The US Economy Is Putting All Its Chips Down On AI

 The United States economy is becoming more and more focalized on Artificial Intelligence. Both investment and market concentration are increasing and generating hope and fear amongst the market and economists. Seven major tech firms account for 32% of the total U.S. stock market value which highlights the dependency of the American economy on AI and its development by these firms. This past week Nvidia became the first company in the world to reach a $5 trillion market cap. To put in perspective, this one company represents 7% of all publicly traded U.S companies.

AI has seemingly propelled the United States economy away from a recession. AI research, development, and operation requires large scale data centers. Massive amounts of investment has funded this and several hundred billion more is expected in the next year. Concerns are rising, however, with many suggesting that this high concentration in the market and GDP may be creating a bubble. 

https://finance.yahoo.com/news/us-economy-putting-chips-down-203100569.html

Economy European Central Bank holds rates steady as economy shows resilience

  The European Central Bank (ECB) maintained its key deposit rate at 2% for the third consecutive meeting. This puts a pause on the rate-cutting cycle that has been going on since last year; these rates ran all the way up to a record high of 4% at that time. There was growth in the third quarter that was slightly above expectations at .2%. The growth was caused by the labor market, strong private sector balance sheets, and steady consumer spending. 

    During the meeting, the ECB highlighted uncertainties such as global trade tension, geopolitical risks, and a stronger EURO. President of the ECB, Christine Lagarde, described the current monetary stance as "a good place," indicating no grave concerns at this time. While there is still some fixing to do, she indicated the flexibility of the central bank depending on fluctuating economic conditions. While services and consumer-driven sectors are performing well, manufacturing continues to face pressure from tariffs and weakening external demand. Overall, the decision reflects cautious optimism as the easing cycle appears near its end, but the ECB will continue to monitor the data closely before making any further moves.

Article: ECB October 2025 rate decision

NIRS Research Supports the Significance of Social Security

 Recent research conducted from the National Institute on Retirement Security (NIRS) on social security revealed how important it really is and serves many purposes for our labor force. 

To be specific, the research found that in 2023;

1. $1.38 trillion in benefits were paid to roughly 67 million households

2. 12.2 million jobs have been generated from social security

3.  $804.6 billion in labor income

4. Generated a total of $2.6 trillion in economic output and $1.6 trillion in GDP.

5. Generated $363 billion in federal, state, and local tax revenues.

6. Each $1 in Social Security benefits supports $2 in total economic activity.

It goes without saying that the impact of social security is substantial. The reason this research was conducted is fear of benefit cuts. Dan Doonan, the NIRS director elaborated on this.

“Every dollar paid out in Social Security benefits supports two dollars in total economic activity. These benefits not only provide financial security for millions of Americans, but they also sustain jobs, generate tax revenue, and keep local economies strong… As policymakers debate how to ensure the long-term solvency of Social Security, they should remember that benefit cuts wouldn't just harm retirees: they would ripple through every community in America,"

Social Security is more than just a benefit to retired people, it is a portion of the economy that stimulates and even encourages economic growth and activity. This sort of responsibility that Social Security is important to preserve, as drastic changes in funding would be detrimental to this and ultimately slow down the economy.

Source: https://www.prnewswire.com/news-releases/social-security-benefits-support-12-million-us-jobs-and-generate-2-6-trillion-in-economic-output-according-to-new-national-institute-on-retirement-security-report-302599200.html

Over 1600 flight delays as government shutdown continues

 

Nearly a month since the government shutdown, we're starting to see the effects on government operations, and those who benefit from various government programs and funding are becoming less operational. Southwest airlines reported Sunday that the airline experienced on Sunday, October 26, over 1600 flight delays. 

Airlines as a whole have experienced over 8000 flight delays. This shutdown is the second-longest shutdown and could continue to get worse with no progress being made on a government funding bill passing through Congress without concessions to Democrats to extend subsidies that helped millions afford health insurance. 

Source: https://www.reuters.com/business/more-than-1400-flights-delayed-government-shutdown-hits-day-27-2025-10-27/

U.S. Inflation Cools Slightly, but Shutdown Clouds the Economic Picture

U.S. consumer prices rose less than expected in September, suggesting that inflation pressures are easing. The Consumer Price Index increased only 0.2%, while core inflation held steady at 3.1% year over year. This slowdown could give the Federal Reserve room to begin lowering interest rates, providing some relief to borrowers and stabilizing markets strained by high costs.

However, the ongoing government shutdown is creating uncertainty by disrupting key data collection. Without full access to reports from agencies such as the Bureau of Labor Statistics, policymakers may struggle to gauge the actual state of the economy. This leaves the Fed in a difficult position, balancing progress on inflation with the risks of acting without complete information.

Article: US consumer inflation cools in September; government shutdown threatens next report By Lucia Mutikani

Link: https://www.reuters.com/world/us/us-consumer-prices-rise-slightly-less-than-expected-september-2025-10-24/?utm_source=chatgpt.com

"K-Shaped Spending"

Consumers are adjusting their spending habits due to concerns about a recession, the government shutdown, and tariff uncertainty. There are 2 “camps” of people… The wealthy are continuing to spend, as they are being bolstered by stock market gains and increasing home values. Middle and low-income households are being forced to pull back on discretionary spending, along with essentials like gas and groceries. 

In response, companies are expanding both their premium offerings and value options. Some examples include Coca-Cola, which does both, while McDonald’s and Chipotle focus on value since lower-income traffic was declining. High-end hotel and airline companies are benefiting, while the budget brands are falling. The delayed CPI report will give clarity on inflation pressures and cost-of-living adjustments. 

Neelakandan, L. (2025, October 23). 'K-shaped' spending: Here's which sectors are showing bifurcation. CNBC. https://www.cnbc.com/2025/10/23/k-shaped-spending-sectors-showing-bifurcation.html

India to cut Russian oil purchases, U.S. to slash tariffs as they near trade deal: Indian media report

 Important Takeaways

• There would be a significant opportunity for Indian manufacturers as the United States intends to lower tariffs on Indian exports from about 50% to 15% to 16%.

