Economics

Summary

Trump wants to repeal the $52.7B CHIPS and Science Act, including $39B in subsidies and $75B in loans for U.S. semiconductor manufacturing, to reduce debt.

His administration is reviewing $33B in finalized grants, including $7.86B for Intel, $6.6B for TSMC, and $6.1B for Micron.

Critics warn this could jeopardize TSMC’s $100B U.S. expansion and Micron’s 50,000-job, $100B project in New York.

The Commerce Department has already cut one-third of its subsidy staff, signaling a policy shift that could weaken U.S. chip production and national security efforts.

Summary

Donald Trump’s tariffs on Canada and Mexico have unsettled markets, sparking fears of a “Trumpcession.”

Investors, once hopeful for a U.S. “golden age,” are now wary of economic uncertainty caused by shifting trade policies, Musk’s disruptive government layoffs, and unclear fiscal strategies.

Businesses and consumers are hesitating on spending, weakening growth prospects.

U.S. consumer confidence has dropped, and concerns over the dollar’s status as a global reserve currency are emerging.

Summary

The global economy risks a crisis akin to the 1930s Great Depression if the U.S. continues imposing steep tariffs, warns Andrew Wilson of the International Chamber of Commerce.

Trump’s 25% tariffs on Canada, Mexico,, and China have already taken effect, with Europe likely next, heightening fears of a retaliatory global trade war.

Economists caution that rising import costs could fuel U.S. inflation and damage trade-sensitive industries.

Non-paywall link

Summary

Warren Buffett criticized tariffs as “an act of war,” warning they function as a tax on goods and raise consumer prices.

His comments follow Trump’s decision to impose 25% tariffs on Canada and Mexico and raise tariffs on China from 10% to 20%, escalating trade tensions. Economists warn tariffs could worsen inflation and harm U.S. consumers.

Commerce Secretary Howard Lutnick dismissed Buffett’s concerns and falsely claimed tariffs could replace the IRS.

Buffett has long opposed tariffs, citing historical economic damage, including their role in worsening the Great Depression.

Summary

U.S. stocks fell sharply after Trump confirmed 25% tariffs on Canada and Mexico would take effect, with additional tariffs on China and agricultural exports coming soon.

The Dow dropped 800 points, the S&P 500 lost 2.1%, and the Nasdaq fell 3%, partly due to Nvidia’s decline. Economic data showed rising supplier costs, adding to concerns.

The stock sell-off erased early-year gains, and retailers warned of potential business impacts.

Some companies, like Chipotle, plan to absorb higher costs, while others expect price hikes.

Summary

Jeff Bezos has directed The Washington Post to only publish opinions supporting free market economics, prompting criticism that he is using his ownership to shield pro-capitalist ideology.

This shift comes after past editorial interference, including blocking an endorsement of Kamala Harris.

Critics argue Bezos’s claim that pro-market views are "underserved" is absurd, given their dominance in major newspapers.

The move highlights concerns over billionaire control of media and the suppression of alternative economic perspectives, particularly those advocating for greater government intervention and worker rights.

Summary

Warren Buffett criticized Trump's tariffs as inflationary and harmful to consumers, calling them "an act of war" that function as a tax on goods because "the Tooth Fairy doesn't pay 'em!"

This marks Buffett's first public comment on Trump's current trade policies, which include 25% tariffs on Mexican and Canadian imports and an additional 10% tariff on Chinese goods starting March 4.

Buffett previously warned about negative global consequences from Trump's aggressive trade moves during his first term.

Meanwhile, China has vowed to retaliate against the new tariffs.

Summary

The global shipping industry faces uncertainty as Donald Trump escalates trade tensions with new tariffs and proposed port entry fees on Chinese-built ships.

U.S. tariffs on China, Mexico, Canada, and the EU could disrupt trade, weaken container ship owners' pricing power, and increase costs for businesses and consumers.

Global supply chains are also strained by rerouting around the Suez Canal and climate-related disruptions.

