The State of U.S. Trade

Right now, U.S. trade policy is shaking things at home and abroad. The government has been raising tariffs on countries like China, Canada, and Mexico, arguing it is about protecting American industries. But higher tariffs often mean higher costs for businesses and, eventually, for consumers. Even agriculture is being affected soybean farmers for example are struggling after China pulled back on imports.

At the same time, the U.S. is trying to manage relations with Europe. A new agreement with the EU capped many tariffs at 15%, which helped avoid a bigger trade war. Still, the mix of protectionism and negotiation shows how trade policy is now being used as much for politics and strategy as for economics. For Americans, these choices matter because they influence prices, jobs, and how stable global supply chains remain.

Stock futures are lower as government shutdown looms

     U.S. stock futures edged lower Tuesday night as Wall Street braced for a likely government shutdown at midnight, with Dow futures slipping 68 points and S&P 500 and Nasdaq 100 futures both down more than 0.2%. Congress will suspend around federal workers and delay critical economic data like Friday’s jobs report, which has added to investor worries about inflation, slowing hiring, and higher stock valuations. Markets ended September on a high note, with the S&P 500 gaining 7.8% in the third quarter, and history shows stocks often climb during shutdowns. After hours, Nike jumped 4% on stronger-than-expected sales, while Lithium Americas surged 34% after the U.S. government announced a 5% stake in the Canadian miner and its Thacker Pass lithium project. The stock market typically gains during a government shutdown, so it wouldnt be a bad idea to look into stocks

Stock market today: Live updates

The resilient stock market may be keeping the economy out of a recession. Why that’s a bad thing

 The stock market going up is making a lot of people feel richer, which has led them to spend more money on things like new houses, cars, and other expensive items. This extra spending is giving the economy a big boost. Reports show that consumer spending has gone up, housing sales have hit new highs, and even company profits are stronger than people expected. All of this makes the economy look stable and healthy, even though job growth has been slow and inflation is still higher than the Federal Reserve’s target. The stock market is allowing the economy to keep up and prevent falling into a recession.

The downside is that this growth isn’t really spread across everyone. Most of the stock gains are helping the richest people, since they own nearly all of the stock market. Regular people who don’t have much invested aren’t feeling the same benefits, and their confidence about the economy has actually been going down. Also the stock market is currently very expensive compared to its past values, which means it could be due for a drop. If that happens, wealthy people may pull back on their spending and the job market wouldn’t be able to pick up the slack. That’s why the economy seems strong on the surface, but it’s really fragile. If the stock market falls, the whole thing could tip into a recession.

https://www.cnbc.com/2025/09/27/wealth-effect-stock-market-recession.html 

Economy Government shutdowns usually have little economic impact. This time could be different

 Government shutdowns usually don’t hurt the economy much. Markets often bounce back, and growth tends to lose only about 0.1 percentage point of GDP per week, even in a long, 35-day shutdown. But this round could be different because there’s a public threat to make some furloughs permanent. That would hit the job market, especially in the D.C. area, and add new uncertainty. Analysts at Barclays and Nomura warn that permanent cuts would be a sharp break from past practice. NerdWallet notes that even a short gap in pay can push families into money trouble.

There’s also a data problem. If the Labor Department closes, the Bureau of Labor Statistics will delay key reports like jobs and inflation, and quality could slip. That means Social Security cost-of-living updates could be affected, and the Federal Reserve might have to lean on private data when making rate decisions. We’ve seen delays before, like in 2013, and Bank of America still expects the overall economic impact to be mild. The big risks this time are permanent job losses and a data blackout that clouds decision-making.

Source :  

https://www.cnbc.com/2025/09/29/government-shutdowns-usually-have-little-economic-impact-this-time-could-be-different.html

Federal Reserve's Recent Rate Cut: Balancing Inflation and Employment Risks

On September 17, 2025, the Federal Reserve made its first interest rate cut of the year, reducing the federal funds rate by 0.25 percentage points to a range of 4.00%–4.25%. This decision marks a shift in the Fed's approach, influenced by emerging concerns over a weakening labor market and persistent inflation.

