WASHINGTON — US President Donald J. Trump said on Wednesday he wanted the federal Education Department to be closed immediately.

Mr. Trump had said last week he would like to close the Department of Education using an executive order but acknowledged he would need buy-ins from Congress and teachers’ unions to fulfill his campaign pledge to do so.

An immediate closure of the Education Department could disrupt tens of billions of dollars in aid to K-12 schools and tuition assistance for college students.

Mr. Trump has spent his first weeks in office pushing through massive changes to the US government, demanding federal employees come back to work in offices or quit, seeking cost and job cuts and trying to shut down agencies such as the US Agency for International Development.

The Education Department has been high on Mr. Trump’s list of targets.

“I’d like it to be closed immediately,” Mr. Trump told reporters on Wednesday. “The Department of Education’s a big con job.”

The president has previously said he had tasked Linda McMahon, his pick to be education secretary, to shutter the department he wants her to lead.

Mr. Trump proposed shuttering the Education Department in his first term from 2017-2021 but Congress did not act. The agency employs 4,245 and spent $251 billion in the most recent year.

Conservative think tanks that have called for abolishing the Education Department have proposed that other agencies could handle its aid programs and oversight duties. — Reuters

AUSTIN RAMIREZ until recently planned to build a new factory in Mexico as part of his Wisconsin-based company’s strategy to expand global production and shift away from China.

“Mexico made a ton of sense six months ago,” said the CEO of Husco, a producer of hydraulic components used in automotive and off-road equipment like bulldozers.

Now, not so much.

Like many other US manufacturers, Husco faces a growing list of trade policies under the new administration of President Donald J. Trump that have jumbled investment plans and cast a shadow over an upturn in the domestic manufacturing economy.

The threat of tariffs against Mexico, the largest US goods trading partner, jolted many producers like this.

Mr. Trump made boosting manufacturing a theme on the campaign trail, promising among other things tariffs and fewer regulations. That stance helped win support in faded industrial regions, including swing states like Wisconsin.

But now that those policies are taking shape, including moves this week to put additional 25% tariffs on all imports of steel and aluminum, the true costs are also coming more into focus. Tariffs on metals, for instance, will help domestic mills that produce them but mean higher prices for the much larger network of companies like Husco that use those raw materials.

Meanwhile, the threat of trade wars has created growing uncertainty over how companies should shape their global supply chains.

Nick Pinchuk, Chief Executive Officer (CEO) of Snap-On, a toolmaker based in Kenosha, Wisconsin, told investors last week that getting the election in the “rearview mirror” will reduce uncertainty among his customers and help boost business in the year ahead.

He noted it’s hard for these customers, many of them blue-collar mechanics, not to feel lingering “macro uncertainty” created by “ongoing wars, immigration disputes, and lingering inflation.”

Manufacturing, which accounts for 10.3% of the economy, was hit hard by the Federal Reserve’s aggressive monetary policy tightening between March 2022 and July 2023 to tame inflation. Though the central bank started cutting rates last September, the factory sector has shown few signs of a strong growth upturn.

A key survey of US manufacturing activity showed the sector experienced expansion in January for the first time in more than two years, but the threat of tariffs has economists questioning whether the rebound can be sustained.

To be sure, some parts of manufacturing are going strong, thanks in many cases to order books that were filled to overflowing during the pandemic boom. Emerson, the St. Louis-based engineering solutions provider, reported first-quarter profits that topped estimates last week, aided by resilient demand in its valves and regulators unit.

CEO Lal Karsanbhai told investors in a call that he sees orders ramping up meaningfully in the second half of the year.

But even they see tariff turmoil. The company said it was ready to implement price increases and surcharges to protect its profits if new tariffs hit Mexico, for instance.

David MacGregor, senior analyst and president of Longbow Research in Cleveland, said that “until the last couple of weeks” he thought US factories were setting up for a solid year in 2025.

“Most of these companies have a pretty good order backlog,” he noted.

But Mr. MacGregor said he now sees more companies “tapping on the brakes.” One telling detail he saw in the latest wave of earnings reports is the weakness in spending by consumers on big discretionary items, like motorcycles.

Harley-Davidson, the Milwaukee-based motorcycle maker, forecast 2025 profits and revenue to be flat to down 5% as the company feels the heat from consumers tempering big-ticket purchases. Demand for all types of high-priced toys, a type of spending that boomed during the pandemic days of lockdowns, has fallen off, while sticky inflation and high interest rates have forced more consumers to prioritize spending on necessities.

John Healy, a managing director at Northcoast Research in Cleveland, said he and other analysts were expecting consumers to feel more comfortable spending in the months ahead.

“But that hasn’t materialized at retail yet,” he said, noting that while interest rates set by the Fed have declined, consumer borrowing costs have moved down only marginally.

At Husco, which is based in Waukesha, Wis., Mr. Ramirez said his business remains robust and he still wants to move forward with that expansion once planned for Mexico, but not in the United States.

Building in the US isn’t an option, he said, because the items to be produced in the new operation have a high labor content. He is considering some other lower-cost country, perhaps India. But recent weeks have shown that tariffs could hit anywhere, Mr. Ramirez said.

