Update 854 – February Core PCE Up 2.8%;
Increase from 2.7% Gain in January
Data released this morning shows that the Fed’s preferred measure of inflation remains sticky above its target of two percent. Meanwhile, GDP growth for the fourth quarter of last year was revised up slightly. The new data comes as the Trump administration’s drastic policy shifts threaten to disrupt the strong growth and progress on inflation achieved over the past few years.
This week, the President continued to roll out new tariffs and previewed next week’s much-anticipated reciprocal tariff announcement deadline. Trump also issued an executive order (EO) to crack down on non-citizen voting ahead of the House’s consideration of the SAVE Act next week, igniting grave concern about executive overreach and protecting voting rights. We cover the aforementioned developments – as well as the confirmation hearings for Trump’s picks to lead the SEC, OCC, and SSA, the Senate’s vote on the overdraft fee rule CRA, and relevant economic policy hearings from this week – below.
Good weekends all…
Best,
Dana
Headline
Core PCE Remains Sticky in February
The Federal Reserve’s preferred measure of inflation, the personal consumption expenditures (PCE) price index, rose 2.5 percent on an annualized basis in February, in line with the 2.5 percent annualized increase in prices in January and slightly down from the 2.6 percent increase in December. This is according to the February PCE report released by the Bureau of Economic Analysis (BEA) this morning.
Core PCE – which strips out food and energy prices – rose by 2.8 percent on a year-on-year basis last month, above expectations of a 2.7 percent annualized increase. This was also slightly up from the 2.7 percent year-on-year increase in core PCE in January.
On a monthly basis, headline PCE rose 0.3 percent last month, just as it had in the two months prior. Core PCE rose on a monthly basis by 0.4 percent last month. This is slightly lower than the 0.3 percent month-on-month increase in prices in January and the 0.2 percent increase in December.
The new data shows that core inflation remains sticky above the Federal Reserve’s longstanding target of two percent as it has remained in the 2.6 to 2.9 percent range since last May. If inflation data continues this trend in the coming months, the Fed’s rate-setting committee, the Federal Open Market Committee (FOMC), will likely be inclined to hold interest rates at an elevated level rather than resuming cuts at its next meeting in May. Committee officials will also consider the strength of the labor market, about which the March jobs report to be released next Friday, will provide more information.
Fourth Quarter GDP Growth Revised Up to 2.4%
The United States economy grew by a healthy 2.4 percent on an annualized basis in the fourth quarter of last year – slightly more than previously estimated. This is according to the third estimate released by the Bureau of Economic Analysis (BEA) yesterday morning.
Real GDP was revised up 0.1 percentage point from the second estimate which was released late last month. The third estimate of GDP is based on more complete data. The upward revision primarily reflected a downward revision to imports which are a subtraction in the calculation of GDP.
Source: U.S. Bureau of Economic Analysis
The healthy GDP growth comes after the American economy grew by a strong 3.1 percent in the third quarter of last year. GDP growth in the first quarter of this year is expected to come in notably weaker at below two percent. The advanced estimate of GDP growth over the first quarter of 2025 will be released on April 30.
Other Developments
This Week in Tariffs
Secondary Tariffs on Venezuelan Oil
On Monday, President Trump signed an executive order declaring that any country buying oil or gas from Venezuela will face a 25 percent tariff on goods imported to the United States starting April 2. The President utilized the International Emergency Economic Powers Act (IEEPA) and Section 301 authorities, which give the President the power to implement tariffs in times of “National Emergency” and for “national security” purposes. The White House has also clarified that these tariffs will be supplemental to those already in place.
The President outlined his reasoning for this move in a Truth Social post on Monday claiming “Venezuela has purposefully and deceitfully sent to the United States, undercover, tens of thousands of high level, and other, criminals, many of whom are murderers and people of a very violent nature” and “Venezuela has been very hostile to the United States and the Freedoms which we espouse.”
Given these are “secondary tariffs,” the administration is not only targeting Venezuela with this order as the country is a major exporter of oil to countries around the world. China – specifically mentioned in the order – is also a key target.
Source: Statista
Auto Tariffs Announced Wednesday
On Wednesday, the President announced that cars and car parts imported into the U.S. will face a 25 percent tariff starting April 3. The White House claims these tariffs – which they predict could raise $100 billion in the first year – will be “permanent” with the hopes of bringing auto manufacturing back to the United States.
The United States imported $474 billion worth of automotive products in 2024, with large shares of trade being with some of America’s closest allies: Mexico, Japan, South Korea, Canada, and Germany. Of vehicles sold in the United States, 45 percent are imported. However, the impact of these tariffs will not only be felt by foreign brands. The supply chains of iconic American brands such as Ford and General Motors cross North American borders multiple times before final assembly.
