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

Europe’s Economic Watch

Europe in late 2025 is seeing a cautious yet hopeful economic environment. While problems remain, there are signs the region is moving toward more stable ground. The European Central Bank has decided not to change its benchmark deposit rate, keeping it at 2%. Inflation in the euro-area is now around 2.1% (year-on-year for August), slightly above target but trending downward. Growth is modest, but recent data show slight upward revisions: 2025 GDP growth is now projected at 1.2%, up from earlier estimates of 0.9%. Europe is balancing inflation control with growth concerns. Persistent inflation, even at moderate levels, limits room to cut rates without risking price stability. Europe is at a crossroads where inflation is falling but not gone, growth is stable but modest, and external risks loom large. The region’s economy looks resilient in many ways but its future depends on how well policymakers navigate trade-offs and climate risks. 

Talks on Tariffs and TikTok

    Top U.S. and Chinese officials met in Madrid to extend a fragile trade truce that is going to expire in November. These talks covered tariffs, export controls, rare earth minerals, and the fate of TikTok, with tensions rising after fresh chip‑industry restrictions on both sides. China’s exports to the U.S. have fallen 15%, pushing Beijing to deepen ties elsewhere, even as it battles overcapacity at home. A potential Trump–Xi meeting at next month’s APEC summit could shape the outcome, but for now, the world’s two largest economies remain locked in a delicate balance between cooperation and confrontation.

Rappeport, A. (2025, September 15). U.S. and China hold fourth round of trade talks as TikTok deadline looms. https://www.nytimes.com/2025/09/14/business/us-china-trade-tiktok-negotiations.html

Trump Endorsed Changes to SEC Guidelines on Public Company Reports

 In a Truth Social post today, trump stated that companies should no longer be forced to report earnings on a Quarterly basis and rather on a semi-annual basis.

Trump states that: “This will save money, and allow managers to focus on properly running their companies, ... Did you ever hear the statement that, ‘China has a 50 to 100 year view on management of a company, whereas we run our companies on a quarterly basis???’ Not good!!!!”

This reflects statements made by both his opponents and large figures within the investing community, such as Jamie Dimon of JPM Chase, Warren Buffett, and Hillary Clinton. It is alleged that this quarterly reporting practice has resulted in less publicly traded companies as they don't want to have the restriction of being short term rather than long term growth.

This idea is pending SEC review, however it has been pushed for by both private and public figures, and it seems very likely that this would be approved. Some of the key drawbacks are: lack of data being reported for economists & policy makers (i.e. travel demand shifts, loan losses, and updates on innovation driven economic booms [such as AI]). "Moving to a six-month reporting period could delay those insights and exaggerate stock moves during shifts in the economy and various industries."

Source: https://www.cnn.com/2025/09/15/economy/trump-quarterly-reporting-sec-earnings 

Rise in U.S. Inflation

     U.S. inflation picked up in August, making things tricky for the Federal Reserve as it considers cutting interest rates. On one hand, slower job growth is raising concerns relating to the labor market. On the other, rising prices make the Fed cautious about moving too quickly. The latest Consumer Price Index showed inflation up 2.9% from last year, the fastest pace since early 2025. Core inflation, which excludes food and energy, held at 3.1%. Month to month, overall prices rose 0.4%, while core prices rose 0.3%, both slightly above expectations. The Fed has kept interest rates steady at 4.25%–4.5% this year after a series of cuts in late 2024. A big reason for the pause is concern over tariffs, which have driven up the costs of goods. Economist Nancy Lazar explained, “Tariffs are a tax… only companies with strong pricing power are holding up.” Several areas are fueling higher prices. Gasoline rose 1.9% in August, airfares spiked nearly 6%. New cars rose 0.3% and used cars climbed 1%, about 6% higher than last year. Housing costs went up 0.4%, and food prices increased 0.5%, with coffee alone surging 21% from a year earlier.

