Something is comung?

April 26 – May 2, 2025

Big news: The official estimate of US GDP (-0.3% per quarter “on an annualized basis”) went into negative territory for the first time in 3 years:

Note that this is the official figure. If we proceed from the inflation assessment “according to Summers”, then the decline began a long time ago, if from the Khazin Foundation assessment (10-12%), then from the fall of 2021 at least. However, it can be noted that other data is also extremely bad. Thus, final sales (-2.5%) are the worst since the beginning of 2009, excluding the brief Covid slump:

At the same time, the forecast data is very bad. Thus, a number of experts estimate a drop in port occupancy in 2-3 months to 40%. This means a strong reduction in imports. The foreign trade balance deficit will, of course, decrease, but the GDP will fall even more.

Macroeconomics. China’s official manufacturing PMI (49.0) is the weakest in 2 years and in recession zone:

However, the independent review is not so gloomy (50.4 – better than expected):

Canada’s manufacturing PMI (45.3) is at a record low, excluding the 2020 Covid slump:

Norway (46.1) 10-year low (excluding Covid):

In Indonesia (46.7) the 4-year minimum:

And in South Korea (47.5) – in 2.5 years:

Industrial activity in the Texas Fed zone has hit rock bottom in 5 years, and 16 years if you exclude Covid:

Business confidence in Italy is at its worst since the peak of Covid, and before that, such numbers were only seen in 2009:

In Mexico, at least for 8 years (again excluding Covid):

Eurozone services sentiment is at its worst since late 2013 (not counting Covid):

Switzerland’s leading indicators hit 1.5-year lows:

And its economic sentiment index is for 2.5 years; its monthly collapse is a record:

US merchandise trade deficit hits record high:

Sweden’s PPI (industrial inflation index) is -3.0% per month; in all 35 years of data collection, it has only been lower once (-5.2% in January 2023):

Inflation expectations in Sweden (+9.5%) are the highest in 2 years and not far from the record peak of 2022:

How can this be? It’s very simple, the Swedish economy is in depression, and imports are rapidly growing in price. Such an economy simply cannot exist for long.

Inflation expectations in the eurozone are at their highest in 2.5 years:

US Manufacturing PMI Prices Paid Component at Nearly 3-Year High:

This is about the Trump-Powell discussion. You may not like Powell, but he has grounds for raising the rate.

US consumer sentiment (Conference Board version) has returned to the lows of Covid, before that the public was so pessimistic only in 2014:

Japan’s consumer sentiment at worst since early 2023:

The number of unemployed in Germany has been growing monthly for 28 months in a row:

It repeated the Covid peak and reached an 11-year high:

Number of US unemployment benefit recipients at 3.5-year high:

The same thing happens with the unemployment rate:

But the length of the working week has increased compared to the previous month:

True, the March data itself also grew, the previous ones were worse: https://fondmx.pro/en/weekly-wrap/granny-and-grandad-rock/

The Bank of Japan kept its monetary policy the same and lowered its inflation forecast.

Main conclusions. The economic situation has begun to deteriorate sharply around the world. Some of it can be blamed on Trump’s tariff wars (the state of logistics in the US, for example), but many indicators are not connected to this in any way. In general, the picture is quite depressing. Inflation is growing, both production and GDP are falling, and even sales are falling in the US (that is, the standard of living is falling).

To clarify the picture, let’s give Pavel Ryabov’s review of the US foreign trade balance.

“The fight against the trade deficit has led to the deficit reaching its highest ever – 162 billion in March vs. 92.7 billion in Mar.24, 82.6 billion in Mar.23 and 120.7 billion in Mar.22 (previously a record deficit for March and for any month). Between 2010 and 2019, the average deficit was 62.5 billion in March.

The trade deficit began to widen beyond the 100 billion per month level on a three-month moving average by Sep. 24 and continued to grow. By Dec. 24, the deficit reached 122.1 billion – this was already the maximum in history, exceeding the fantastic figures of the record deficit in 2022.

Under Trump, the deficit was 154.6 billion in January, 147.8 billion in February and now 162 billion in March, an average of almost 155 billion per month since the beginning of 2025. This is simply incredible! 55% higher than under sleepy Biden in 2024 and 75% higher than in 2023.

What is the reason for such a stunning growth of the trade deficit? Outpacing growth of imports due to expectations of tariff chaos from Trump and company.

Imports began to accelerate abnormally as soon as the contours of Trump’s new economic policy became clear (since Jan. 25), when the annual growth rate of imports was 26.1%, in February – 22.5%, in March – 30.8% y/y.

The current volume of imports is 342 billion per month and this is close to the theoretical limit (the capacity of commercial ports and the number of available container ships). Business is chartering everything that can be chartered.

The load on trade gateways has grown by a third since 2013-2024 and by about 60-70% since 2018-2019, but about 15-20% of the increase is the effect of price growth over 6-7 years.

The largest increase in imports is recorded in consumer goods – 55.5% y/y, followed by industrial goods – 37.8% y/y, capital goods – 22.2% y/y. Basically, businesses and the population are stocking up on durable goods.

Businesses are working for the warehouse, understanding that nothing good is expected in the next 4 years, but an attempt to buy a little time, probably 1-3 months of additional warehouse stocks to reconfigure trade flows.

At the same time, exports are practically not growing – 170-180 billion per month, which is comparable to the volume of exports in 2023-2024 with a growth of about 3-4% per year at par.

It is difficult to assess the short-term dynamics in foreign trade now, since the configuration of trade duties is still unclear.

It is highly likely that imports will remain at a very high level in the next three months, even despite the 10% duties for most countries, since businesses, assuming the madness of the Trump administration, will hedge risks through active accumulation of inventories, the same applies to the population.

Exports will not grow, but will tend to decrease mainly due to direct or hidden boycott of American products, which is very pronounced in Canada, Europe and China.

Trade with China has effectively stopped, and a 3-4-fold decrease in volumes should be expected.

In the next three months, the trade deficit may be in the range of 130-170 billion per month, which is twice the norm – these are the masters of trade deals that work in the US.”

Well, the future, taking into account the forecast data of US port workers and carriers, looks very difficult. Most likely, Trump’s tariff wars will lead to the fact that many productions within the US, connected with imported components, will sharply decrease. And the probability of the onset of the acute stage of the crisis has increased sharply.

So, although we wish our readers a good weekend and a successful work week, we recommend keeping your ears open and preparing as much as possible for various kinds of surprises. They are just around the corner