Economy in Brief

• Price index held in check by slower gains in services prices.
• Real spending reverses December rise.
• Disposable income surges and savings rate jumps.

• Deepening in goods trade deficit after December’s widening.
• Exports rise 2.0% m/m vs. a 3.8% December drop, led by a 10.9% rebound in exports of consumer goods ex-autos.
• Imports, up in all end-use categories, jump 11.9%, the largest m/m increase since July ’20 to a record level, led by a record 32.7% surge in imports of industrial supplies & materials.

The global economy remains fragile, with financial markets showing resilience despite persistent policy uncertainties, geopolitical risks, and uneven growth. Investors have largely adopted a wait-and-see approach, balancing inflationary pressures and rising US trade protectionism against looser monetary policy and optimism about AI-driven productivity gains. This week’s charts highlight the growing complexities in global trade and economic policy, where traditional tools, such as tariffs, could be increasingly misaligned with economic realities. Recent US survey data, for instance, indicate a sharp rise in inflation expectations, likely fuelled by concerns over tariffs, which have simultaneously weighed on consumer confidence (chart 1). Meanwhile, latest US trade figures reveal a record deficit in goods trade alongside a widening surplus in services trade, further emphasizing why tariffs alone are unlikely to correct trade imbalances (chart 2). At the same time, shifts in US trade policy have coincided with near-record highs in global economic policy uncertainty. By dampening business and consumer confidence, this could weaken US export demand, complicating the intended effects of trade restrictions. Another dynamic is unfolding in Europe, where geopolitical tensions are prompting governments to increase defence spending, introducing yet another layer of uncertainty into the macroeconomic outlook (chart 4). In short, downside risks to global growth are mounting. Sector-specific and country-level risk indicators, such as those provided by our data partner Dun and Bradstreet, and which capture these underlying pressures, will certainly be useful for monitoring broader economic risks in the months ahead (charts 5 and 6).

• Sales decline to record low.
• Home sales fall across much of country.

• Inventory drag on economic growth remains largest in almost two years; net exports add minimally to growth.
• Sharp gain in consumer spending growth is unrevised while business investment declines.
• Price index gain is revised up.

• New orders excluding aircraft were flat in January.
• But bookings for nondefense capital goods other than aircraft are perhaps picking up.

• Weekly increase somewhat larger than forecast.
• Insured unemployment rate holds at 1.2%, same since late 2023.