Federal Reserve Bank of New York President John Williams emphasized that the rate cut was aimed at bolstering the job market, which has shown signs of softening. He noted that while inflation remains above the Fed's 2% target, the central bank's primary focus was to support employment without igniting runaway inflation.

Similarly, Federal Reserve Bank of Boston President Susan Collins expressed openness to further rate cuts, depending on economic data. She highlighted the need for a "modestly restrictive" policy to balance inflation control with labor market stability.

However, not all Fed officials are aligned on the path forward. Federal Reserve Governor Stephen Miran proposed a more aggressive stance, advocating for rapid and deep interest rate cuts based on assumptions about inflation and the neutral rate of interest. His approach has faced criticism for selectively interpreting economic effects and overemphasizing certain policy outcomes.

The recent rate cut reflects the Fed's cautious approach to navigating the current economic landscape. With inflation still elevated and the labor market showing signs of strain, the central bank faces the challenge of supporting employment while ensuring that inflation expectations remain anchored. As the year progresses, the Fed's decisions will continue to be closely scrutinized for signs of how it balances these competing priorities.

https://www.reuters.com/sustainability/boards-policy-regulation/feds-williams-says-cutting-rates-aimed-bolstering-job-market-2025-09-29/?utm_source=chatgpt.com

Increased Chances of Government Shutdown as Deadline Approaches

    Over the past weeks, discussion of a government shutdown has become more and more serious as time has gone. With September 30 being the last day to come to an agreement, it seems like both parties are unwilling to budge on their demands for a funding deal. 

    House Speaker, Mike Johnson, said on an interview with CNBC that Democrats "need to come to their senses and do the right thing." Referring to inability to come to a bipartisan agreement over a funding deal to keep the government in operation. 

    The Democratic party says that in order for them to agree to agree on a funding deal must include an extension of enhanced Affordable Care Act tax credits. These credits, which millions of Americans use, are set to expire at the end of 2025. Hakeem Jeffries, House Minority Leader, said on Squawk Box that "If the government shuts down, it’s their decision to do it". 

    The Republican party is acting like they are unwilling to include that at this time, but Johnson said they would be open to a conversation about the ACA at a later time. This statement came after Johnson accused the Democratic party of wanting to give undocumented immigrants federal health benefits. 

    The last time that the government shut down was during the first Trump administration in 2018-2019 that lasted 35 days. To-date it is the longest government shutdown in American history.

    It is becoming more evident that this conflict is about politics more than policy. It will be interesting to see if the government comes to an agreement to avoid a shutdown that is starting to become more imminent as the clock ticks towards midnight.

 Link to Article: https://www.cnbc.com/2025/09/30/government-shutdown-live-updates.html 

World's first nationally certified deforestation-free coffee

A groundbreaking partnership between Lavazza, the government of Ecuador, and the UNDP is making waves in the coffee world, and it’s now a finalist for the World Economic Forum’s Giving to Amplify Earth Action Awards. Together, they’ve launched the world’s first nationally certified deforestation-free coffee, creating a fully traceable supply chain that protects the Amazon while supporting over 400 smallholder farmers. Through Ecuador’s PROAmazonía program, the initiative has already restored over 15,000 hectares of land and exported 85 tons of sustainable coffee under Lavazza’s ¡Tierra! brand.