• In return, India will increase agricultural access to the United States and decrease its imports of Russian oil.

The agreement is indicative of a larger geopolitical trend. Examination: This trade agreement between the United States and India marks a shift from transactional trade to a strategic partnership. Lower tariffs can significantly increase India's export potential, especially in industries such as machinery, textiles, and pharmaceuticals. 

It gives the United States influence over energy policy and fortifies relations with one of Asia's fastest-growing economies. The trade-offs are real, though. India runs the danger of increased import expenses and logistical difficulties when it reconfigures its refinery inputs by reducing its use of discounted Russian oil. Due to the possibility of American imports competing with Indian farmers in delicate markets, the agricultural concessions may potentially draw criticism from within the country. The long-term picture is encouraging, though. With careful management, this deal might strengthen U.S. involvement in South Asia and establish India as a central global manufacturing hub. More significantly, it highlights how trade agreements are evolving into tools of power alignment and diplomacy, rather than merely economic considerations.

Both countries stand to benefit. However, the success of this agreement will hinge on how well it is implemented and how effectively it reconciles domestic stability with strategic ambition by establishing a trade strategy that links financial incentives to strategic alignment. The action would increase domestic tensions over energy pricing and farm competition, but it might also promote India's "Make in India" objectives and increase exports.

Link

Gold and Silver Decline after Price Surge

 

The value of gold declined 3% after a decline of 6.3%, which is the worst rout for gold within 12 years. This was not too unsurprising as technical analysis showed gold being overvalued. This may mark a new level of certainty in the market, as people are getting used to some of the economic outcomes of the shutdown and fluid tariff rates.

Source: https://finance.yahoo.com/news/gold-silver-stabilize-massive-drops-231228968.html 

The Rising Role of Regional Trade

Global trade is slowing as protectionism and geopolitical tensions reshape the world economy. The IMF projects trade growth of only about 1.7% in 2025, far below global output. Ongoing tariff threats, especially between the U.S. and China, have led many countries to seek stability through regional and bilateral trade agreements. India, for example, is expanding its deals with Mercosur and the European Free Trade Association to reduce tariffs and boost investment. These partnerships offer businesses more predictable rules, new markets, and protection from global volatility. However, challenges like non-tariff barriers, complex regulations, and implementation gaps limit their impact. Still, as global cooperation weakens, regional trade pacts are becoming vital tools for economic resilience. The world is shifting from broad globalization to smaller, strategic alliances focused on stability and security in a more uncertain trade environment.

Family Offices Shift Toward Tech and Stocks Despite Global Uncertainty

 Family offices are continuing to look towards technology and equities despite the global uncertainty. According to Goldman Sachs 2025 Family Office Investment Insight report, 58% of surveyed family offices plan to heavily weigh technology in the next year. On the other hand, only 5% of families plan to be underweight. These investors currently hold about 31% of their portfolios in public equities and 42% in other alternatives like hedge funds. Even with market volatility, family offices continue to be consistent in their allocations. This is because of the strong performance of their equities and the increasing opportunities related to AI.

There have been many top market risks that have caused this turn. The possibility of a recession and geopolitical instability continue to be top risks as inflation concerns have slowly stopped. The generational capital has allowed them to act quickly and continue to capitalize on long-term opportunities where other investors cannot. 61% of family offices say geopolitical tensions are their main risk, showing their confidence in the markets ability to rebound. Also, cryptocurrency continues to gain attraction with almost a third of family offices investing in it which is doubled from 2021. Ultimately the consistent confidence of family offices shows their ability to balance risk and opportunity, proving that in times where it's hard to predict what is going to happen with the market their vision for the long term is their greatest strength.

Nearly 40% of Family Offices Plan to Raise Allocations to Public and Private Equity | Goldman Sachs

Government shutdown becomes the third-largest in history with no end in sight

    We are currently on Day 19 of the Government shutdown. This is what we know as of Day 19. There is currently no end in sight, after senators were unable for the tenth time to resolve the impasse in votes. There last vote took place Thursday, October 16th. This shutdown is the third- longest funding, lapse in modern history. The only shutdowns that are ahead of the current one are the shutdowns in 1985 and 2018-2019. In recent history, shutdowns are a new-coming phenomenon. Shutdowns first began in 1980. Senate Majority Leader John Thune sent home the upper chamber for the weekend after Thursday's vote.This means that the next vote will take place on Monday. The White House has been out of session since September 19th with no place to return until the shutdown is over. Thune's office stated that they will bring up the bill again this week that would pay federal employees and military services members who have continued to work during the shutdown. To pass this legislation it would require Democrats, who have blocked a long-term defense spending bill from advancing. 

To hit back at the United States in their trade war, China borrows from the US playbook

 China announced the latest edition to the global trade war as they will require export licensing for foreign companies shipping products containing at least 0.1% rare earth metals or that are made with Chinese rare earth technology. Making up about 90% of the supply, China is home to the largest concentration of rare earth metals. These seventeen different soft metals are utilized for the production of technology, automobiles, and many defense products. Trump recently announced an 100% tariff on China and restrictions on U.S. software exports. Experts are noted as viewing this as an escalation on China's part as they face severe economic pressure.

