Treasury
U.S. first-quarter consumer spending may see first contraction since the pandemic
The Conference Board expects that inflation-adjusted U.S. first-quarter consumer spending may decline 0.2% quarter-over-quarter on an annualized basis, marking the first contraction since the pandemic. In February, the core PCE price index accelerated to 2.8% year-over-year, with tariff concerns and rising inflation expectations making consumers more cautious.
Pillar Two Implementation Imminent, Enterprises Should Focus on Three Key Areas
The Organization for Economic Co-operation and Development (OECD) reached an agreement in 2021 on the Pillar Two minimum tax rules, which propose a 15% global minimum tax rate for large multinational enterprises. Over 140 countries have signed the agreement, and about 40 countries have enacted implementing legislation. These rules are complex and interconnect the tax affairs of various entities within enterprises, with filings set to intensify from 2025 to 2026. Business leaders should focus on technology investment, data sources and management, and internal organizational changes to efficiently comply with the new obligations.
Rising inflation coupled with weak consumption raises concerns about 'stagflation' risk in the US economy
US inflation accelerated to 2.8% in February, while consumer spending grew only 0.1%, raising stagflation concerns. Allianz Chief Economic Advisor Mohamed El-Erian noted that long-term inflation expectations have risen to a 32-year high. Fed officials have downgraded growth forecasts, with the Atlanta Fed projecting a 2.8% contraction in first-quarter GDP.
US announces 25% tariff on imported cars, effective April 2
US President Trump signed an executive order on Wednesday imposing a 25% tariff on all cars manufactured outside the United States, effective April 2, with collection beginning April 3. The tariffs cover imported sedans, SUVs, crossovers, minivans, cargo vans, and light trucks, as well as some parts such as engines and transmissions. A White House fact sheet noted that parts compliant with the USMCA agreement will be temporarily exempted, but tariffs will apply by May 3 at the latest. Automakers and suppliers have expressed concerns, as Mexico and Canada account for the majority of US auto imports.
Tariff anxiety drags down US consumer expectations to 12-year low
Data released by the Conference Board on March 25 shows that the US consumer expectations index for employment, personal income, and business conditions over the next six months fell sharply by 9.6 points to 65.2, the lowest level in 12 years, reflecting growing concerns over tariffs and trade policy. Meanwhile, consumer inflation expectations for the next 12 months rose to 6.2%. Federal Reserve officials and economists have both noted that trade policy is pushing up short-term inflation expectations, but long-term expectations remain relatively stable.
Tariffs and policy uncertainty weigh on U.S. manufacturing, business expectations fall to near three-year low
S&P Global data shows U.S. manufacturing activity slowed in March, with the PMI falling to 49.8 and business expectations dropping to the second-lowest level since October 2022. Tariffs and policy uncertainty have companies worried about weak demand, and while services growth hit a three-month high, expectations declined for consecutive months. Multiple institutions have lowered 2025 growth forecasts, and the Federal Reserve has also cut its economic outlook.
Abolishing the Carried Interest Tax Loophole May Induce Predatory Operations in Private Equity
The closure of the carried interest tax loophole has once again become a policy focus. Although this move helps alleviate fiscal deficits, the author warns that without the three-year holding period incentive, the private equity industry may slide toward short-termist practices such as rapid flipping and asset stripping, harming industry reputation and the investment ecosystem.
The Conference Board: Economic Data Points to Persistent Growth Headwinds
The Conference Board reported Thursday that its Leading Economic Index continues to point to growth headwinds, projecting U.S. economic growth will slow to 2% in 2025 from 2.8% in 2024. Meanwhile, the Federal Reserve cut its growth forecast for this year to 1.7% and held interest rates steady.
Federal Reserve Holds Benchmark Rate Steady, Raises Inflation Forecast and Lowers Growth Projection
On March 19, the Federal Reserve announced it would hold interest rates steady at 4.25%-4.5%, with the dot plot indicating that two rate cuts may still occur this year. The latest economic projections raised the 2025 core PCE inflation expectation to 2.8% and lowered GDP growth to 1.7%. Powell stated that tariff policies bring high uncertainty, but the Fed does not need to act hastily and will wait for clearer data signals.
US February retail sales growth misses expectations, tariff uncertainty weighs on consumer outlook
U.S. retail sales rose 0.2% month-over-month in February, below market expectations, with January data revised to a decline of 1.2%. Uncertainty over tariff policies has raised concerns about consumer spending and economic slowdown. Economists noted that uncertainty over the Trump administration's tariff policies has negatively impacted consumer and business confidence, with the Atlanta Fed downgrading its first-quarter GDP forecast to a contraction of 2.1%.