This could be a game-changer for the global coffee economy. As consumers demand more transparency and eco-conscious products, models like this one are setting a new standard for how coffee is grown and sold. Not only does it open doors for farmers in rainforest regions to access premium markets, but it also pressures larger producers to adopt more sustainable practices. With plans to expand the model to cacao, livestock, and other countries, this isn’t just about better coffee, it’s about redefining how the world does agriculture.

https://www.thenews.com.pk/latest/1347497-world-first-eco-friendly-coffee-nominated-for-award

Many Jobs at Risk in Africa as U.S. Trade Deal Expires

 The African Growth and Opportunity Act (AGOA) has been giving qualifying African nations duty-free access to U.S. markets on thousands of products since its inception in 2000 and is set to expire Tuesday. This largely threatens key export markets that have been relying heavily on the duty-free access to the U.S. markets. In countries such as Kenya and South Africa, factories in the textile and apparel sectors could be forced to cut thousands of jobs as exports become less competitive. In countries like Kenya who will be widely affected by this termination, preparation of large layoffs has already been made, and in South Africa, the tariffs alone could put an estimated 30,000 jobs at risk.

The termination of AGOA would directly affect government revenues as well as decreasing business confidence in sectors that are already small and rely heavily on exports such as Lesotho and Eswatini. The U.S. Congress is looking at a short-term one-year extension of the deal; however, the uncertainty of the situation may lead to reduced foreign investment as well as lingering economic stability in those affected by AGOA.

Past trade policy shifts have not led to many large-scale crises, however given the central role that AGOA plays in the African markets, given the prominence of exports, the loss of the deal may further weaken a previously fragile labor market

Revised GDP Data Shows 3.8% Growth but Tech Spending May be Propping it Up

Revised data from the Commerce Department puts second-quarter economic growth at 3.8%. This could potentially complicate the Fed's decisions as they tend to cut interest rates when the economy is struggling, but data shows that it actually isn't. The 3.8% increase was higher than the most recent estimate of 3.3% and is actually the strongest reading since the third quarter of 2024. It shows actually that the U.S. economy is resilient, even in the face of unemployment concerns and inflation.

The revision reflected stronger growth in consumer spending, from 1.6% to 2.5%, even with consumers seeming not too optimistic about spending. Data shows that despite their pessimism regarding spending, their willingness to spend actually hasn't changed.

Meanwhile, despite the Fed's prediction that unemployment would climb from 4.3% to 4.5%, the latest data actually doesn't support this, it instead alleviates some worries about further deterioration in the job market. This suggests that the economy is doing just fine even though there's a slowdown in employment growth.

But this doesn't actually mean the U.S. economy is in the best state as the second quarter reflects the three months ending June 30. The growth picture has changed since then. A slowing labor market combined with Trump's combination of aggressive tariffs and immigration enforcement has generated concern about little growth. Even with consumer spending remaining resilient, there's a concern that lower and middle income families are being squeezed as upper income consumers continue to spend, so the resilience in consumer spending doesn't really describe lower and middle income consumers. It also really could just be that ahead of tariff, households imported more (so consumed more) to avoid them.

With regards to concerns about the job market, the Fed cut interest rates to boost economic growth, but Thursday's positive economic data complicates the situation because there seems like there may be less of a need for lower interest rates to stimulate growth. But even this thinking could be problematic because GDP growth could be extremely uneven. 

There's concerns that tech companies' spending on AI is single-handedly propping up the economy especially because federal spending cuts and uncertainty regarding tariffs have clouded sentiment elsewhere. The problem with this though is that it makes GDP growth uneven and uncertain. Some people have even suggested that without tech-related spending, the U.S. would be in a recession this year. 

The U.S. really needs other sources of GDP growth as well.

Source: https://www.nbcnews.com/business/economy/us-gdp-second-quarter-consumers-buying-rcna233692

Shutdown would halt jobs report, key economic data amid recession fears

 If budget funding does not pass by Wednesday, the government will experience a shutdown. Economically, this news imposes a threat to the release of critical economic data. The Bureau of Labor Statistics will be closed and the release of key economic data would be delayed. Most critically, this includes the September jobs report, the Consumer Price Index, and key wage data. This would effect the operations of the Federal Reserve who rely heavily on these figures for their policy decisions. Additionally, this would more prominently effect investor sentiments and would likely lead to a shake up in the financial markets which respond more instantaneously to current news.