These policies show how neither economic system in China and the U.S. are strictly pure. Both are forms of government intervention in the economy. The U.S. is not a pure capitalistic society but imposes less nationalization of industries as China. China's requirement of licensing on foreign companies utilizing rare earth metals from China showcases a more strict form of government control over production. 

https://finance.yahoo.com/news/hit-back-united-states-trade-000105881.html

S&P 500 Futures Rise As Trade Tensions With China Seem To Be Cooling

US equities have seen a rise amidst hopes of easing tensions between the US and China. S&P 500 futures have risen 0.2%  in early asian trading hours. After threatening 100% Tariffs on Chinese imports Trump later redacted the statement claiming that tariffs that high would not be sustainable. Chinese officials have already told their global counterparts that tightened export controls, which were threatened earlier this month, will not affect normal trade flows between China and the globe. Strategists at Australias central bank are optimistic that tensions between the US and China will ease following a planned meeting between treasury secretary Scott Bessent and his Chinese counterpart He Lifeng. There are also rumors that Donald Trump and Xi Jinping will meet in the coming month as well, adding to equity traders relief and optimism that tensions between the two nations will ease. 

https://www.bloomberg.com/news/articles/2025-10-19/us-stock-futures-rise-as-china-trade-tensions-cool-markets-wrap?srnd=phx-economics-v2 

There's a shocking disparity between how high-income and low-income earners feel about the economy

     According to JP Morgan cost of living survey, their is a growing divide between how high-income and low-income earners in America perceive the economy. High-income earners are far more optimistic about the economic conditions, while lower-income workers are definitely less confident. The data from JP Morgan's survey suggest that we're in a "K-shape" economy, which is an economy where different groups experience very different outcomes.  This article also did a great job of highlighting a lot of statistics to back up its experience. 

    According to the survey, high-income earners had a confidence level of 6.2 on a scale of 1-10, while the low income workers had a average confidence level of 4.4. Along with this statistic 6 out of 10 high-income consumers said that paying bills have been easier to cover while 30% of lower income earners have said so showing a 30% gap in-between. This survey raises the question on what we could do to make life easier on these lower-income earners. With that being said with helping theme it requires a mix of short-term relief and long term changes that can make the economy more sustainable as well. 

This government shutdown could be the longest ever — maybe running until Thanksgiving. What might the economic damage be?

    The Current Government shutdown down which began in early October, is now being said could last until Thanksgiving. If that is the case, it would become the longest in US history. The shutdown stems from political disagreements over spending and health care funding. It is said that approximately 0.1%-0.2% is lost weekly. The white house is advising that if this keeps up, there will be projected losses between 15-30 billion in consumer spending if closure continues. 

    The Shutdown is not only hitting consumers but also federal workers, contractors, and the travel sector the hardest.  This is only delaying critical economic data and eroding public and business confidence within the US market. Although some of these conditions may be temporary, there may still be lasting economic damage. This could lead to layoffs, and potentially, government programs will be permanently disrupted.

https://www.msn.com/en-us/money/markets/this-government-shutdown-could-be-the-longest-ever-maybe-running-until-thanksgiving-what-might-the-economic-damage-be/ar-AA1OGHsz?ocid=BingNewsVerp

Consumers are taking a big hit from tariffs

     In 2025, global businesses are feeling the pressure from renewed U.S. tariffs, with S&P Global estimating the costs could exceed $1.2 trillion this year, which is a figure they believe might even be conservative. These tariffs, described as a kind of hidden tax on global supply chains, have created widespread disruptions through higher freight costs and logistics delays. While the White House insists that foreign exporters will shoulder most of the burden and that the tariffs are essential for promoting “fair trade” and bringing production back to the U.S., the evidence strongly suggests otherwise.

    S&P’s analysis shows that only about one third of the financial burden will fall on companies, while the remaining two thirds will land squarely on consumers. In other words, people are paying more for less as real output declines. The situation got even worse earlier this year when the administration removed the "de minimis" exception that allowed imports under $800 to bypass tariffs, a change that analysts call the “real inflection point” for how quickly costs have risen.

    As a result, profit margins are expected to shrink by about 64 basis points in 2025, marking a significant hit to global businesses. While there’s still some optimism that margins could eventually recover as companies adapt using technology and supply chain restructuring, the near term issues are clear. In the end, the trillion dollar tariff squeeze highlights a tough reality, despite political claims, tariffs rarely hurt only foreign exporters most of the cost ends up being paid by everyday consumers.

Source: https://www.cnbc.com/2025/10/16/tariff-costs-to-companies-this-year-to-hit-1point2-trillion-with-consumers-taking-most-of-the-hit-sp-says.html  

Trump administration agrees to deliver more student loan forgiveness

     The Trump administration has agreed to restart student debt forgiveness. Borrowers will have the option between two income-driven repayment programs that have been previously paused. The two are income-contingent repayment (ICR) and pay-as-you-earn plans (PAYE). The wheels started spinning with this because of a legal agreement between the US Department of Education and the American Federation of Teachers(AFT). AFT sued the Trump administration at the beginning of 2025 for supposedly illegally blocking or pausing student loan forgiveness.  

    Under the agreement, the Education Department will restart loan forgiveness for eligible borrowers in the ICR and PAYE programs, which currently serve over 2.5 million people. Borrowers receiving forgiveness in 2025 won’t owe federal taxes on the canceled debt, though that tax break ends this year. Overall, this is good news for students currently facing this issue, but uncertainties arise after 2028 when this will most likely be phased out. 

Article: Trump administration agrees to deliver more student loan forgiveness

Gold prices rose to a new record high this week, topping $4,300. Here's why.

This CBS news article talks about the rising price of gold. The price of gold has reached a new high at about $4,300 per troy ounce. The rise in price has been driven by broad economic and geopolitical uncertainties. A lot of these uncertainties have stemmed from Trump's trade wars. The increased demand for gold is from investors fleeing to “safe-haven” assets, because investors are seeking stability. Another reason for this surge is because of the weakening U.S. dollar and expectations of lower interest rates. Central banks are also increasing their demand for gold with geopolitical risks, such as the conflicts in Ukraine and Gaza. The U.S. government shutdown also adds to these anxieties, because key economic data has been delayed. 

