10 Things You Need to Know: April 8, 2025
Key data releases this week include: NFIB Small Business Optimism (Tue), FOMC meeting minutes (Wed), CPI (Thu), PPI (Fri), and consumer sentiment (Fri).
Haver
April 3, 2025
The U.S. trade deficit in goods and services (BOP basis) in February narrowed to $122.7 billion, after widening to a record $130.7 billion in January. $123.5 billion deficit was expected by the Action Economics Forecast Survey.
Haver
April 4, 2025
Nonfarm payrolls increased 228,000 (1.2% y/y) during March after rising 117,000 in February. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 152,000. Average hourly earnings rose an expected 0.3% during March after increasing 0.2% in February. The unemployment rate, measured in the household survey, edged up to 4.2%.
Capital Economics
April 3, 2025
If the 20% US tariff on the EU is sustained it is likely to reduce economic activity in the euro-zone by more than the 0.1 to 0.2% of GDP we had previously assumed. The impact on inflation should be small but risks to growth and confidence cement the case for a 25bp rate cut in mid-April.
Reuters, Argus Media
April 2, 2025, April 1, 2025
Mexico’s government has revised its 2025 economic growth forecast to 1.5% to 2.3% from 2% to 3%, citing weaker residential investment and persistent supply shocks. The private sector and the Bank of Mexico have more pessimistic views, with the central bank predicting a potential contraction of up to 0.2%.
WSJ
April 1, 2025
Brazil is positioning itself as a key beneficiary in the global trade war as China turns to Brazilian soybeans and other commodities in response to US tariffs. Brazilian President Luiz Inacio Lula da Silva is strengthening ties with China and exploring new markets, including Japan and the US. “Trump is reshuffling trade, and this is opening up opportunities,” says Andre Perfeito, chief economist at Sao Paulo-based APCE.
Capital Economics
April 4, 2025
If the 26% US tariff on India is sustained it is likely to reduce economic activity, but the impact won’t be very big given that India is not especially reliant on US demand. And the RBI can give an offsetting lift to domestic demand by loosening monetary policy. Over the medium term, India now arguably has a bigger advantage as a potential friendshoring destination given the massive tariffs on China and Vietnam.
WSJ, The New York Times
April 4, 2025
Federal Reserve Chair Jerome Powell said that the central bank will wait for more clarity before making policy moves while noting that he expects tariffs to slow growth and increase inflation. “Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said.
Bloomberg
April 2, 2025
US Treasury Secretary Scott Bessent has warned that the federal government could reach the debt ceiling as soon as May or June, urging lawmakers to address the issue promptly. Bessent’s comments align with the Congressional Budget Office’s estimate that the Treasury might exhaust its accounting measures by September.
Oxford Economics
April 3, 2025
Even with stagflation conditions, the U.S. will likely manage to avoid a recession this year, with a quarterly decline in real GDP occurring only in the third quarter. The economic fallout will remain relatively limited so long as the European Union can negotiate its tariff rate down to 10%. Imports from Canada and Mexico that are compliant with the current trade deal will continue to receive an exemption.