    There was some relief, as utility gas and certain medical goods fell in price. The labor market adds another layer of complexity. Hiring has slowed, partly due to immigration restrictions, while layoffs remain low and unemployment is holding at 4.3%. That puts the Fed in a tough spot, they can cut rates to support jobs, or they keep rates high to control inflation. In the end, the Fed is will probably take things slowly. Rate cuts could help workers, but inflation isn’t going down fast enough. For now the central bank will probably move carefully, aiming to support the economy without letting prices spiral again.

America’s economy defies gloomy expectations

 While forecasts and public beliefs expected a slowing of the economy, the U.S. economy has been steadfast and has surpassed expectations. GDP growth has become stabilized as the latest quarterly numbers showcase a higher than expected annualized increase. Fears of high interest rates have led to worries in the U.S. economy; however, strong consumer spending, strong labor market, and historically low unemployment are the key factors supporting this resiliency. Core inflation is still above the Federal Reserve's target, yet it is appears to finally be steady and under control. Three rate cuts this year are expected due to this unexpected strength of the economy which will ease this tension. Interestingly, the slow job growths, as the article states, should be taken with the context of slower population growth. The American Enterprise Institute and Brookings Institution believe the net migration number to be between -500,000 and 100,000 significantly lower than the 2 million expectation.

https://www.economist.com/finance-and-economics/2025/09/14/americas-economy-defies-gloomy-expectations

China is Ditching the dollar

     China is pushing to elevate the value of the yuan, the Chinese currency, as trust in the dollar wanes by the day. Currently, the dollar is looking weaker due to America's rising debt, political uncertainties, and some uncertainty surrounding the banks. At the same time, China has been building its own financial systems, including a dollar-free payment network and a digital yuan. China is doing this in order to make it easier for countries to trade and invest without using dollars. China has also made deals with banks and shifted much of their overseas lending into yuan rather than the dollar. This move by China allows them to stay protected from US sanctions and gives other countries a reason to use the yuan. 

    With all this being said, the yuan isn't replacing the dollar anytime soon. Only a small percentage of global payments and reserves are in yuan. The dollar is still dominant, and that's why China is pushing for other countries to issue yuan-denominated bonds, along with using their new digital payment systems. Overall, China is more focused on creating a trade world where there are several strong currencies, and hopefully for China, that includes the yuan.  

Article: China is ditching the dollar, fast

European Stocks Are Forecast to Rise 5% After 'Stellar" Start

     The European stock market had a strong start to 2025, their equities on the Continent initially have been outperforming the United States. Although, the STOXX 600 index of large European companies has nearly flat lined since March. It has been weighed down by weak corporate warnings and higher valuations. Goldman Sachs Research forecasts the STOXX 600 will rise about 5% to 580 over the next year (as of September 1). They are predicting a 12-month total return, including dividends, of 8%. 

    European's equities are relatively more expensive now then they were at the beginning of 2025. The forward price/earning ratio has risen to 14.4. This number puts European equities in the 70th percentile of there historical value range which goes back to the year 2000. The European stocks are expensive in absolute however they are still cheaper than U.S. stocks. 

    Sachs expects the euro to about 7% to 1.25 versus the American dollar over the next year. This would lead to a significant drag on European companies' as the relative value as the relative value of their sales in the US decline. This will result in domestic-focused companies will benefit. The European equity funds are now seeing inflows after having outflows from 2022-2024. The value stocks are outperforming in Europe which is the opposite than the US. Europe's growth stocks are pressured by failing USD, slower US growth, rising trade barrier, and China who is now a competitor, not a growth driver. 

https://www.goldmansachs.com/insights/articles/european-stocks-forecast-to-rise-after-stellar-start

Posted by: Chanden

Trump's tariffs are slowly finding their way into consumer prices

    U.S. inflation data released in 2025 shows that tariffs are increasingly raising the cost of goods, clothing and auto parts. Prices of apparel, audio products, groceries, new cars, furniture and hardware all grew by anywhere between 0.3%-0.8%. Coffee prices rose 3.6% from the  month as is up 20.9% from a year ago. These prices may not seem to sound dramatic but they are enough to give both consumers and federal reserve policymakers at least some cause for concern. These tariff price pressures are hurting consumers at a time where the labor market is already showing signs of concern. 