This graph is from the article showing the dramatic increase in price per ounce

Link: https://www.cbsnews.com/news/gold-prices-high-whats-driving-surge/

Government Shutdown Presenting Economic Data Limitations as Private Information Suggests Slowing Labor Market

 In the three weeks since the government shutdown, access to economic data has been limited. Many releases, most notably the employment numbers, have been inactive since the BLS closed down. With the reduced number releases and reports, the FED is having more difficulties analyzing our labor market. Due to this, we have seen the reliance on other information sources like Automatic Data Processing, Inc. (ADP) and the Institute for Supply Management’s Manufacturing and Services (ISM).

*Chicago Fed Real-Time Unemployment Rate (September 2025), source: chicagofed.org

The trend in black shows the official unemployment rate published by the BLS since 2022. However, since the BLS has not released their most recent data, the current unemployment rate is up in the air. The Chicago FED has estimated the unemployment rate based on public and private information, which they announced as about 4.34%. While this might seem accurate, this is an estimation. Without the official numbers to verify the accuracy, we are left feeling much less certain.

With the information that we do have at our disposal, we can still derive projections and make somewhat educated forecasts and interpretations. These reports have recently suggested the labor market could be slowing down and that there is an overall decrease is hirings. With this being said, the reports also suggest that these trends are very gradual, and there is no evidence of any sharp decrease that would cause extra concern.

Overall, the country is in a tight spot in the labor data department because of this shutdown. We have to estimate our current figures based on private data, which in turn makes forecasts less accurate. Because of this, economic decisions are being made based on uncertain numbers. We are experiencing trying times and I have growing concern for how our economy will behave going forward if this trend continues.

Source: https://www.marketpulse.com/markets/us-lack-of-labor-market-data-due-to-government-shutdown-investors-seek-alternative-indicators/

Shutdown impact: What it means for workers, federal programs and the economy

 

The ongoing 2025 U.S. government shutdown, which began on October 1st, has become one of the longest in history, with no end in sight. The shutdown stems from a political standoff between the Trump administration and Democrats over funding priorities. The administration is using the shutdown to cut government programs it opposes and reduce the size of federal agencies, while Democrats are demanding funding that protects Americans from losing health insurance or facing higher premiums. As a result, about 750,000 federal employees have been furloughed, while others continue working without pay. Although they are expected to receive back pay later, many are struggling financially, and food banks have begun providing extra support to affected workers.

The shutdown’s economic and social effects are severe. It costs taxpayers roughly $400 million a day in back pay for workers who are currently unable to do their jobs. The Trump administration has also announced plans to permanently eliminate thousands of federal positions, raising legal and ethical concerns after a federal judge temporarily blocked the firings. Essential services like national security and public safety continue, but many government offices and programs remain closed. As the shutdown drags on, families face growing financial stress, the economy suffers, and political divisions deepen, leaving millions of Americans uncertain about when relief will come.

Source :  https://apnews.com/article/shutdown-trump-furloughs-firings-economy-federal-workers-efced4c32282087c8c53aeab535230a0

California to Begin Selling State-branded Insulin Beginning in 2026

 

     California to Begin Selling State-branded Insulin Beginning in 2026

    Gavin Newsom, the Governor of California, announced this week that the State of California will get involved in pharma by offering state-branded insulin capped at 11 dollars per pen to California residents with diabetes beginning in 2026. Back in 2022 when Newsom first announced that California will address the high cost of insulin, it was suggested that the California could contract with Civica Rx, a non-profit drug manufacturer in Lehi, Utah, to produce and sell the state-branded insulin [for 11 dollars per pen], however, officials also suggested that state funds could be appropriated towards the development of a $50 million state-operated manufacturing plant in California. With the State of California now competing with Brand-name drug companies, people with insurance could pay even less for insulin if their insurer offers coverage of the state-branded insulin pens. 

https://apnews.com/article/california-affordable-insulin-415edd0b915677d2051d22b4b8f8121c

https://calmatters.org/health/2025/10/insulin-california-announcement/

China’s New Port Fees on U.S. Ships

China just started adding new port fees on ships that are U.S.-owned or built, while giving Chinese ships a pass. In response, the U.S. plans to add 100% tariffs on Chinese goods starting November 1.

Moves like this keep raising costs for trade between the two countries and add more tension to an already fragile relationship. It feels like every time progress is made, another issue sets things back. If this keeps going, it could start to affect prices and supply chains around the world.

Source

• https://www.reuters.com/business/autos-transportation/china-begins-charging-port-fees-us-ships-exempts-china-built-ones-2025-10-13/

Politics and Economics in Japan and France

A very informative 8-minute interview with Jordan Rochester, head of FICC Strategy EMEA at Mizuho about the impact of recent political development in Japan and France on their respective markets. Given that we have already covered France and are currently covering Japan, this episode seems particularly relevant. 

The interview is between the timestamps 8:30 and 16:15.

https://www.bloomberg.com/news/audio/2025-10-06/bloomberg-surveillance-markets-and-politics-podcast

Rethinking Value-Added Taxes for Developing Economies

The Value-Added Taxes (VAT) were first introduced in the early 1950s to help countries increase tax revenue. Since then, almost 200 countries worldwide have used this method to strengthen compliance and generate a more reliable revenue stream. However, the benefits for developed and undeveloped nations differ with VAT, and recent studies show a reassessment is critical. In undeveloped nations with rich resources, it has not been beneficial, as governments have had significant fiscal shortfalls and lost tariff revenues. This framework has caused a "resource curse" in that theory; the cost of extraction has decreased, which has then increased the reliance on unprocessed raw material exports; this is not a money-rich industry. 

