Rupee stays pressured near record low levels amidst tariff concerns; RBI eyed
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Time of India
4 minutes ago
- Time of India
Top economist issues chilling recession warning: The Fed can't save us this time
US recession warning 2025: A series of concerning economic reports have put US households and businesses on alert, indicating a potential recession. Flat consumer spending, shrinking factories, and stalled hiring are key indicators. Economist Mark Zandi warns that the economy is on the "precipice of recession," attributing the slowdown to President Trump's trade and immigration policies. Tired of too many ads? Remove Ads Economist Mark Zandi Warns: 'The Economy Is on the Precipice of Recession' Sluggish Hiring Numbers Raise Concerns Tired of too many ads? Remove Ads GDP Growth Hides Weakness in Core Domestic Demand Rising Core Inflation Limits Federal Reserve's Response Options Housing and Manufacturing Sectors in Decline Why the Unemployment Rate Isn't Telling the Full Story Tariffs and Immigration Crackdowns Are Slowing Growth FAQs Tired of too many ads? Remove Ads US households and businesses are starting the week on edge after a series of economic reports painted a troubling picture: consumer spending is flat, factories are shrinking, and hiring has stalled, as per a Analytics chief economist Mark Zandi highlighted that 'The economy is on the precipice of recession. That's the clear takeaway from last week's economic data dump,' as quoted in the Fortune report. This warning comes amid growing signs that US president Donald Trump's trade and immigration policies are dragging down growth, according to the warned that, 'Consumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall. And with inflation on the rise, it is tough for the Fed to come to the rescue,' as quoted in the Fortune READ: Social security shake-up: Trump's new move has retirees fuming — here's what you need to know The latest job growth numbers came in far below expectations, as payrolls increased by just 73,000 in July, well under the forecast of roughly 100,000, as reported by Fortune. Even more alarming, May and June saw steep downward revisions, May was cut from 144,000 to 19,000, and June from 147,000 to just 14,000, according to the report. That means the average monthly job increase over the past three months is now only 35,000, suggesting a slowdown in momentum that can't be ignored, as reported by Gross Domestic Product (GDP) grew faster than expected in Q2, but a closer look reveals weak underlying demand because a key gauge that strips out foreign trade and focuses on total domestic consumption shows the economy is in a slowdown phase, as reported by READ: As the July jobs report paints a grim picture, 114 companies plan layoffs in August - is yours on the list? Meanwhile, the core inflation rate, which excludes volatile food and energy prices, rose to 2.8%, surpassing the Federal Reserve's 2% target, according to the report. That combination of weakening growth and sticky inflation presents a real challenge for policymakers, as per data this week showed construction activity falling, notably in single-family home spending, and the Institute for Supply Management's manufacturing activity index for July slipped, signaling contraction in a vital sector of the economy, according to the the unemployment rate remains steady between 4% and 4.2% for more than a year, but that is because the size of the labor force has stagnated, as reported by Fortune. Zandi pointed out that the foreign-born workforce has plunged by 1.2 million in the last six months amid Trump's immigration crackdown, while the overall labor participation rate has fallen, as reported by attributes much of the slowdown to tariffs and restrictive immigration policies, both of which he says are squeezing profits and shrinking the economy's potential, according to the report. He observes an economy-wide hiring freeze, especially hurting recent graduates entering the workforce, as per the Fortune economist explained, 'It's no mystery why the economy is struggling; blame increasing U.S. tariffs and highly restrictive immigration policy,' adding, 'The tariffs are cutting increasingly deeply into the profits of American companies and the purchasing power of American households. Fewer immigrant workers means a smaller economy,' as quoted by officially, but economists say the warning sign like weak hiring and flat spending are piling up, as per the Fortune not right now. Inflation is still above the Fed's 2% target, so they're holding off on rate cuts.