   

    Economists believe that these tariffs are hitting the middle class the hardest for their basic necessities like gas, food, clothing and housing as their continues to be a rise in cost. Trump stated that he believes the tariffs wouldn't drive inflation higher. Over the next couple of weeks, central bank officials are set two meet whether to lower their key overnight fund rate, currently around 4.3%. While the tariff driven price increase in these goods are very concerning they could just be temporary. Along with that, the federal reserve cutting rates might provide short-term relief to borrowers and keep growth moving.     

https://www.cnbc.com/2025/09/11/trumps-tariffs-are-slowly-finding-their-way-into-consumer-prices.html

BlackRock Seeks to Tokenize ETFs After Bitcoin Fund Breakthrough

 Olga Kharif, editor at Bloomberg Media, has written an article discussing BlackRock, the worlds largest asset manager exploring a revolutionary new use for blockchain and tokenization. BlackRock is exploring the possibility of tokenizing ETF's and listing them on the blockchain. This idea would revolutionize the way that exchange traded funds are traded, moving them into the blockchain era. The benefits of tokenizing assets would allow for easier access to markets, around the clock trading, and creating new uses for collateral across the crypto industry. 

BlackRock has been a leader in tokenizing assets, and sees strong potential in the future of the marketplace. In 2024 Blackrock launched BUIDL, a money-market fund which has grown to over $2 billion in value. BlackRock also released a spot Bitcoin ETF, which has become one of the most popular funds of its kind. 

There are a lot of regulatory issues that need to be resolved prior to the legalization and broad based acceptance of tokenizing assets. Currently, ETF's settle through traditional clearinghouses whereas Tokenized assets move instantly. Compliance, custody and settlement speed of deals are some of the many problems. BlackRock is moving forward with this new business function because the Trump administration has showed a willingness to test blockchain situated markets in controlled circumstances. 

https://www.bloomberg.com/news/articles/2025-09-13/warner-bros-brings-big-win-for-fallen-angel-debt-credit-weekly?srnd=phx-markets

The Hybrid Adoption Continues to Rise as People Step Away from EV

 Goldman Sachs has lowered its forecast for global Electric Vehicle adoption. They project that EVs will account for 25% of global sales by 2030 which is down from 28%, and they additionally project that by 2040 EVs will account for 52% which is down from 59%. The main two reasons of this slowdown are the early expiration of EV tax credits in the US, and also regulatory changes in the U.S. and Europe, including relaxed fuel economy standards. However, in China, the strong demand keeps its forecast unchanged. EV sales are continuing to rise their while in North America and Europe EV momentum has slowed. 

On the other hand hybrid vehicles are expected to have a gain in market share. Goldman Sachs Research sees hybrid vehicles  making a push as they project up to 12% of global sales by 2030 and 9% by 2040 both more than what they were projected in earlier forecasts. This shift benefit your traditional automakers, who can be efficient in producing a mix between hybrids and EVs. As a result of this, profit margins are projected to rise by up to 3 percentage points, which would be around 20 billion dollars in pre-tax earnings. 

https://www.goldmansachs.com/insights/articles/hybrid-adoption-to-rise-as-electric-vehicle-momentum-slows

Consumers Faced Higher Inflation in August as Housing, Groceries Spike

 Consumer prices rose more than expected in August, mainly because of higher housing and grocery costs. The Consumer Price Index (CPI) increased 0.4% for the month, bringing the annual inflation rate to 2.9%, slightly above July’s 2.7%. This rise in essential goods means many consumers are feeling more financial pressure, especially as wage growth begins to slow down. The data suggests that the cost of living continues to climb despite earlier signs that inflation might be cooling.

The report comes just before the Federal Reserve’s meeting, where officials are expected to cut interest rates to support a softening job market. Even with slightly higher inflation, markets are predicting a quarter-point rate cut, with more cuts likely later this year. The Fed’s decisions are also playing out against a political backdrop, as President Trump has criticized Chairman Jerome Powell for keeping rates too high and is attempting to remove a Fed board member, a case now heading to the Supreme Court.

