March 1-8, 2025
The fall of the financial markets in the US, of course, was a bright event, but it is simply a reaction to the introduction of duties on goods from Canada, Mexico and China for American consumers. But the concept of duties has been discussed for a long time, and for China they are already in effect, they have just been raised a little.
But a completely different moment became really interesting. The forecast for US GDP for the first quarter from the Atlanta Federal Reserve (the GDPNow model) now gives (it changes every day as data comes in) -2.8% quarterly, but on an annualized basis – in all 15 years of statistics, it was worse only once, at the peak of covid:
Рис. 1
We have already noted more than once that in reality, the decline in US GDP has been going on since the fall of 2021. But all American macroeconomic models underestimate inflation rates, so no one sees this decline in nominal terms. It is noticeable only in debt figures and in real sales of American enterprises, it is not for nothing that for a significant part of the time since the end of Covid, there was deflation in American industry:
And so, the above model somehow bypassed this inflation distortion. How it happened is a question, but such cases happen. And it is very interesting how this collision will be resolved, most likely, the model will be corrected so that this fall does not appear again. In reality, of course, this will not affect in any way.
Macroeconomics. Industrial production in South Korea -4.1% per year, the worst dynamics in 1.5 years:
Рис. 3
In France -0.6% per month and -1.6% per year, 5th consecutive monthly minus:
Рис. 4
Рис. 5
The UK’s construction PMI (an expert index of the state of the industry; its value below 50 means stagnation and decline) is the weakest in 5 years. A little more and there will be a 16-year low, and the housing sector has already shown it:
Рис. 6
Рис. 7
Mexico business confidence at its weakest since Covid:
Рис. 8
US trade deficit hits record high as imports soar by 10%:
Рис. 9
US Manufacturing PMI Input Price Component at 2.5-Year High:
Рис. 10
It will get worse as tariffs rise.
Switzerland CPI +0.6% m/m, repeating a 2-year high and only 0.1% below a 15-year high:
Рис. 11
Рис. 12
Indonesia’s CPI unexpectedly went into negative territory (-0.1% per year), for the first time in 25 years:
Рис. 13
Рис. 14
This is a sign of a recession starting.
US job cut announcements in February are the highest since 2009 (excluding Covid):
Рис. 15
Рис. 16
The seemingly benign report from the US Department of Labor actually contains multi-year anti-records. The broad unemployment rate (U-6) jumped by 0.5% to 8.0%. Excluding Covid, this is a 7-year peak:
Рис. 17
Adult labor force participation (excluding Covid) hits 48-year low:
Рис. 18
The average length of the working week has been at the bottom of 2020 for the second month now. And previously, such figures were in 2010:
Рис. 19
The ECB cut the rate by 0.25% to 2.65%, worsened the forecast for the region’s economy. The Central Bank of Turkey cut the interest rate by 2.5% to 42.5%.
Main conclusions. It seems that a sharp deterioration in the global economy has begun. We can refer to Trump with his graceful elephant in a china shop, but the increase in tariffs in the US has not had an impact on all indicators. Rather, we are talking about risks that all participants in economic processes consider to be excessive.
By the way, the fall of the American stock market is not a crisis at all. And Trump said directly that in the process of restructuring the economy there will be some decline in the standard of living due to rising prices. The problems are not in the financial sphere, they are in the sphere of the real economy.
By the way, the graph of French government bond yields shows that they are at their highest since 2011:
Рис. 20
This is, as you can see, a pure risk assessment. And the military preparations of the Euro-Atlantic elite, which now rules the European Union and Great Britain in the current situation, do not reduce these risks at all, on the contrary, they increase them. However, let’s see how this situation will develop further.
In the meantime, we congratulate our readers on the holiday of March 8 and to all of them pleasant gifts and an easy working week!