This has led researchers to find that even if a tax system seems to work for one nation, the concept does not work worldwide. The VAT needs to be altered for developing countries that face budget constraints. In 2024, China stopped VAT reimbursements for 2 major raw goods, and while shipping costs rose, it created incentives to process domestically and keep them within China. 

 https://www.project-syndicate.org/commentary/how-vat-has-failed-developing-economies-by-rabah-arezki-et-al-2025-10

Buy Now Pay Later Threatening Banks

 

CNBC published an article last month on buy now, pay later loans threatening Banks. Buy now, pay later loans can be found in apps such as Klarna or Afterpay. According to eMarketer, over 85 million Americans used Buy Now, Pay Later in 2024. When someone uses Buy now, Pay Later, which allows consumers to pay in installments at no interest rate, it's a purchase that could have gone to a credit card lender or bank.

https://www.cnbc.com/2025/09/14/heres-why-banks-credit-card-companies-are-wary-of-buy-now-pay-later-loans.html

Corporate Profits Cool as AI Spending Takes Center Stage

 As U.S. companies release their third-quarter results, investors are paying close attention to signs that profit growth may finally be losing steam. According to a recent Reuters report, earnings for S&P 500 firms are expected to grow at a slower pace this quarter, as higher tariffs, rising labor costs, and cautious consumer spending weigh on margins. Despite these headwinds, many firms continue to invest in artificial intelligence, seeing it as a key driver of future productivity and competitiveness. 

This shift in focus highlights a larger trend in the post-pandemic economy, where short-term profits are being traded for long-term technological positioning. Industries ranging from manufacturing to financial services are investing heavily in AI tools that promise efficiency gains but carry uncertain returns. Analysts note that this could create a divide between firms with the scale to absorb high upfront costs and smaller companies struggling to keep pace.

The slowdown in earnings comes at a delicate time for the Federal Reserve, which is balancing elevated inflation with growing calls for rate cuts. Slower profit growth could ease inflationary pressure, but weak corporate performance might also dampen investment and hiring. Whether AI spending can offset these cyclical challenges remains to be seen, but it’s clear that technology is reshaping the path forward for American business.

Article: US companies' profit growth seen softer, spotlight on AI spending By Caroline Valetkevitch

Link: https://www.reuters.com/business/us-companies-profit-growth-seen-softer-spotlight-ai-spending-2025-10-09/?utm_source=chatgpt.com

U.S. Market Developments

 

Recently, the U.S. economy has been showing some cracks. The services sector, which usually drives growth, has basically stalled with fewer less activity and weak job numbers. That’s a problem since most of our economy runs on services and consumer spending. The government shutdown isn’t helping either with agencies closed, key data jobs reports are delayed, and regulators can’t fully do their jobs. That makes it harder for businesses and investors to know what’s really going on.

At the same time, everyone’s throwing money at artificial intelligence. Some think it’s the future, others think it’s starting to look like a bubble. Consumer confidence is also slipping because of high prices and interest rates. Put together, these trends show how shaky things can get when politics, tech hype, and everyday spending collide. Even in a strong market system, confidence and stability can always sway. 

For first-time job hunters, a college degree isn’t unlocking the opportunities it once did, data shows

According to CNBC, it has become increasingly hard for college graduates to get jobs in our labour market. This is alarming to read as someone who is about to graduate, especially when Chief economist at Burning Glass institute Gad Levanon states that the U.S. is “no country for young grads”. Although the government shutdown is making it harder to read and predict precise trends, the data shows that the unemployment rate for new college graduates hit a nine year peak, the weakest it has been since 2009. This is the highest unemployment percentage for entry level jobs in decades. 

Because of this, the article states that a bachelor's degree isn't delivering on its promises of access to white-collar jobs for the first time in modern history. Because this path is becoming increasingly less reliable, and with the rise of AI, many young people are being deterred from attending college which could result in a rapid decline of university enrollment in the coming years.

link to article: https://www.cnbc.com/2025/10/03/job-market-new-grads-unemployment.html

Lowest Hiring Since 2009

 The job market didn’t change much in September, with unemployment holding steady at 4.34%. Layoffs stayed about the same, but hiring slowed down a bit, showing that companies are pulling back. A report from outplacement firm Challenger, Gray & Christmas said layoff announcements actually dropped last month, but overall job cuts this year are already higher than all of last year. At the same time, hiring plans have fallen hard, down more than half from last year and at their lowest level since the 2009 financial crisis. With the government shutdown delaying official reports, people are turning to other sources to figure out what’s really happening in the job market.

Cox, J. (2025, October 2). Report shows hiring at lowest since 2009 as economists turn to alternative data during shutdown blackout. CNBC https://www.cnbc.com/2025/10/02/report-shows-hiring-at-lowest-since-2009-as-economists-turn-to-alternative-data-during-shutdown-blackout.html

U.S. Latino Immigrants generate $1.6 trillion in GDP, report says

         A report from the Latino Donor Collaborative, highlighted the role that Latinos play in the U.S. economy. Latinos alone generated $1.6 trillion in GDP , contributing to an overall purchasing power for U.S. Latinos of $4.1 trillion. This data alone would make the Latino economy be the fifth-largest in the world if they were their own country. Dennis Hoffman, said his simulation he did will predict that total GDP could decline by $2.3 trillion or 7.7%. This article attributes this to higher workforce participation, growing entrepreneurship, and rising consumer spending compared to the rest of the nation. 

        California's GDP alone is on track to surpass the $1 trillion mark within the next few years. Along with that Modelo has taken budweiser to become America's No. 1 selling beer brand by capturing 50% of the Latino consumer market before being taken over this week by Michelob Ultra. Along with Modelo other companies have seen significant use like T-Mobile, Dr. Pepper and Kia. Along with Latinos spending much more on our economy baby boomers spending has dropped by 4% and Latinos are seemingly picking up that slack. While this data does show reason for concern it brings up the question whether what trump is doing is right or not for a future mass deportation. 

https://www.cnbc.com/2025/09/24/us-latino-immigrants-gdp-report-says.html

The Impact of Truck, Furniture, and Pharmaceutical Tariffs on the American Economy

The increased import duties, targeting heavy trucks, kitchen cabinets, furniture, and pharmaceuticals, were announced by former President Donald Trump and are scheduled to take effect on October 1. There is a catch, however: if businesses are actively constructing plants in the United States, they can avoid the duties, which range from 25% to 100%.