Source : https://money.usnews.com/money/personal-finance/articles/consumers-faced-higher-inflation-in-august-as-housing-groceries-spike 

Deflation in Asian Economies

 As American inflation is rising, Asian inflation (except for Japan and Bangladesh) has fallen. In fact, prices in both China and Thailand are falling, many other countries within Asia are also falling. My own personal theory going into this article was that the Tariffs are playing as a demand shock, which gives a higher amount of supply, thus making the goods less valuable. However the article contends that firms "frontloaded" shipments before tariffs were in place, where exports to America had widely increased whereas the prices increased moderately compared to G20 countries and started dipping into the negatives as of late.

The article theorizes that there were several causes to the deflationary period such as:

    1. China's overcapacity causing domestic inflation while spreading deflation to countries reliant on Chinese goods. "China’s export-price index has fallen by 15%, even as exports have risen. Although the spillovers are global, Asian economies have probably been hit hardest. Over the same period, China’s goods-trade surplus with developing countries in Asia has almost doubled."

    2. Commodity markets for fuel and food have been cooling down. "The decision of the Organization of the Petroleum Exporting Countries and its allies to ramp up drilling has kept oil prices quiescent. Meanwhile, food inflation—which has been high for years because of the war in Ukraine and damage to harvests from hot weather—has subsided."

    3. Demand within Asian countries has been weakening over time, while business cycles are not as fruitful as they had hoped.

    4. Wage growth within Asia has deaccelerated. 

The article does, however, state that the Tariffs (if they are not adjusted or repealed) will further entrench the cooling of inflation. 

Source: https://www.economist.com/finance-and-economics/2025/09/01/the-threat-of-deflation-stalks-asias-economies 

The US Factory spending $100,000 a month more due to tariffs

 This article by the BBC examines how industrial towns in the U.S. are experiencing the real effects of tariffs imposed under President Donald Trump.  It focuses on a Massachusetts town that once thrived on textile production. Trump's promise was that tariffs would protect U.S. industries from foreign competition, bring back jobs, and restore economic growth. However, this article shows that the policy has produced disappointing results. 

   Local businesses state that tariffs have raised the costs for materials and disrupted supply chains, making it more difficult to compete. Workers and factory owners voice their frustration with the new tariffs. This article shows the competing visions for America’s economic future. These tariffs appeal to the people who want to protect domestic jobs and punish foreign competitors, mostly China. However, it shows the challenges of implementing these protectionist policies in a globalized economy. For the factory owners in Massachusetts, tariffs have done nothing but harm the industry. 

Article Link: https://www.bbc.com/news/articles/c3rvdxz9589o?accountMarketingPreferences=off

Fed Signals Rate Cuts Ahead as Tariffs Shift Growth Dynamics

New York Fed President John Williams recently suggested that interest rate cuts could be on the horizon if inflation continues to cool and unemployment edges higher. Projections now show inflation dropping from around 3% this year to the Fed’s 2% target by 2027, with GDP growth forecast to slow to roughly 1.25–1.5% next year. While tariffs have added about 1–1.5% to inflation, Williams emphasized that the Fed remains “data-driven” and will adjust gradually.

This outlook highlights the balancing act facing policymakers. Rate cuts may ease borrowing costs and support growth, but the effects of tariffs, higher prices, and international trade frictions add uncertainty to the mix. With global demand uneven and job growth slowing, the Fed’s next moves could determine whether the economy maintains steady growth or risks sliding into a more prolonged slowdown.

Article: Fed's Williams sees gradual rate cuts but lets data drive when they'll happen by Michael S. Derby

Link: https://www.reuters.com/business/feds-williams-sees-gradual-rate-cuts-lets-data-drive-when-theyll-happen-2025-09-04/?utm_source=chatgpt.com

Why the private sector can’t replace U.S. government data

 A very timely discussion about why the private sector cannot collect information in the same way as the government can. This ties nicely into our discussion of perfect markets where information is necessary for the efficient functioning of markets. Private firms can and do provide some statistics, but the article argues that many area are neglected by the private market. One can classify this as an example of positive externality where a social benefit of information is greater than the private benefit to a firm generating the information. Hence, we would expect that information would be undersupplied and overpriced compared to a situation where firms could capture the externality. Perhaps that is a justification for the government to provide information.