In regards to the USMCA, the White House explained “USMCA-compliant automobile parts will remain tariff-free until the Secretary of Commerce, in consultation with the U.S. Customs and Border Protection (CBP), establishes a process to apply tariffs to their non-U.S. content.” Vehicles entering the United States from Canada or Mexico will face a 12.5 percent tariff if 50 percent of a car is made with foreign parts.
Economists have long warned of the risks associated with Trump’s broad and sporadic tariff policies. These auto tariffs threaten to raise the prices consumers pay for cars by thousands of dollars.
Looking Ahead to “Liberation Day”
We are only a few days away from President Trump’s so-called “Liberation Day.” Trump is expected to announce broad reciprocal tariffs on many, if not all, countries that the U.S. trades with based on months of studies and reviews of other countries’ trade barriers. For weeks, the Trump administration has been hammering down with threats of aggressive tariff rates based on other countries’ tariff and non-tariff trade barriers – such as a Value Added Tax (VAT). However, it seems that the administration is signaling some restraint this week.
Some of the language from President Trump previews a more measured approach than previously reported:
- “I may give a lot of countries breaks. It’s reciprocal, but we might be even nicer than that. You know, we’ve been very nice to a lot of countries for a long time.”
- “We are going to make it very lenient … in many cases, less than the tariff that they’ve been charging us for decades.”
While it is difficult to predict how Trump will approach next week, some analysts are predicting tariff rates from between 9-15 percent, with some expecting the administration to focus on 15 trading partners who the President has labeled as the “Dirty 15.” Trump’s threats continue to throw markets into panic, confuse business owners, worry consumers about looming price hikes and anger America’s closest trading partners and allies.
Trump’s Executive Order on Voter Registration
On Tuesday, President Trump signed an executive order titled, “Preserving and Protecting the Integrity of American Elections”, which, among other things, would change which documentation can be used as proof of citizenship when registering or reregistering to vote, give DOGE access to each state’s voter rolls and process for reviewing and maintaining them, and restrict access to mail-in ballot through regulation. Much of the executive order is anticipated to be part of the SAVE Act, which Republicans plan to pass through the House next week.
Identification
The order dictates that the following forms of ID can be used to prove citizenship:
- Passport
- REAL ID*
- Military ID*
- Other government-issued photo IDs if citizenship is indicated
Asterisked IDs above do not have affirmative indicators of citizenship, and REAL ID, which is available in all 50 states, is legally available to non-citizens.
Naturalization papers or birth certificates are not explicitly included, keeping in line with Trump’s previous executive order ending birthright citizenship, which is still tied up in the courts.
The most straightforward proof of citizenship is the passport, which 146 million American citizens don’t have. Those adults are more likely to live in red and rural states. There are seven states where fewer than a third of citizens have a valid passport, including 80 percent of people in West Virginia (1.4 million voters).
DOGE
Not only does the executive order direct actions from the Election Assistance Commission (EAC), but it also requires states to provide DOGE with access to review their voter rolls and access information on how those rolls are reviewed and maintained. DOGE has no legal or constitutional authority to oversee how states run elections.
It is important to note that the EAC is a bipartisan, independent agency that is not subject to the Executive Branch, one of many reasons why organizations that focus on voting rights doubt the constitutionality of the order.
Mail-in Ballots
17 states and Washington, DC. accept and count mail-in ballots if they are postmarked on or before Election Day to ensure that voters have up until Election Day to make their decisions. In his EO, Trump dictated that ballots received after election day would not be counted, suggesting it would be the same as someone showing up to vote days after election day when the election was already decided.
Critics argue that this is executive overreach, as America’s election system is decentralized. Article 1, Section 4 of the Constitution gives states the authority to determine the “times, places, and manner” of how elections are run. When it has been necessary to use the federal government to protect voter rights, Congress acts, not the President.
While the President has taken action this week on this issue, Congress is not far behind. It is expected that Republicans will move to pass the SAVE Act, which was introduced by Rep. Chip Roy (R-TX) on the first day of the 119th Congress. The House passed the SAVE Act last Congress, but with Democrats controlling the Senate, the bill never reached the Senate Floor.
Senate Votes to Block CFPB Rule Lowering Overdraft Fees
Yesterday, the Senate voted to overturn a Consumer Financial Protection Bureau (CFPB) rule protecting consumers from overdraft fee abuses by America’s largest financial institutions. The Senate advanced S.J.Res. 18, a Congressional Review Act (CRA) resolution to block the CFPB’s overdraft rule in a 52-47 vote, with every Democrat present voting no and every Republican except Senator Josh Hawley (R-MO) supporting the measure.