“We’ve seen how things can change,” he said, “so it’s really debilitating to make a decision.” — Reuters

WASHINGTON – U.S. consumer prices increased by the most in nearly 1-1/2 years in January, with Americans facing higher costs for a range of goods and services, reinforcing the Federal Reserve’s message that it was in no rush to resume cutting interest rates amid growing uncertainty over the economy.

The hotter-than-expected inflation reported by the Labor Department on Wednesday was likely partly due to businesses raising prices at the start of the year, evident in a record surge in the cost of prescription medication and an increase in motor vehicle insurance.

The report followed a pattern of CPI numbers overshooting expectations every January, which some economists said suggested that the seasonal adjustment factors, the model used by the government to strip out seasonal fluctuations from the data, were not fully accounting for the one-off turn-of-year price hikes.

Nonetheless, they said the so-called residual seasonality was not responsible for all of the broad rise in prices, which offered a cautionary note to President Donald Trump’s push for tariffs on imported goods that have been panned by economists as inflationary.

Trump was elected on promises to lower prices for inflation-weary consumers. High inflation could imperil the Trump administration’s agenda, including tax cuts, which could overstimulate a healthy economy, and mass deportations of undocumented immigrants that are seen causing labor shortages and raising costs such as wages for businesses.

“The moderation we saw in consumer inflation last summer is no longer visible now,” said Scott Anderson, chief U.S. economist at BMO Capital Markets. “The problem for the Fed is this isn’t just a one-month event, but looks like a real multi-month firming of inflation pressures.”

The consumer price index jumped 0.5% last month, the biggest gain since August 2023, after rising 0.4% in December, the Labor Department’s Bureau of Labor Statistics (BLS) said.

Shelter, which includes hotels and motel rooms, increased 0.4% and accounted for nearly 30% of the rise in the CPI. That followed two straight monthly gains of 0.3%.

Food prices rose 0.4% after increasing 0.3% in December. Grocery store prices surged 0.5%, with the cost of eggs soaring 15.2%, the largest increase since June 2015. That accounted for about two-thirds of the rise in prices at the supermarket.

An avian flu outbreak has caused a shortage of eggs, driving up prices. Egg prices, which fueled much of the voter discontent with inflation, increased 53.0% year-on-year in January.

Prices also rose for meats, poultry and fish as well as for nonalcoholic beverages and dairy products. Fruits and vegetable prices fell by the most in nearly two years. Gasoline prices increased 1.8% while natural gas cost 1.8% more, but electricity prices were unchanged.

In the 12 months through January, the CPI increased 3.0%. That was the biggest gain since June 2024 and followed a 2.9% advance in December. Economists polled by Reuters had forecast the CPI gaining 0.3% and rising 2.9% year-on-year.

The BLS updated CPI weights and seasonal adjustment factors to reflect price movements in 2024. Economists had expected the updated seasonal factors to temper the rise in the CPI.

Businesses could also have preemptively raised prices in anticipation of higher and broad tariffs on imported goods.

Trump early this month suspended a highly telegraphed 25% tariff on goods from Canada and Mexico until March. But a 10% additional tariff on Chinese goods went into effect this month. Economists expect that those tariffs, when they are eventually enforced, will lift inflation.

Fed Chair Jerome Powell appearing before lawmakers for a second day on Wednesday said the CPI report highlighted that the central bank was “not quite there yet” in its quest to bring inflation back to its 2% target.
Stocks on Wall Street slumped. The dollar eased versus a basket of currencies. U.S. Treasury yields rose.

RATE CUT HOPES DIMINISHING
Chances of a rate cut this year are diminishing. Consumers’ one-year inflation expectations surged to a 15-month high in early February as households perceived that “it may be too late to avoid the negative impact of tariff policy,” a University of Michigan survey of consumers showed last week.

Higher inflation, together with a stable labor market, has some economists believing the Fed’s easing cycle is over.

The Fed left its benchmark overnight interest rate unchanged in the 4.25%-4.50% range in January, having reduced it by 100 basis points since September, when it embarked on its policy easing cycle. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation.

Excluding the volatile food and energy components, the CPI climbed 0.4% in January. The so-called core CPI increased 0.2% in December. Residual seasonality has tended to be more pronounced in the core CPI.

Shelter costs increased 0.4%, boosted by a 1.7% rebound in the prices of hotels and motel rooms. But owners’ equivalent rent moderated further, rising 0.3%. Prescription medication prices jumped by a record 2.5% and hospital services increased 0.9%. The cost of motor vehicle insurance soared 2.0%.

Airline fares rose 1.2%, slowing after December’s 3.0% surge. There were also increases in the prices of recreation, used cars and trucks, communication and education. Apparel prices fell 1.4%. Overall, core goods prices rose 0.3%.

In the 12 months through January, the core CPI rose 3.3% after advancing 3.2% in December.

Based on the CPI data, economists estimated that the core personal consumption expenditures price index rose 0.4% in January after gaining 0.2% in December. It is one of the measures tracked by the Fed for monetary policy. Core inflation was forecast increasing 2.7% after rising 2.8% in December. January’s producer price data on Thursday could impact these estimates.

“The risk is tilted toward less easing if the administration’s policy mix fuels inflation and inflation expectations,” said Gregory Daco, chief economist at EY-Parthenon. — Reuters