Global Economics Wrap-Up_ May 16, 2025

Summary of Key Points from the Conference Call Industry and Economic Outlook - Global Growth Forecast: The global growth forecast for 2025 has been revised up to 2.3% from 2.1% due to a 90-day suspension of US-China tariffs [4][8] - US Growth Forecast: The US growth forecast for 2025 has been increased by 0.5 percentage points to 1% Q4/Q4, with a reduction in 12-month recession odds to 35% from 45% [4][8] - China Growth Forecast: The growth forecast for China has been raised to 4.6% in 2025 and 3.8% in 2026, up from 4.0% and 3.5% previously [4][13] - UK Growth Forecast: The UK growth forecast has been increased to 1.2% in 2025 and 1.1% in 2026, reflecting better tariff news and stronger-than-expected Q1 GDP [5][12] Investment Trends - US Investment Announcements: Companies have announced plans to invest over $2 trillion in the US over multiple years, with foreign governments pledging an additional $4.2 trillion in capital investment and purchases of American goods [5][6] - Investment Uplift Estimate: The estimated uplift to annual investment from these projects is between $30 billion and $135 billion, which is 0.1%-0.4% of US GDP [7] Tariff Implications - US-China Trade Deal: The US and China reached a trade deal that includes a 90-day pause in retaliatory tariffs, leading to a lower effective tariff rate than previously expected [8][11] - Long-term Tariff Effects: A 13 percentage point increase in tariffs is projected to lower US real income by around 1% in the long run, with higher tariffs expected to weigh on output and innovation [11][12] Inflation and Economic Indicators - Core CPI Inflation: Core CPI inflation increased by 0.24% in April and 2.78% year-over-year, with specific categories showing upward pressure due to tariffs [11] - Retail Sales and Jobless Claims: Core retail sales declined by 0.2% in April, and initial jobless claims remained unchanged at 229,000 for the week ending May 10 [12] Regional Economic Updates - Europe: The Euro area GDP forecast has been upgraded by 0.2%, with core inflation nudged up to 2.1% in Q4 2025 [12] - India: Headline inflation in India is near a six-year low, with a forecast of 1.2% real GDP growth in 2025, up from 1.1% previously [13][14] Additional Insights - Investment Completion Rates: Historical data indicates that 80% of announced investment projects were completed, suggesting that not all announced spending may materialize [5][6] - Sectoral Tariff Flexibility: The US-UK trade deal maintains a 10% baseline tariff but allows for flexibility on sectoral tariffs, indicating potential changes in trade dynamics [11] This summary encapsulates the key insights and data points from the conference call, providing a comprehensive overview of the current economic landscape and investment outlook.