The Myth of American Deindustrialization

Manufacturing in the United States has fluctuated in recent years, as US-based businesses moved labor-intensive manufacturing overseas.  These are profit-driven changes to produce low-cost goods for low-income households. Recently, the POTUS has debated the security behind industrial supply chains and wants to "bring factories back" to the United States. Data released by the US Bureau of Economic Analysis (BEA) estimates that by 2024, stock in US direct investment in manufacturing abroad was $1.1 trillion. While China was estimated to run at $200 billion. This is because overseas industrial operations are not included in national accounts and could be the reason why US-based workers felt these consequences more than the US stock markets. 

If we try to bring old manufacturing back to the US, it will only hurt the American people. It was a smart move for the US to abandon manufacturing when we did. As technology advanced, the employment per output shrank dramatically. During Germany's run as a top manufacturer, it only saw a rise in unemployment numbers. As higher-value goods were being produced by robots, fewer workers were needed for their skills. Will large American corporations continue production internationally, or will trade tensions bring labor-intensive manufacturing back to the United States? Who will be the most affected by these changes??

https://www.project-syndicate.org/commentary/us-manufacturing-globally-dominant-deindustrialization-a-myth-by-jorge-arbache-and-otaviano-canuto-2025-09

Wall Street sees September rate cut as sure thing — CPI inflation data will have much to say about what comes next

 Markets are bracing for September to be the month that the Fed decides to cut the interest rates after the weakest jobs data in years was reported for August. There was just a 22,000 payroll rise, and traders see a 100% chance of at least a 25-basis point cut and even some odds of a 50-basis point move. This is a signal of how quickly the opinions have shifted to the thought that the labor market might be cooling down. Fed officials are still claiming that the upcoming CPI will be crucial in determining how to adjust the pace of the cuts. Investors feel that with soft labor data and sticky service inflation, the picture and indicate a drop in interest rates.

In the longer-term tariff, related price pressures pose a key risk. More analysts warn that if more of the tariff impact filters through to consumer prices, core inflation could remain above the Fed's 2% target. This would limit how far policymakers can go. Markets have penciled in multiple cuts into 2025-2026; however, these cuts may be overly optimistic. Gradual cutting should support the equity markets in the short term, given the weak labor data and persistent inflation that will define how aggressive the Fed can be. 

https://www.msn.com/en-us/money/markets/wall-street-sees-september-rate-cut-as-sure-thing-cpi-inflation-data-will-have-much-to-say-about-what-comes-next/ar-AA1M3E6L?ocid=BingNewsSerp

What the Rates of Workers Switching Employers or Holding Multiple Jobs Can Tell Us

 The St. Louis Fed recently analyzed how the portion of American workers who work multiple jobs has changed since the pandemic. During the COVID-19, the rate of people working multiple jobs dipped to around 4%. This was significant because this was historically low. Since then, around March 2025, that rate had recovered to about 5.5% which translates to over 8 million people. Alongside that, the number of people working multiple part-time jobs also fell between March and July, which could indicate that some workers returned to full-time roles or quit their part-time employment.

These changes are important and have some implications for the labor market. Rising rates of people holding multiple jobs often indicate financial pressures or when money is tight. On the other hand, it’s important to consider that some of this increase may not be because of financial pressure, but rather done willingly because of life-style changes or related circumstances. At the end of the day, the consistency of millions of people working more than one job highlights the current challenges in the economy and home income. 

Source: https://www.stlouisfed.org/open-vault/2025/aug/workers-switching-employers-holding-multiple-jobs

Markets Stumble Out of Long Weekend

With Labor Day weekend coming to a close, the stock market opened September on a weak note. The S&P 500 fell roughly 0.7% and the Nasdaq 100 fell nearly 1% after large tech stocks pulled back. Nvidia was one of the biggest movers, losing 1.5% ahead of the market opening. Investors are worried about high-tech valuations and increasing U.S. government debt.