Experts warn these policies could drive up freight rates and consumer prices while adding economic burdens to U.S. exporters and importers.

Summary

Commerce Secretary Howard Lutnick proposed separating government spending from GDP reports, claiming this would increase transparency as the Musk-led DOGE pursues spending cuts.

Economists warn this could distort a fundamental economic measure. Government spending is traditionally included in the GDP because changes in taxes, spending, deficits and regulations by the government can impact the path of overall growth.

Lutnick and Musk claim government spending doesn't create economic value, with Musk stating, "A more accurate measure of GDP would exclude government spending."

Critics note this downplays benefits of Social Security, infrastructure, and research.

Summary

China is considering tariffs on U.S. agricultural exports in response to Trump’s new trade measures.

These measures include raising tariffs on Chinese imports from 10% to 20% and ending the de minimis exemption for small shipments. Importers rushed to place orders before the increase took effect.

Chinese manufacturing saw a slight rebound, but analysts warn of an economic slowdown.

Meanwhile, China’s leadership continues efforts to boost consumer spending and support private industry amid trade tensions.

Summary

The Atlanta Fed’s GDPNow tracker indicates U.S. GDP may shrink by 1.5% in Q1 2025, reversing from an earlier 2.3% growth estimate.

Weak consumer spending and exports contributed to the downgrade, reflecting broader economic concerns. Inflation-adjusted spending dropped 0.5% in January, and net exports' contribution fell sharply.

Declining consumer confidence, rising jobless claims, and an inverted yield curve signal potential recession risks.

Markets now expect multiple Fed rate cuts in 2025, with an 80% chance of a June reduction, as economic uncertainty weighs on stocks and bonds.

Summary

Deere investors overwhelmingly rejected an anti-DEI resolution, with only 1.3% voting in favor.

The proposal, filed by the conservative National Legal and Policy Center, sought a report on racial and gender hiring statistics.

Deere, which recently distanced itself from LGBTQ+ pride events, faced scrutiny amid broader corporate retreats from DEI under pressure from the Trump administration.

However, investors at Apple and Costco have upheld DEI efforts, reflecting continued support for workplace diversity despite political opposition. Deere’s vote signals resistance to anti-DEI measures in the corporate sector.

Summary

A government report warns that Trump’s tariffs on Canada, Mexico, and China, along with federal job cuts, could hurt consumers and slow the economy.

While inflation has cooled to 2.5%, tariffs may drive prices higher, prompting companies to raise costs and cut jobs.

Consumer spending fell 0.2% in January, the most since February 2021, even as their incomes rose. Businesses fear volatility with growing economic uncertainty, with industries bracing for price hikes.

Economists warn tariffs could push inflation up 0.8 percentage points, potentially derailing economic stability and eroding consumer confidence.

Summary

Trump announced 25% tariffs on Mexico and Canada will begin March 4, claiming continued drug trafficking concerns despite earlier border enforcement pledges.

On the same date, China will face an additional 10% tariff, bringing total Chinese import tariffs to 20%.

This announcement contradicted earlier statements by White House Economic Director Kevin Hassett, who suggested all tariff decisions would come after an April 1 study.

Trump's broader tariff agenda includes global 25% steel and aluminum tariffs starting March 12 and reciprocal tariffs on nations with duties on US imports.

Summary

The 10-year Treasury yield has fallen below the 3-month note, creating an "inverted yield curve" that the Federal Reserve considers a reliable recession indicator.

This shift occurred as yields tumbled since Trump's inauguration, with investors concerned his tariff policies could spike inflation and slow growth.

Consumer sentiment surveys show increasing anxiety about inflation, with the University of Michigan reporting five-year inflation expectations at their highest since 1995.

Despite these warning signs, economists remain divided on recession likelihood, noting that while bond markets signal caution, the labor market remains strong without the job losses typically associated with recessions.

KEY POINTS

• Tesla shares sank 8% on Tuesday and have now lost most of their gains that followed Donald Trump’s election victory in November.
• The stock has plunged 25% this year, while the Nasdaq is down just 1.5%.
• Reuters reported on Monday that the company’s long-awaited upgrade of its partially automated driving system in China left owners unimpressed.