The action aligns with Trump's broader initiative to "reshore" manufacturing. Home products and trucks are examples of classic blue-collar businesses, but pharmaceuticals are essential for both national security and the economy. The administration presents tariffs as a source of income and as a means of negotiating power.

Potential Impacts on the Economy

• Increased Prices: Almost invariably, import expenses are passed on to customers. Pharmaceutical tariffs, however limited in certain trade agreements, run the risk of driving up the cost of medications, and furniture and cabinets may become more costly.

• Supply Chain Changes: While some businesses might expedite their U.S. investments, others will have to deal with expensive delays and interruptions.

• Trade Tensions: It is anticipated that Europe and its allies will resist, possibly retaliating or contesting the sanctions legally.

• Uncertainty: Companies don't like rules that change. Long-term investment is deterred by unpredictable tariffs, particularly in sectors with international supply chains.

These tariffs continue a trend that involves focusing on particular industries, imposing severe fines, and establishing exceptions for American investment. They run the risk of escalating inflation, strained alliances, and unsettled markets, even though they might boost some domestic production.

Trump's tariff plan focuses more on transforming trade policy into an instrument for industrial strategy than it does on short-term economic concerns. Higher prices, strained trade relations, and corporate uncertainty are the costs of the gamble, though.

Link

Pro-EU Party wins election in Moldova

Historically, Moldova was one of Russia's allies until the invasion of Ukraine, which sparked a lot of economic instability within the country. It had specifically led to both energy shocks and higher inflation, while also being met with a substantial decline in population due to migration and political divisions.

A decision was made in Moldova whether to align with the European Union or Russia, and the Moldovans chose the pro EU party. The pro-Russian party has decided to protest the results and contest them within their supreme court. 

The pro EU party had won just over 50% of the votes, whereas the pro-Russia party won 24.3% of the votes. The pro EU party had been accusing Russia of interference within the election, opposed to the pro-Russian claims of western interference within Moldova's election.

This is a surprising turn of events, as due to Russia's invasion of Ukraine, they are losing countries that had been open to Russian markets and their less economically dependent allies. Finland and Sweden were both intimidated by Russia's sudden invasion of a neutral country, and tied themselves to NATO. This shows a growing trend among countries that they are less likely to either trust or want to align themselves to Russia.

"This vote for pro-European parties and for the majority in the parliament for pro-European parties is showing that the direction is clear: Moldovan people want peace, development under the European Union family... The EU announced the start of accession talks with Moldova in December 2023, and negotiations officially began in June 2024."

Source: https://www.dw.com/en/moldova-ruling-pro-eu-party-wins-election/live-74163154 

Consumers Keep Spending Despite Inflation

August brought some mixed signals for the U.S. economy. Consumer spending was up 0.6%, which shows people are still willing to spend, and personal income rose slightly too. But the job market is losing steam—only 22,000 jobs were added, and unemployment stayed at 4.3%.

At the same time, inflation hasn’t cooled enough. The Fed’s PCE index rose 2.7% compared to last year, which keeps pressure on policymakers. The challenge is pretty clear: cut rates to help jobs, or keep rates high to get prices under control. If the balance tips the wrong way, we could end up with stagflation—slow growth and sticky inflation at the same time.

Sources:

• BEA – August 2025 Personal Income & Outlays
• Reuters – U.S. PCE Inflation Matches Expectations

Trump again places heavy tariffs

 

    President Donald Trump recently announced a sweeping expansion of tariffs, set to take effect on October 1st, in what he describes as an effort to reduce the federal budget deficit while boosting domestic manufacturing. The new measures include a 100% tariff on pharmaceutical drugs, 50% on kitchen cabinets and bathroom vanities, 30% on upholstered furniture, and 25% on heavy trucks. While the administration used Section 232 of the Trade Expansion Act of 1962 to justify tariffs on pharmaceuticals and trucks, citing national security concerns, the inclusion of furniture and cabinetry stretches the definition further. Trump has framed these tariffs under “National Security and other reasons,” a justification that may face serious legal challenges as the Supreme Court prepares to hear a case in November about the limits of presidential tariff authority.

    The pharmaceutical tariffs stand out as the most consequential. In 2024 alone, the United States imported nearly $233 billion in pharmaceutical and medicinal products. A 100% tariff could, in practice, double the cost of many medicines, raising concerns that patients may be forced to ration or skip essential treatments. This also risks increasing expenses for programs like Medicare and Medicaid. The administration did leave an important exemption, companies currently building or breaking ground on U.S. production facilities will not be subject to the new tax. That clause has already influenced industry behavior, with major pharmaceutical companies such as Johnson & Johnson announcing new domestic investments earlier this year.

Containers are piled upon a cargo terminal in Frankfurt, Germany, on Sept. 9, 2025.Michael Probst/AP

    Economically, the picture is less optimistic. Federal Reserve Chair Jerome Powell warned that tariffs are responsible for “most or all” of the inflation seen this year, even as Trump continues to insist that “there’s no inflation” and that the country is experiencing “unbelievable success.” In reality, the consumer price index has climbed 2.9% over the past 12 months, signaling real cost increases for households. At the same time, the jobs data undermine the idea that tariffs are driving domestic growth. Since the first round of broad tariffs went into effect in April, manufacturers have cut 42,000 jobs, while builders have eliminated 8,000 positions. The 50% tariff on cabinetry and vanities could make the housing market even worse, where high mortgage rates and tight supply already leave many potential buyers priced out.

    Overall, the expansion of tariffs highlights the tension between Trump’s political rhetoric and the economic realities on the ground. While the administration tries to frame tariffs as tools of independence and national security, the immediate impacts have been higher costs, limited job growth, and heightened uncertainty. Whether these policies produce more issues or success, they represent one of the most defining and controversial aspects of Trump’s economic strategy.

The resilient stock market may be keeping the economy out of a recession. Why that’s a bad thing.

