10 Things You Need to Know: May 13, 2025
Key data releases this week include: NFIB Small Business Optimism (Tue), CPI (Tue), retail sales (Thu), PPI (Thu), industrial production (Thu), NAHB Housing Market Index (Thu), housing starts (Fri), and consumer sentiment (Fri).
Haver
May 6, 2025
The U.S. trade deficit in goods and services (BOP basis) in March grew to $140.5 billion after narrowing slightly to $123.2 billion in February. A $136.7 billion deficit was expected by the Action Economics Forecast Survey. Exports rose 0.2% (6.7% y/y) in March. This was accompanied by a 4.4% rise (27.1% y/y) in imports.
Haver
May 8, 2025
Nonfarm labor productivity fell 0.8% (SAAR) during Q1’25 after increasing 1.7% in Q4’24. The productivity decline raised unit labor costs by 5.7% (1.3% y/y) in Q1 versus expectations for a 5.2% increase. Compensation per hour increased 4.8% last quarter.
Capital Economics
May 9, 2025
Euro-zone GDP expanded at a decent pace in Q1 but that was partly due to temporary tariff front-running effects. And while higher defense and infrastructure spending will support euro-zone GDP growth later this year and in 2026, the boost will be smaller than some are hoping for. So, we expect the economy to grow quite slowly in the coming years. This, together with declining core inflation, should prompt the ECB to cut its deposit rate twice more this year, to 1.75%.
The New York Times, Financial Times
May 12, 2025
The US and China have agreed to reduce tariffs for 90 days, marking a significant de-escalation in the trade war. The US will lower tariffs on Chinese goods to 30% from 145%, while China will reduce duties on US imports to 10% from 125%. The agreement, reached in Geneva, has boosted global stocks and the US dollar.
South China Morning Post
May 6, 2025
China is unlikely to de-dollarize in the short term despite trade tensions with the US, according to a report from Oxford Economics. The report notes that China remains heavily reliant on the dollar due to its export-oriented economy and limited alternatives for its $3.2 trillion in foreign exchange reserves.
Barron’s
May 12, 2025
More than 450 S&P 500 companies have reported first-quarter earnings, with nearly 80% beating earnings-per-share estimates and about 60% besting sales projections.
Barron’s
May 12, 2025
Some 235,000 small businesses import goods or materials representing a third of the total value of U.S. imports. And 40% of those build their products in the U.S. but requiring raw material or other inputs from abroad.
Bloomberg
May 12, 2025
The House tax committee’s draft bill to renew President Donald Trump’s tax cuts calls for increasing the state and local tax deduction to $30,000 for couples but limits the write-off to households earning $400,000 or less, according to a person familiar with the matter. Individuals earning up to $200,000 could claim $15,000 in SALT deductions under the proposal. The SALT issue has been one of the most contentious for the House GOP to resolve.
Wall Street Journal, CNBC, American Banker
May 7, 2025, May 7, 2025, May 6, 2025
Treasury Secretary Scott Bessent told Congress the U.S. is renegotiating trade deals with 17 major partners and expects most to wrap by year’s end. “Approximately 97 or 98% of our trade deficit is with 15 countries. Eighteen percent of the countries are our major trading partners, and I would be surprised if we don’t have more than 80 or 90% of those wrapped up by the end of the year,” Bessent said.