Page 6 - ARUBA TODAY

A6 U.S. NEWS
Thursday 2 February 2017
Retailers, trade groups fight GOP tax proposal
Fed leaves rates alone, gives
no hints of when it may hike ANNE D’INNOCENZIO want to eliminate tax in- ing members to meet with
CHRISTOPHER S. RUGABER
centives that encourage different levels of the new
AP Business Reporters U.S. companies to move administration as well as
MARTIN CRUTSINGER NEW YORK (AP) — More overseas, sharply cut the lawmakers. Details of the
AP Economics Writer than 100 retailers includ- corporate tax rate to 20 consumer campaign are
WASHINGTON (AP) — The Federal Reserve has left its ing Wal-Mart and Target as percent from 35 percent, still being worked out, ac-
key interest rate unchanged at a time of solid eco- well as key trade associa- and encourage more fac- cording to a spokeswoman
nomic gains but also heightened uncertainty sur- tions are launching a new tory output at home. But at the retail trade group.
rounding the new Trump administration. coalition aimed at fight- opponents say the plan A lot is at stake. Nearly all
At the same time, the Fed pointed to improved ing a Republican proposal would have a harmful rip- such items that U.S. shop-
sentiment among consumers and businesses. And on how imports get taxed, pling effect, causing com- pers buy are either wholly
it said it had become more confident that inflation
will reach its 2 percent target. But the Fed offered no
hints about when it will resume raising rates.
In a statement it issued Wednesday after its latest
policy meeting, the Fed said it wants more time to
monitor the economy and still envisions a gradual
pace of rate increases.
Many economists think the Fed will put off further rate
increases until more is known about President Don-
ald Trump’s ambitious agenda, or whether his drive
to cancel or rewrite trade deals will slow growth or
unsettle investors.
The statement offered a slightly more upbeat tone
than it did after the Fed’s previous meeting in De-
cember, reflecting rising confidence in the econo-
my and signs that chronically low inflation is moving
higher.
In January, a measure of consumer confidence shot
up to the highest level in more than 15 years, the
Conference Board has reported. And a measure of
small business confidence has reached its highest
point since 2004, according to the National Federa-
tion of Independent Business.
In its statement, the Fed said flatly that inflation “will
rise to 2 percent over the medium term.” Previously,
it had said only that inflation was “expected” to rise A woman pushes her shopping cart as an employee pulls a long line of carts outside a Target store
to 2 percent. in Encinitas, Calif. More than 100 retailers, including Wal-Mart and Target as well as key trade as-
But none of the revisions to the statement appeared sociations, are launching a new coalition aimed at fighting a Republican proposal on how imports
to hint that a rate hike could be coming as soon as get taxed, which they believe would harm their businesses.
the Fed’s next meeting in March. If the Fed does (AP Photo/Lenny Ignelzi)
want to signal investors of a forthcoming rate in-
crease, it can use Chair Janet Yellen’s semiannual a measure they believe panies to even lay off work- or partly produced over-
testimony on interest-rate policy to Congress on Feb. would harm their business- ers. The proposal — spear- seas as companies have
14-15 to do so. es. headed by House GOP sought the cheapest way
Some economists said they still think a rate hike as The National Retail Federa- Speaker Paul Ryan and to make goods. And with
soon as March is possible — if details of Trump’s eco- tion, along with the Ameri- Texas Rep. Kevin Brady, online competition and
nomic plan become clearer by then and if the job can International Automo- the top Republican on the shoppers trained to find
market continues to show strength. bile Dealers Association, House tax-writing commit- the best deals, U.S. retailers
“We view this statement as a very small nudge to- the National Grocers Asso- tee — would constitute the haven’t had the power to
wards the next rate hike, but action in March will ciation and others are join- most sweeping reforms to raise prices on many goods
come only if the next two labor market reports are ing forces to form Ameri- corporate taxes in at least for several years.
strong and we have a clear idea of the likely extent cans for Affordable Prod- three decades. “I’m losing sleep. I am
and timing of fiscal easing,” said Ian Shepherdson, ucts, which will run a cam- Trump has dismissed the scared out of my mind,”
chief economist at Pantheon Macroeconomics. paign to educate consum- cornerstone of the House said Rick Woldenberg,
Other analysts mentioned June as a more likely time ers and show lawmakers GOP plan as “too compli- CEO of Learning Resourc-
for the next rate hike. More will be known by then that the so-called Border cated” and has been tout- es, which has signed on to
about the fate of Trump’s stimulus program and how Adjusted Tax plan would ing a 35 percent levy on the coalition. It is a family-
the economy and investors respond to it. lead to higher prices of as imports. Yet his spokesman owned company based
“We still expect the fiscal stimulus to be passed by much as 20 percent on appeared to put the tax in Vernon Hills, Illinois that
June,” said Paul Ashworth, chief U.S. economist at everyday items including back in play last week by makes educational toys
Capital Economics. “As the stimulus boosts eco- clothing, food and even proposing a 20 percent tax and employs 150 people in
nomic growth and particularly inflation, we then an- gas. The diversified group, on goods from Mexico and the U.S.
ticipate a much more aggressive second half of the which also includes such “other countries we have a He estimates that under
year” by the Fed. companies as Nike, Best trade deficit with” to pay the GOP plan his federal
Ashcroft envisions three rate increases from June Buy, luxury conglomerate for a border wall. tax rate would soar to 165
through December. LVMH and Dollar General, “There’s a rush to get this percent from 39.6 percent,
Wednesday’s Fed statement was approved 10-0. The is trying to make their op- done in Congress. We want he would have to raise
panel’s voting membership among regional bank position heard even while to make sure our voices are prices by 10 percent to 15
presidents rotates each January, and two members Congress and the president heard,” said David French, percent to stay viable, and
who dissented at times in 2016 in favor of faster rate try to sort out exactly what chief lobbyist for the Na- would have to lay off em-
increases do not have votes this year. adjustments to put forth. tional Retail Federation, ployees.
Congressional Republicans which has been dispatch-
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