Summary

Tesla’s European sales dropped 45% in January, with market share falling from 1.8% to 1%.

This decline comes as CEO Elon Musk faces backlash over his political interventions, including support for Germany’s far-right AfD and ties to Donald Trump’s administration.

Tesla sales plummeted in Germany and France, and it trailed Chinese EV rival BYD in UK registrations.

Despite Tesla’s slump, Europe’s electric vehicle market grew by 34%, with Germany, Belgium, and the Netherlands posting strong gains.

Summary

Apple announced a $500 billion U.S. investment over five years, including 20,000 new jobs and AI server production, amid Trump’s tariff threats.

Plans include a Houston server factory, a Detroit manufacturing academy, and data center expansions. Trump took credit for the move, claiming his trade policies influenced Apple’s decision.

Analysts expressed skepticism about Apple’s ability to deploy the full amount, given its reliance on foreign suppliers.

Key revenue-generating products like iPhones remain manufactured abroad.

Summary

The Federal Reserve remains in a cautious "neutral" stance as it monitors economic uncertainties stemming from Trump's trade, immigration, and regulatory policies.

Fed officials, including Raphael Bostic and Jerome Powell, emphasize uncertainty’s impact on inflation and employment.

Inflation remains above the Fed’s 2% target, with concerns about persistent price pressures. The Fed is reluctant to adjust interest rates until inflation stabilizes.

Economist Mark Zandi warns of financial risks, particularly a potential bond market sell-off.

Summary.

While the overall U.S. economy appears stable, a stark wealth divide is emerging. High-income earners (roughly $153,000+ annually) are driving growth, while lower-income households ($73,000 and below) face increasing financial strain.

Consumer debt delinquency is at a near 5-year high, with credit card delinquencies over 90 days reaching 11%, a post-2011 peak. Newly delinquent credit cards are at 9%, also a 2011 high.

Minimum credit card payments hit a 12-year high, while credit scores above 750 reach record highs. Shares of those with scores below 600 have started rising after years of decline.

Nonprime borrowers see default and debt levels exceeding pre-pandemic levels.

Summary

A Harris poll found that 24% of Americans have stopped shopping at favorite stores due to political stances, with Democrats (45%) leading in consumer-driven boycotts.

The trend follows corporations rolling back DEI policies in response to Trump's presidency, triggering backlash from liberal shoppers.

Target, Walmart, and Amazon have scaled back diversity efforts, prompting boycotts and activist scrutiny. Meanwhile, Costco, Microsoft, and Apple have maintained DEI commitments.

The growing political divide in corporate policies has led some consumers to disengage entirely from the economy, choosing to spend less overall.

Summary

Tesla’s Q1 2025 deliveries are predicted to drop to 359,000 vehicles, a 7% year-over-year decline and a 27% drop from last quarter—its lowest level since Q3 2022.

Sales in Europe have fallen by 50%, while China sees a slight decline. The U.S. market remains uncertain but could determine the final numbers.

Analysts suggest the Model Y changeover will be blamed for the decline, though critics argue CEO Elon Musk’s influence is also a factor.

Earnings are expected to suffer, with similar justifications from Tesla.

Summary

The Dow Jones fell 748 points Friday, marking its worst day of 2025, as investors reacted to weak economic data and inflation concerns.

Consumer sentiment dropped sharply, existing home sales declined, and U.S. services activity contracted.

Fears over Trump tariffs and spending cuts further rattled markets.

The S&P 500 and Nasdaq also saw significant declines as investors shifted away from riskier assets.

Summary

Meta has approved a compensation plan allowing executives to receive bonuses of up to 200% of their base salary, according to an SEC filing.

The decision follows Meta’s announcement to cut about 4,000 jobs, roughly 5% of its workforce.

The company also reduced annual equity refreshers for employees by approximately 10%.

Meta justified the executive pay increase by stating that their cash compensation was below market rates.