The rule was finalized by the CFPB in December and is set to go into effect on October 1. It would reduce overdraft fees charged by insured depository institutions and credit unions with more than $10 billion in assets from the average $35 charged today to $5, or an amount that covers costs and losses. The CFPB estimates that this will save consumers up to $5 billion in annual overdraft fees, or $225 per household that pays overdraft fees.
Last month, H.J.Res.59 – the House companion to the CRA led by House Financial Services Committee Chair J. French Hill (R-AR) – was advanced out of the committee in a 30-19 vote, with every Democrat present voting no. That CRA resolution could move to the House floor as soon as next week. 20/20 Vision, along with a broad coalition of consumer organizations, strongly opposes the resolution and encourages all Democrats to vote against the measure.
Nominations
Frank Bisignano, Commissioner of Social Security Administration
On Tuesday, the Senate Finance Committee held a hearing to consider the nomination of Frank Bisagnano as Commissioner of the Social Security Administration. Bisagnano, who has no relevant experience in the public sector, has spent his career working on Wall Street and is the current CEO of fintech giant Fiserv.
Consideration of Bisagnano’s nomination to lead the SSA comes amid rising concern over the administration’s/DOGE’s undisciplined and unrestrained efficiency efforts at the agency, which have materialized through staffing cuts, customer service changes, contract terminations, and field office closures that have already negatively impacted beneficiaries. Despite Bisagnano stating early on in his opening remarks that Trump “has made protecting and preserving Social Security an important part of his vision” to “make life better for Americans,” the administration seems to be already cutting crucial benefits and services under the guise of “efficiency.” This, compounded with the fact that unelected billionaire Elon Musk recently called Social Security “the biggest ponzi scheme of all time” and a statement from Commerce Secretary Howard Lutnick that the only people who would care about delays in benefits are fraudsters, has prompted great concern, especially from Democratic members of the Finance Committee.
In Tuesday’s hearing, Bisagnano largely focused on his private sector experience, asserting that his past and current companies have handled a much higher value of transactions with a lower error rate, which seemed to appease and impress many Republican Senators. Responding to concerns from Democrats like Finance Ranking Member Ron Wyden (D-OR) over the agency’s apparent decline (websites crashing, inability to answer phone calls, delays in benefits, etc.), the nominee refused to denounce DOGE’s efforts. In Bisagnano’s words, the agency doesn’t have a “DOGE issue” but a “leadership issue,” clearly referring to Acting Commissioner Leland Dudek. However, Democrats also challenged this notion throughout the hearing, referring to a whistleblower report from a former senior official at the SSA that stated Bisagnano has been very involved with decision-making at the agency despite awaiting his Senate confirmation. Bisignano denied these claims, though Senator Wyden vowed to investigate the issue further.
Ultimately, Bisignano seems intent on having the best of both worlds, arguing that he supports DOGE’s efficiency efforts – the same ones negatively impacting beneficiaries – but that he would also make progress on improving customer service and determination wait times. While improved technology and management – which Bisagnano stated he would bring to the agency – could help, the fact of the matter is that these are not valid replacements for staff and funding. With baby boomers currently retiring, the SSA is already handling more beneficiaries than ever before with staffing levels at around a 50-year low. The agency plans to cut an additional 7,000 workers (over 10 percent of the SSA workforce) and close more field offices while making changes like requiring beneficiaries to claim their benefits in person, all factors that directly contradict Bisagnano’s claims that he and the administration would protect the program and put beneficiaries above all else.
If other nominations are any indication, Bisignano should have no problem securing confirmation to lead the SSA once brought to the Senate floor for a vote. But for the 74 million retirees hoping to secure their earned benefits as scheduled, the outcome may be far less certain.
Senate Banking Committee Considers Atkins and Gould Nominations
Yesterday, the Senate Committee on Banking, Housing, and Urban Affairs convened for a hearing in which they considered the nominations of Paul Atkins to serve as a member of the Securities and Exchange Commission and Jonathan Gould to serve as the Comptroller of the Currency.
Paul Atkins, Member, Securities and Exchange Commission
Paul Atkins was an SEC commissioner from 2002 to 2008 and has since founded Patomak Global Partners, a consulting firm with global reach that specializes in risk management. In a packed hearing with four total nominees, many elements of Atkins’ role, if confirmed, were left without time for questions. A critical area which was left without questioning was his plans for and perspectives on digital assets and cryptocurrencies.