Economic Times
6 minutes ago
- Economic Times
US effective tariff on Indian goods jumped to 20.7% from 2.4% last year: Fitch Ratings
Synopsis Fitch Ratings reports a significant increase in US tariffs on Indian goods by 2025. This rise to 20.7% from 2.4% may hinder India's economic expansion. Goldman Sachs has already lowered India's growth forecasts. HDFC Bank also anticipates a GDP growth reduction. Moody's Ratings suggests potential challenges for India's manufacturing sector. However, India's economy is expected to remain resilient. Agencies New Delhi: The US effective tariff rate on Indian goods rose to 20.7% in 2025, up from 2.4% in 2024, due to the addition of an 18.3 percentage point increase this year, according to Fitch Ratings. The increase in tariffs poses some downside risk to India's economic growth. Overall, the US effective tariff rate is now 17%, around 8 percentage points lower than April 3 estimate, when higher reciprocal tariffs were originally announced, it said on Monday. "The US tariff rate of 17% reflects a 15% tariff rate on EU goods, including auto and auto parts, and higher tariffs for major trading partners Brazil, Taiwan, India and Switzerland," it added. Last week, US President Donald Trump announced 25% tariff on Indian goods, along with an unspecified additional penalty related to India's energy dealings with Russia. Goldman Sachs on Monday cut India's economic growth forecast to 6.5% for 2025 and 6.4% for 2026, due to US tariffs. "In our view, some of these tariffs are likely to be negotiated lower over time, and further downside risk to the growth trajectory mainly emanates from the uncertainty, " it to HDFC Bank, the tariff poses a downside risk of 20-25 bps to India's GDP growth. Christian de Guzman, senior vice president, Moody's Ratings, said, "Curtailed access to the largest economy globally diminishes prospects for India's ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics".He, however, added, "India's economy is expected to remain resilient as it is less trade-reliant than other large economies in the Asia-Pacific."
Economic Times
6 minutes ago
- Economic Times
Trump 2.0's China playbook ruffles partners. Outreach to Pakistan, cold-shoulder to Taiwan during China talks raise concerns
Synopsis Donald Trump's recent moves suggest a softer stance on China, raising concerns among allies like India and Taiwan. Hosting Pakistan's army chief, cancelling a Taiwan dialogue, and lifting Nvidia's AI chip ban are seen as major shifts. Critics warn these concessions, driven by trade pressures and political deals, undermine long-term Indo-Pacific strategies and sideline key partners in countering China. Is there a shift in Trump's China policy? While it's too early to make that call, there are worrying indications that point to a more accommodating Trump trade posture on China even if it means reversing his own security decisions. For India, the Quad and most of the Indo-Pacific, that's worrying as it's accompanied by no exception for allies or partners on the tariff begin with, he is cold-shouldering Taiwan while warming up to China's all-weather friend Pakistan. In June, Trump hosted Pakistan Army Chief Gen Asim Munir in Washington, but in the same month, his administration apparently cancelled a planned defence dialogue with Taiwan as trade talks with China were on. Just recently, Taiwan President Lai Ching-te called off a trip to South America because US did not allow him a stopover, though Taiwan sought to cover for the embarrassment by citing other pressing engagements as most glaring, one on which there is considerable discomfort within his own camp, is removing restrictions on Nvidia to resume selling of H20 chips to China for AI development. Trump had imposed these restrictions in April following China's surprise advancement with DeepSeek. It emerged that the H20 chips, which were customised for China and meant to be slightly less advanced than the high-end H100 Nvidia chips for AI, were in effect not that July 28, a bunch of former security officials, including Matt Pottinger, former Deputy NSA in Trump 1.0, wrote to US Commerce Secretary Howard Lutnick urging him to reconsider the decision. The letter stated that H20 was a "potent accelerator" of China's AI capabilities and was "not an outdated chip". It warned that H20 outperforms the H100 in "inference tasks" and should not be other worry highlighted in the letter was that H20 will never be restricted to just the civilian domain and will support China's military purposes under its "military-civil fusion strategy". But it appears the call was made during a meeting between Trump and Nvidia at an expensive Mar-a-Lago dinner. Even China has found this US backing-off difficult to digest. Its Cyberspace Administration summoned Nvidia officials with questions on whether the H20s have a backdoor that enables unauthorized access and surveillance. The US company has denied it, though Beijing is likely to carry out its own all the tough talk on China, these are significant concessions from Trump, some through individual deals and others due to the political pressures arising from squeezing Chinese supply chains, especially on rare earths and magnets, without credible actions, however, sit oddly with his MAGA politics and Trump's core support base. And so, indications are that they are going ahead with their own play in the US Congress. Amid all the cautiousness in White House on China, a bipartisan bill called the Uyghur Genocide Accountability and Sanctions Act of 2025 was moved recently in the US the legislation was moved by the Republican Senator Dan Sullivan, who chairs the Congressional-Executive Commission on China and co-sponsored by Republican Representative John Moolenaar, who heads the House Select Committee on the Chinese Communist Party. Several Democratic Congressmen have supported the legislation, which seeks to expand existing sanctions, imposes visa bans and restricts U.S. government contracts linked to forced many ways, the limits of Trump's transactional approach have hit the Chinese wall. Given China's dominance in trade and supply chains, the plan was always to adopt a coordinated strategy with allies and partners to develop alternatives. Because for now, China literally holds the the Trump Administration has ended up in a bargaining match with Beijing, which might get some purchase in the short term, but has put its main partners in building and executing the long-term counter China strategy in question - namely Taiwan and the Quad.
