What you need to know about those 'Trump Accounts'
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What are Trump Accounts and how do they work?
When babies come preloaded with $1,000, I'm David Brancaccio in Los Angeles. The federal government has promised to put $1,000 into an account for every new baby, regardless of family income. The Trump account is the branding. There was a summit yesterday with more details on how these will work. Marketplace's Carla Javier reports.
There was a lot of good news at the summit, says Ray Boschera at the Aspen Institute. He works on policies to build wealth for low-income people and advised Congress and the administration on the accounts. Trump accounts really are kind of a historic property. The government is saying that all newborns are eligible to receive a Trump account.
What challenges do families face with Trump Accounts?
And if they're lucky enough to be born between 2025 and 2028, they'll get $1,000 from the government, no strings attached. One problem, though, says Bouchera, is that the accounts are not opened automatically. Families have to choose to open an account, either while filing taxes or eventually through a government portal. They've designed kind of an opt-in process using tax returns and portals that a lot of, especially lower-income families, simply won't participate in. Because they don't file taxes or might not know what the accounts are all about.
What insights did the Federal Reserve provide on interest rates?
But William Elliott at the University of Michigan says if families do sign up, these accounts can act as wealth reservoirs.
The advantage of them is that it does allow for multiple streams of assets to flow into it.
Allowing for the potential for additional contributions from philanthropy, employers, state governments, and families themselves can contribute to the tax-deferred investment accounts as well. I'm Carla Javier from Marketplace.
Teachable moments from the Federal Reserve yesterday. There were many. Let's consult Diane Swonk, chief economist at the audit tax and advisory firm KPMG. Morning. Good morning. We were not on the edge of our seats waiting for the interest rate cut that never came yesterday. We knew that. But did you learn anything from that briefing?
Even though the vote itself was sort of buttressed by yet another two dissents in favor of additional cuts, what we heard from the chairman was how broad the consensus was to pause now, to wait and see what's going to happen yet. And even during the course of the press conference itself, we saw Chair Powell say, you know, that inflation would come down.
How does the economy impact Latino-owned businesses?
That's our base case. But he really ended on a very strong note saying that they would not prematurely declare victory over inflation because that's something they've already done and they didn't want to repeat that mistake.
Well, he suggested he sees signs of strength in the economy. Is Chair Powell more optimistic than you are, Diane?
No, the economy is growing rapidly. The problem has been the labor market doesn't match it. And he laid that out also in his comments saying, you know, usually when there is such tension between the overall economy and the labor market, the labor market wins. And that was interesting as well. But I think it's important that they see the three cuts they made as a hedge against the weakness in the labor market. And now the risk to both inflation and unemployment are more balanced.
What are the growth statistics for Latino entrepreneurship?
But they're still both to the upside. And I think that's important as well. And that's why the Fed is willing to sit this out and wait to see the dust settle on where tariffs end up and how inflation eventually performs.
Before we go, Diane, you go down to the lakeshore in a stiff wind and you can shout, but because of the wind, no one can hear you. I got that image when Chair Powell said this.
The U.S. federal budget deficit is, you know, uncontroversially on an unsustainable path.
I mean, he keeps warning about this. Is anybody listening?
It's something that he's very concerned about, and I am as well.
What challenges do Latino entrepreneurs encounter in securing funding?
And what's most concerning now is that is also accompanied fiscal stimulus, where not only is a deficit not sustainable and on an unsustainable path, but it could add to inflationary pressures in 2026.
Diane Swong, chief economist, KPMG.
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Chapters
6 chapters
1
What are Trump Accounts and how do they work?
0:01–0:42
2
What challenges do families face with Trump Accounts?
0:42–1:20
3
What insights did the Federal Reserve provide on interest rates?
1:20–2:29
4
How does the economy impact Latino-owned businesses?
2:29–3:23
5
What are the growth statistics for Latino entrepreneurship?
3:23–4:03
6
What challenges do Latino entrepreneurs encounter in securing funding?
4:03–6:35