Democrats cornered Atkins to discuss his role as a SEC Commissioner in the years leading up to the 2008 financial crisis. This effort was spearheaded by Senator Elizabeth Warren’s (D-MA) opening statement in which she referred to his “almost perfect track record, he got pretty much everything wrong in the run-up to the biggest financial crash since the Great Depression.” When asked pointedly what he thinks caused the financial crisis, he blamed misregulation – not overregulation – as well as the SEC’s focus on ancillary issues at the time. He also used that time to point out that some of the key factors of the 2008 financial crisis have yet to be addressed without addressing his particular role in the SEC to head off risks building in the markets ahead of the crisis.
20/20 Vision has joined over 45 other organizations in opposing Atkins’ nomination, and we encourage all Democrats on the Committee to vote against his confirmation.
Jonathan Gould, Comptroller of the Currency
Jonathan Gould is a partner at Jones Day and former Senior Deputy Comptroller and Chief Counsel at the Office of the Comptroller of Currency.
The committee considered Gould’s nomination just two days after Ranking Member Elizabeth Warren (D-MA) sent a letter to Gould raising concerns about his ability to avoid real or perceived conflicts of interest while serving in the position, given his prior clients and previous work at Bitfury, a Blockchain technology company. While Gould has committed to resigning from Jones Day and recusing himself from work involving the firm and its broad range of clients, the regulator he is in line to lead would be responsible for regulation and supervision of his prior clients, JPMorgan Chase and Goldman Sachs.
Hearings
House Ways and Means Subcommittee on Trade Hearing: American Trade Negotiation Priorities
On Tuesday, the House Ways and Means Subcommittee on Trade held the hearing, “American Trade Negotiation Priorities.” In this hearing, the committee convened to ask experts and industry leaders how the United States can better position itself with clear negotiation priorities in upcoming trade negotiations or in the event of new trade agreements.
Republicans stayed tight in their talking points by praising the President’s America First trade policy, unveiled on his first day in office. They critiqued the Biden administration’s focus on frameworks and concepts of trade agreements and highlighted the need to counter unfair trade practices held by our trading partners such as high tariff barriers as well as VATs and luxury taxes – namely in the case of witness Jonathon Root CFO of Commercial Harley Davidson who gave the example of Denmark who charges a 25 percent VAT on Harley Davison as well as a 150 percent luxury tax.
Democrats highlighted the Executive Branch’s overreach on trade policy with the expertise of witness Kathleen Claussen of Georgetown University Law Center, who testified that now is the time to find the balance of congressional and presidential power in trade negotiations so that Congress can fulfill its Constitutional mandate and agreements can have necessary enforcement provisions better set by Congress.
HFSC Subcommittee on Financial Institutions Considers Bills Attacking CFPB
On Wednesday, the House Financial Services Subcommittee on Financial Institutions convened for a hearing in which Republicans continued their ongoing attack against the Consumer Financial Protection Bureau (CFPB) amidst the Trump administration’s ongoing attempt to dismantle the agency.
The subcommittee considered nine bills during the hearing to further weaken the bureau’s ability to fulfill its congressional mandate. These include:
H.R. 654, the Taking Account of Bureaucrats’ Spending (TABS) Act of 2025 – The bill led by Subcommittee Chair Andy Barr (R-KY) seeks to reform the bureau, including by renaming it the Consumer Financial Empowerment Agency and making it subject to annual Congressional appropriations.
H.R. 2183, the CFPB Dual Mandate and Economic Analysis Act – This bill, led by Representative Tom Emmer (R-MN), would amend the Consumer Financial Protection Act of 2010 to change the CFPB’s mission. Under the bill, the CFPB’s mission would include “strengthening private sector participation in markets, without government interference or subsidies, to increase competition and enhance consumer choice.”
Additionally, the subcommittee considered H.J.Res.74, a CRA resolution seeking to block the CFPB’s rule to prevent medical debt from impacting consumer credit scores.
The hearing was skewed given that some subcommittee Democrats were unable to attend as it coincided with the funeral of Representative Raúl Grijalva (D-AZ). As Seth Frotman, former CFPB general counsel, noted, President Trump, Elon Musk, and Russ Vought’s attempted shutdown of the CFPB puts every American at risk. And as Subcommittee Ranking Member Bill Foster (D-IL) noted, Republican attempts to restructure the bureau at this moment feel like an effort to rearrange the deck chairs on the Lusitania after they’ve torpedoed it.
Look Ahead
Friday, April 4
- March jobs report