    The economic data this week has presented a brighter picture compared to recent trends. The consumer spending this past August was stronger than expected along with the income. Companies and households have continued to spend more while inflation has been soft. Housing also showed signs of life. GDP growth has been revising upward. Stock markets like Dow, Nasdaq, S&P 500 have increased due to AI, industrial strength and corporate profits.  The stock market strength is keeping the United States economy out of a recession by boosting the consumer spending. Wealthy households are playing a major role into all of this. The large stockholders are also spending more. 

    Some could see this as a bad thing. A large majority of the spending is coming from wealthier households because there stock portfolios are booming. According to the University of Michigan survey, the consumer sentiment has heavily decreased since January, it hurts those that have little or no stock exposure. There is a major risk with all that is going on. If the stock market was to fall, the spending could decrease because job growth is very weak. This could leave the economy vulnerable.  

Chanden Lee: Sunday, September 28, 2025

Fed Chair Powell says rising inflation and slow hiring pose 'challenging situation'

 Federal Reserve Chair Jerome Powell indicated a delicate balancing act for the Fed as the U.S economy is facing both a raise in inflation and a slowdown in hiring. Powell described the situation as 'challenging" for central bankers attempting to steer the economy through this period of uncertainty. Last week, the Fed cut interest rates for the first time this year, aiming to support employment while battling inflation. The Federal Open Market Committee (FOMC) has indicated additional quarter point cuts that may come later in the year. Despite this, Powell cautioned that the prices remain uncertain and that the risks are "two-sided". 

The Fed's decision followed a push by President Trump to influence the central banks, which includes efforts to remove board members and pressure for larger rate cuts. Economists warn that the U.S economy may be experiencing stagflation, with slow hiring and raising inflation creating a tricky economy. Powell's remarks underscore the thin ice that policy makers tread upon in today's economic landscape.

https://abcnews.go.com/Business/fed-chair-powell-rising-inflation-slow-hiring-pose/story?id=125857000 

Gold Remains at Near Record Levels

Gold prices increased for the sixth straight week, and are holding near a record high price of $3,773 an ounce. Investors and traders have pushed money into the precious metal as crucial US Jobs data from the Bureau of Labor Statistics may be put on hold amidst a potential government shutdown on October 1st. If the jobs, and payroll data is not released this may force the Federal Reserve into an unclear position to cut rates, or to hold as they meet in October. 

Investors are also moving money to gold as Federal Reserve independence is becoming increasingly scrutinized and under fire. Barclays strategists have claimed that gold remains a good "value-hedge" to the US Dollar and Treasuries as more uncertainty is expected in the coming months. 

https://www.bloomberg.com/news/articles/2025-09-29/gold-holds-near-record-as-traders-weigh-us-shutdown-fed-rates?srnd=homepage-americas 

Gold and Other Commodities are Key to Hedging Potential Market Risks

Gold and other commodities are key to protecting portfolio's from unexpected risks such as inflation and supply shocks Goldman Sachs explains. Commodities outperformed in 2022 when the energy crisis kept equity-bond portfolios struggling. Goldman Sachs analysis shows that in a full year that had stocks and bonds showing negative returns, either gold or commodities had the exact opposite with a positive showing.

Preparing for the next couple year, commodities are expected to gain volume in their role with government using resources as leverage with the addition of supply chains tightening. By 2030 the U.S. is projected to supply a third of Global liquified natural gas exports, while China controls 90 plus percentage of rare earth refining. Energy persists as the most inflation sensitive hedge,  but other industrial metals and rare earths are close seconds reinstating why commodities are an important inclusion for portfolio diversification.

https://www.goldmansachs.com/insights/articles/why-investors-should-hedge-with-gold-and-other-commodities

Iranians Brace for Economic Impact of New U.N. Sanctions

 This past Saturday, the United Nations Security Council reimposed sanctions on Iran over the status of its nuclear program and lack of diplomatic cooperation. Such treaties and sanctions have existed for the past twenty years and were due to be up in 2025; this paired with the recent expansive enrichment of their uranium stock have created on-going global headlines. This news provides even more detrimental news for the Iranian people amid already destitute economic situations. Energy and water supply is extremely low, inflation is rising over 40%, unemployment is skyrocketing, and their currency is being devalued.

These sanctions and their consequences showcase the potential impacts of external forces such as foreign politics on the health of an economic system. The sanctions effect trade liberalization for Iran which can be directly seen through the devaluation of their currency and spiking inflation. Iran's mixed economy has facets of central planning by the government particularly over their oil industry. These externalities are accentuating the inefficiencies of the the command economy system. For instance, the government is currently rationing water and power usage throughout the nation. All in all, this situation highlights how outside factors effect the health of an economy.

https://www.nytimes.com/2025/09/27/world/middleeast/sanctions-iran-economy-snapback.html

Economic Growth Comes in Stronger in the Second Quarter

The Bureau of Economic Analysis showed that the U.S. economy expanded greater than they had predicted for the second quarter. GDP increased at 3.8% which was predicted to be 3.3% for the second quarter. This is largely driven by an increase in consumer spending. The tariffs that have been implemented have boosted domestic demand and a reduction in imports. Imports saw a major drop, which is the reason for a domestic demand increase. In the third quarter, it is being predicted that there could be growth from trades. 

While the gain follows a 0.6% contraction in the first quarter, many analysts stay to still be cautious with investments given the trade volatility. The cooling of the labor market is another risk that could affect the future GDP. Many believe that a soft landing is still possible, given the cut in interest rates, but it all depends on the inflation rate. 

 https://money.usnews.com/money/personal-finance/articles/economic-growth-comes-in-stronger-in-the-second-quarter 

Europe Markets European pharma stocks flat after Trump slaps 100% tariffs on medicine imports

    Despite the latest trade policy from the White House, European stocks finished higher Friday. The Stoxx 600 index rose 0.8% with the majority of major country benchmarks in green. However, pharmaceutical stocks were the exception to this. The sector traded nervously after Trump confirmed that the US will apply a 100% tariff on imported medicines starting on October 1st. He added that companies breaking ground on U.S. factories would be spared from the measure. Shares of Novo Nordisk, Zealand Pharma, and Orion all fell on the news. Despite this, firms could avoid a major hit if they continue with US-based production. 