It wasn't just stocks under pressure; global bonds also sold off, pushing yields higher. The U.S. dollar posted its biggest one-day gain (about 0.9%) since July, following a six‑day losing streak. This was due to better-than-expected manufacturing data. Gold rose to an all‑time high of over $3,500 an ounce as investors expect possible interest rate reductions this month. 

Van Vuuren, A. J. (2025, September 1). Stocks fall as rising yields stir investor jitters: Markets wrap. Bloomberg. https://www.bloomberg.com/news/articles/2025-09-01/stock-market-today-dow-s-p-live-updates

The economy rebounded and has grown 3.3 percent in the second quarter

U.S. Economy Rebounds in Second Quarter 2025

  The U.S. economy showed a strong rebound this spring, bouncing back from a weak first quarter that was largely attributed to the Trump administration’s escalating of trade wars. According to the Commerce Department, gross domestic product (GDP) expanded at a 3.3% annual pace from April through June, an upward revision from the initial 3% estimate released in July.

This follows a difficult start to the year, when GDP contracted by 0.5% in the first three months of 2025. Economists largely blamed this downturn on a surge in imports as businesses rushed to stock up on foreign goods ahead of Trump’s tariffs. Since imports are subtracted from GDP, this created a temporary drag on growth.

In the second quarter, however, the trend reversed, imports fell at a 29.8% annual pace, boosting GDP growth by over 5 percentage points. While this provided a temporary lift, some economists caution that it does not necessarily signal long-term economic strength.

 President Donald Trump holds charts as he speaks about the economy in the Oval Office of the White House, Aug. 7, 2025, in Washington.

Q2 growth looked strong on paper, but most of it came from a one-time collapse in imports. Consumer spending is improving, but weak investment and shrinking government spending still suggest that more challenges may be ahead.

source: https://www.usnews.com/news/business/articles/2025-08-28/us-economy-grows-3-3-in-second-quarter-government-says-in-second-estimate-of-april-june-growth 

Global Music Industry Faces Slower Growth but Promises Long-Term Potential

     Last year the global music industry grew significantly less than it did in 2023, growing only 6.2% compared to 15.6%. Despite these current setbacks, analysts from Goldman Sachs are very optimistic about the future economic growth in the music industry. These projections are very bold, as Goldman Sachs is projecting that the industries revenue is going to almost double in the next 10 years reaching a new milestone of 200 million. However, this report explained that the path to reaching 100 million in 2024 is going to be a lot different in the next decade.

    There are going to be a lot of key factors that change the way the music industry generates revenue within the next 10 years. Emerging streaming markets that are specific to Africa, Asia, and Latin America are expected to develop as internet access in these areas grows a new wave of subscribers will join. Additionally an integration of video content is expected to arise as streaming services will make music videos, live sessions, and even interactive experiences. Lastly, new monetization models will surface giving artists more profit while increasing the engagement of the fans. Overall, even with a down year in growth for the music industry, experts believe with emerging streaming markets, new video content and monetization models the music industry will go nuclear in the next decade.

https://www.goldmansachs.com/insights/articles/global-music-revenues-are-forecast-to-double-to-200-million-in-2035

Germany issues with higher inflation and unemployment has reason for concern

        Germany, like much of Europe, is having a huge issue with unemployment and inflation issues in their economy this summer. Germany's inflation rose higher than expected to 2.1% in August while in July it rose at a much better 1.8% .During this core inflation, which strips out the food and energy inflation stayed at steady 2.7% while unemployment rose much higher with it reaching 6.4% which is well above where they want to be. These pressures are being compounded by wider issues of the newly implemented U.S. tariffs, which could have an even worse affect in the months ahead. 

    The U.S and EU struck a trade agreement in July, which included a 15% tariff rate on much of the exported goods into the U.S. economy. This has a huge affect on Germany because of their highly export-driven economy which could cause an overcapacity at home, lowering the prices of these goods. These decisions have already contracted the country's GDP expanding by 0.3% in quarter one, and then contracting by 0.3% in the next period. The full impact of the tariffs remain very much uncertain, but they could cause the Central Bank to consider cutting rates at their next couple of meetings. 

https://www.cnbc.com/2025/08/29/german-inflation-august-2025.html