In the past, government shutdowns have not been the catalysts to severe economic issues like recessions; however, this shutdown poses a different threat due to the calls for mass firing of federal workers. This would make an impact as the key issue the Federal Reserve is addressing is the weakening labor market. Mass firing of government employees would lead to a compounding of this issue.

https://thehill.com/business/5526916-government-shutdown-economic-data/

The resilient stock market may be keeping the economy out of a recession. Why that's a bad thing

The significant growth we are seeing in the stock market is becoming a driver of the economy and a major support in preventing a recession. Consumer spending in the economy is largely sustained by the growth of the stock market and the "wealth effect." Most beneficiaries of this stock growth are high-income households with strong portfolios. The disparity in wealth growth among high-income households due to the stock market is creating positive sentiment for them; however, the majority of Americans feel less benefit from this growth, and their sentiment is declining. This reliance of the economy on stock market growth raises concerns among some economists, as it reveals a weak point. If the stock market were to collapse, it would directly impact consumer spending and cause it to fall. Such a rapid decline in consumer spending could lead to a recession, especially given the flat job growth recently. One concern about the stock market is that the S&P 500 is trading at a significantly high and unsustainable rate of 22.5x. Despite worries about the stability of a stock-driven economy, strong economic data supports it, including a 0.4% increase in inflation-adjusted consumer spending in August, a 3.8% annualized growth rate in second-quarter GDP, and growth in durable goods and home sales. Inflation remains above the Federal Reserve's 2% goal, but there are expectations for two more rate cuts this year. The economy's strength, driven by the stock market, is a double-edged sword, presenting risks of future rapid declines as well as the potential for continued growth this year.

https://www.cnbc.com/2025/09/27/wealth-effect-stock-market-recession.html

U.S. expands tariff dragnet to masks, syringes and robotics in sweeping import probe

         The Trump administration has initiated a trade probe under section 232 which is focused on import of industrial machinery, robotics, and medical devices. This trade probe could lead to fresh tariffs and raise costs for consumer, hospitals and manufacturers. The commerce Department began to investigate on September 2, and they will try to find out whether U.S. domestic production can meet demand of this market. The U.S relies heavily on imports from both China and Mexico for machinery with the important accounting for more than 18% and 17% of total machinery purchases in 2023. The investigation covers a broad array of goods including surgical masks, MRI machines, automated tools, welding machines and more.

    

        This announces flustered the financial markets, with shares of major medical device makers like GE Healthcare, Stryker, Intuitive Surgical, ResMed falling significantly as the investors began to worry about the price increase from the trade probe. Rick Pollach, the CEO of the American Hospital Association, said that these disruptions could have potential to disrupt with patient care. In my opinion, this move by the trump administration highlights the tension between protecting national security and risking economic disruption. I do believe that it makes since for the United States to reduce imports of goods but the negatives  of the market instability and disrupting patient care does give reason for concern.   

https://www.cnbc.com/2025/09/25/trump-tariff-threat-looms-over-robotics-and-medical-devices-section232-import-investigation.html   

Consumer confidence sinks near record lows, yet spending remains strong

    In September 2025, U.S. consumer sentiment dropped to 55.4 from 58.2 in August, marking its weakest reading in four months and reflecting growing unease about the economy. The decline was broad-based, affecting nearly all income and demographic groups, though households with higher wealth tied to stock market gains reported slightly steadier views. The University of Michigan survey showed that while near-term inflation expectations eased modestly, long-term inflation expectations inched up, highlighting persistent anxiety over rising costs. Consumers also expressed more concern about weakening job prospects and the impact of tariffs, which added to inflation worries. Despite the gloomier outlook, recent data showed consumer spending rose 0.6% in August, underscoring the tension between Americans’ actual spending behavior and their more negative feelings about the economy’s direction. Overall, the sharp downturn in sentiment signals rising fragility in confidence as inflation, labor uncertainty, and trade policy weigh on the public’s outlook. 

https://www.cnn.com/2025/09/26/economy/us-consumer-sentiment-september#openweb-convo