USA

The organisation warns that President Donald Trump has put US fiscal policy on an unsustainable trajectory. Global growth is holding up better than expected as an artificial intelligence (AI) investment boom helps offset some of the shock from United States tariff hikes, according to the Organisation for Economic Co-operation and Development (OECD). The Paris-based organisation, however, warned on Tuesday that global growth was vulnerable to any new outbreak of trade tensions, while investor optimism about AI could trigger a stock market correction if expectations are not met. In its Economic Outlook, the OECD forecast global growth would slow modestly from 3.2 percent in 2025 to 2.9 percent in 2026, leaving its forecasts untouched from its last estimates in September. It pre...

A quarterly review finds that the U.S. economy’s increasingly K-shaped nature is making American consumption patterns uneven and unpredictable. Despite continued growth, this and several other data points suggest a precarious economic situation could soon emerge. Roger W. Ferguson Jr. is the Steven A. Tananbaum Distinguished Fellow for International Economics at the Council on Foreign Relations. Maximilian Hippold is a research associate for international economics at CFR. More From Our Experts The longest government shutdown in U.S. history ended after weeks of political gridlock, but the impasse has already taken a toll on the U.S. economy. Federal employees and contractors missed paychecks, and many working-class Americans started to feel the effect of reduced funding for ...

The US economy is relying on AI capex by Microsoft, Amazon, Alphabet, Meta and Nvidia, as traditional sectors stagnate, risking recession if the boom ends AI has grown from a useful tool, to something driving economic growth. Investment in data centres and computing infrastructure now represent a huge portion of GDP in developed economies.  In the US, this dependence has reached a point where economists are questioning what happens if the boom ends. Recent volatility in AI stocks has exposed how tied the US economy has become to AI-related investment and wealth creation.  The numbers show that business investment in AI may have accounted for half of the growth in gross domestic product, adjusted for inflation, during the first six months of this year...

The Indian rupee is expected to remain under pressure until India signs a trade with the US, said economists and treasury heads in an FE poll. However, 75% believe that it may not breach 90 against the dollar in the next one month unless the Reserve Bank of India does not support the currency through interventions.  According to V R C Reddy, treasury head, Karur Vysya Bank, the 90 level will be protected for a few more weeks. He expects the positive trade deal outcome by December-end would drive the rupee to 88.20. “The sharp fall in the rupee was led by speculation on the trade deal. There has been constant depreciation pressure on the rupee due to capital outflows. Moreover, recent widening in the trade deficit due to gold imports has also increased de...

A leading investment bank has delivered an arresting diagnosis of the U.S. economy: the labor market, long a pillar of resilience, may be in real trouble. In their latest economic outlook, UBS economists led by Jonathan Pingle painted a picture of mounting weakness that extends well beyond headline job numbers, warning of a growing risk to households and the broader recovery. The latest “US Economics Weekly” note from the Swiss investment bank came with bated breath ahead of the impending end of the federal government shutdown. Economists and market-watchers have been deprived of federal economic data for over 40 days, something that former Bureau of Labor Statistics commissioner Erica Groshen likened to “flying blind” in late October. If the government does reopen, Pingle’s team s...

US President Donald Trump has introduced tariffs on goods reaching it from countries around the world. Trump argues that the move will boost American manufacturing and create jobs, but critics warn of higher prices and damage to the global economy. The US Supreme Court is also considering whether the tariffs are illegal. What are tariffs and how do they work? Tariffs are taxes on imported goods. Typically, the charge is a percentage of a good's value. For example, a 10% tariff on a $10 product would mean a $1 tax on top - taking the total cost to $11 (£8.34). The tax is paid to the government by companies bringing in the foreign products. These firms may pass some or all of the extra cost on to their customers, which in this case means ordinary Americans and ot...