    Trump also stated that heavy trucks imported into the US will face a 25% tariff starting next month. This adds another level of uncertainty into the current markets and global trade as a whole. In response, the EU stated that it may slap tariffs of up to 50% on Chinese steel to show Trump that it can respond with something that will affect America. Overall, while Europe’s markets closed broadly higher, the day’s moves reflected investors trying to balance optimism with a new batch of tariff battles and effects on certain sectors. 

Article: Europe markets Sept. 26: Trump's 100% pharma tariffs, FTSE 100

How Gender Equality Boost Economic Growth

 In the article, "How Gender Equality Boosts Economic Growth," the author analyzed the barriers gender created for economic productivity by country.  As industrial policy and protectionism have started to return to high-income countries, low and middle-income countries need to make sure they have efficient human capital to keep up. Women, for centuries, have had low labor force participation rates, as they are usually doing household chores, which, although they are jobs, do not fall into the LF participation rate. If barriers are removed, there could be a 15-20% increase in countries. Looking at countries worldwide, such as Egypt and Peru, if gender disparities were to decrease, then Egypt's income would rise by 24%, while Peru's would see a smaller, yet still impactful, increase of 5%. 

The main issue is the demand side, with discrimination by employers and supply distortions that have resulted. Barriers for women that have pushed them to adhere to social norms of staying home. By removing these demand-side issues, there can be a positive change for the supply side.  Would investment in gender equality be a smart move for governments to implement? Or would forcing equality ruin people's drive to work harder and maximize competition? 

Article: https://www.project-syndicate.org/commentary/gender-equality-boosts-economic-growth-at-low-cost-by-pinelopi-koujianou-goldberg-2025-09

Inflation stayed steady last month as Trump’s tariffs hit some prices — here’s what might feel most expensive

 Inflation in the U.S. is currently 2.7%, still higher than the Federal Reserve’s 2% goal. Prices are also much higher than before the pandemic—on average, things cost about 24% more than they did in early 2020. While inflation has dropped a lot since its 2022 peak, it’s not improving as quickly now because tariffs and higher import taxes are pushing up costs. Many businesses are passing these higher costs to shoppers, which is why prices for everyday items like coffee, eggs, beef, and even used cars are still rising. Core inflation, which leaves out food and energy, is at 3.1%, showing that the underlying price problem hasn’t gone away.

Economists expect inflation to stay elevated for a few more years, especially if tariffs remain high. This has made the Fed cautious about cutting interest rates further, which means borrowing money (for cars, credit cards, or homes) will stay expensive. For consumers, the big picture is that prices will likely keep rising slowly, and money doesn’t go as far as it used to. Even though inflation is much better than in 2022, it’s still a problem that affects shopping, saving, and planning for the future.

Source : https://www.bankrate.com/banking/federal-reserve/latest-inflation-statistics/ 

How Russia’s besieged economy is clinging on

 Russia’s economy, which has faced setbacks because of sanctions, war-expenses, and rising costs, has shifted from growth toward stagnation. GDP growth has slowed down and some indicators—like manufacturing purchasing manager indices—suggest real activity is contracting. Corporate cash flow has been weaker, wages are falling, and stock markets are under pressure. The authorities are pulling back on expansive fiscal stimulus, which tightens monetary policy, and trying to contain inflation through high interest rates. Despite the hardships, unemployment remains low and many Russians claim their individual economic situation remains reasonably good, largely because real wages are still relatively strong. 

It’s surprising that the Russian economy has managed to stay afloat under all the pressure. The fact that many citizens are still seeing slight improvements in wages and a relatively consistent quality of life is also surprising. Still, the strength of the economy is weaker than it seems. At the end of the day, Russia is still experiencing slow growth, falling profits, and rising inflation.

Source https://www.economist.com/finance-and-economics/2025/09/21/how-russias-besieged-economy-is-clinging-on

Consumer Spending Holds Up Despite Tariff Headwinds

Over the past few weeks, U.S. retail sales have surprised analysts by rising more than expected in August. According to this article, retail sales climbed 0.6% from July, with core retail sales (excluding volatile categories like autos and gas) up 0.7%. While higher prices resulting from tariffs are partly responsible for the increase, the broader rise shows some resilience among consumers. 

However, this strength in spending is happening alongside a weakening labor market and rising cost pressures. Import prices have edged up amid tariff increases, and many economists warn that these tariff-driven price hikes could erode purchasing power over time. Wages are not rising fast enough for many, especially those with lower incomes, causing concerns that the current strength in spending may not last.

Article: US retail sales increase strongly; softening labor market a headwind By Lucia Mutikani

Link: https://www.reuters.com/business/retail-consumer/us-retail-sales-increase-strongly-softening-labor-market-headwind-2025-09-16/?utm_source=chatgpt.com

Rising Interest Rates and the Housing Market

    Over the past couple of years the Federal Reserve has been raising interest rates to slow inflation. One side effect is that mortgage rates are now over 7%, which makes borrowing a lot more expensive. That has pushed many buyers out of the market and slowed things down.

    What’s interesting is that home prices haven’t dropped as much as you’d expect. Builders still face high costs for labor and materials, and zoning rules limit new supply. So even though fewer people are buying, there aren’t enough homes to really bring prices down. 

    This leaves a lot of people stuck. First-time buyers can’t afford to enter the market, while homeowners with older low-rate mortgages don’t want to sell. It makes me wonder how long high rates can last before either construction slows way down or prices finally adjust.

Sources:

https://www.freddiemac.com/pmms

https://www.nahb.org/news-and-economics/housing-economics