms "expect supply availability to be worse in six months". This is easily a new low for the indicator which was launched in May 2024.
The employment index fell for a 3rd consecutive month (-5.7), the first such span since Q1 2021. Expected employment and wages both dropped sharply.
And like the Empire State manufacturing survey, inflation concerns picked up: expected prices paid up 2.2 points to 57.0 / expected prices received up 1.6 points to 37.3 (both 26-month highs). Current prices received jumped 8.0 points to 27.4, a 21-month high, with prices received up 2.8 points to a 9-month high 51.3.
Like the Empire manufacturing report, the services survey doesn't mention "tariffs" - but it a warning sign that such dynamics could be repeated in other regional Fed and the national ISM/PMI surveys. Expectations for the Philly Fed February survey out Thursday shows a sharp pullback is expected, but the February flash PMIs are expected to see an uptick vs Jan.