Global regime change, Australian growth and RBA minutes

International economic headlines this week were dominated by the chaotic introduction of US tariffs on Mexico and Canada which were swiftly followed first by a month-long pause on the carmaker component of that policy and then by a broader time-limited exemption for goods covered by the United States-Mexico-Canada Agreement (USMCA) along with additional tariffs on China. 

Addressing Congress in the first major speech of his second term, President Trump said his tariffs were about ‘making America rich again and making America great again’. He also repeated his promise to introduce reciprocal tariffs with effect from 2 April. Other headlines this week tracked the aftermath of the Oval Office Blowup between Trump and Zelensky,  subsequent US decisions to pause military aid and suspend intelligence sharing with Ukraine and Germany’s ‘historic’ plan to unleash defence spending. There’s no doubt, ‘the times they are a-changin.’ We dig into some potential implications of the shifting (crumbling?) global order below.

This week also saw the Australian economy exit its seven quarter long per capita recession. December quarter 2024 GDP numbers were as markets expected, confirming a modest pickup in activity towards the end of last year, but leaving growth running well below potential. We look at five key lessons from this week’s national accounts data and in related matters examine the Productivity Commission’s latest take on Australia’s productivity problem.

Finally, we review the Minutes from last month’s RBA meeting and consider implications for future rate moves. All that below, plus a roundup of the other data releases this week and the regular selection of readings and podcasts. For even more economics and related material, on the AICD’s own Dismal Science podcast this week we talk Australian growth and global regime change.

Finally, I’ll be presenting at the Australian Governance Summit next week, where we’ll record our regular live episode of the Dismal Science. If you get a chance, please do say hello. I am always delighted to hear from regular readers and listeners…unless I am running to one of my sessions of course (in which case, I will instead catch you later).

Global order in flux

The old global order is being disassembled at pace. What comes next is unclear.

Exhibit number one is (what remains of) the international trading order. Here, the list of adverse developments is long and growing. Back on 1 February, the Trump administration announced 25 per cent tariffs on Canada and Mexico and a new 10 per cent tariff on China. Within days the proposed North American tariffs had been suspended for a month, however tariffs on China went into effect on 4 February. Beijing’s retaliatory measures then took effect from 10 February. On the same day, President Trump announced 25 per cent tariffs on steel and aluminium (adjusting tariffs that were originally imposed during his first administration in March 2018), which for now are still scheduled to take effect from 12 March. A few days later, on 13 February, the administration released a plan to introduce so-called reciprocal tariffs, due to come into force on 2 April.

This week, on 4 March, the United States imposed previously delayed tariffs on Canada and Mexico, while also introducing an additional 10 per cent tariff on China. Retaliatory tariffs from Canada and China have already been announced, with Mexico saying it will respond this Sunday. And most recently, on 5 and 6 March, the White House added to an ever-growing sense of trade policy whiplash when it said first that it would pause some tariffs on carmakers in Mexico and Canada for a month and then one day later announced that all goods compliant with Trump 1.0s USMCA agreement would also receive a one-month on tariffs, marking two major policy adjustments in two days.

Exhibit number two is the post-1945 Western security order, where the relationship between the United States and some of its traditional alliance partners is changing rapidly as Washington seeks a deal with Moscow to end the conflict in Ukraine. On 14 February this year, US Vice President Vance delivered a provocative speech at the Munich Security confidence that hit out at some European allies and their domestic policies. On 18 February, Washington and Moscow held talks in Riyadh on ending the war in Ukraine with no place for Kyiv or any Western European ally at the table. The sense of a global re-ordering was further reinforced on 24 February, when at a meeting of the UN General Assembly marking the third anniversary of the Russian invasion of Ukraine, the United States voted against European amendments, lining up instead with Russia, North Korea, Belarus and others. Later the same day, at the UN Security Council, a US resolution calling for a swift end to the war passed with backing from Moscow and Beijing and abstentions from Paris and London. Then came the dramatic 28 February confrontation between Zelensky, Trump and Vance in the White House which was followed by US decisions first to suspend military assistance to Kyiv and later to suspend intelligence sharing.

The sheer speed and scale of the challenges to the established trade and security orders has been dramatic. One measure of this has been a remarkable surge in trade policy uncertainty, which by the end of last month had soared to levels that dwarf the (already dramatic) spikes seen during the previous Trump administration (see chart below).

The rapidity with which trade policy measures have been announced, postponed, amended and re-introduced over the past few days, let alone weeks, makes understanding the economic rationale at work here difficult. Still, two observations come to mind at this point.

First, it is worth considering whether the same kind of regime shift will hit the global financial system. In the aftermath of Trump’s election victory, there was speculation about the possibility of a Mar-a-Lago Accord that would provide a 21^st Century MAGA take on the 1985 Plaza Accord between the United States, Japan and Europe to depreciate the US dollar and rebalance the world economy. See this Hudson Bay Capital summary – which we linked to in an earlier roundup – for some of the thinking here. Ideas being floated include introducing a form of ‘user fee’ on official US Treasury holdings and forcing countries to swap their short-term holdings of US Treasury paper for so-called century bonds. When first raised, the response to these kinds of proposals included lots of use of the word ‘outlandish.’ Now, two months into the new administration, such plans do not seem quite so unlikely after all. Also, note that if we were to see moves along these lines, the immediate impact of radically higher financial uncertainty could prove much more dramatic than that associated with greater tariff and trade policy uncertainty. Global financial markets adjust much more quickly than global trade flows and are considerably more prone to overshooting.

Second, it is also worth thinking about the likelihood of increased linkages between trade, financial and security policies. It is now a commonplace that we are living in an era of geoeconomics, where economics and geopolitics are more closely intertwined than ever. But those linkages could still tighten further. What about tying security guarantees to trade policy decisions (something Brussels might have to consider, say, if it wanted to retaliate in response to future Trump tariffs, for example)? Or linking alliance relationships and security guarantees to foreign government debt purchases that would be directed to fund a US budget deficit about to be expanded by the extension of trillion-dollar tax cuts? Again, the immediate reaction to such ideas might be to turn to that ‘outlandish’ word again. But as we are learning, something that was ‘outlandish’ a few months ago could be tomorrow’s surprise policy announcement.

Australia’s per capita recession over, but economic growth still soft

The Australian economy grew by 0.6 per cent over the quarter (seasonally adjusted, chain volume basis) in the final quarter of last year, which corresponded to annual real GDP growth of 1.3 per cent. That outcome was in line with the consensus market forecast and slightly stronger than the RBA’s forecast in the February 2025 Statement on Monetary Policy, which had assumed an annual GDP growth rate of 1.1 per cent. The quarterly result was the strongest since the December quarter 2022, while the annual outcome was the highest since the December quarter 2023. Both results comfortably outpaced growth in the September quarter 2024 (0.3 per cent quarter-on-quarter and 0.8 per cent year-on-year). Even so, the pace of annual real GDP growth remained well below Australia’s potential growth rate of 2.25 – 2.5 per cent.

As is always the case with the quarterly national accounts release, there is a wealth of information. But for now, we will stick to just five important messages found in the numbers.

First, Australia has now exited its ‘per capita recession.’ Real GDP per capita rose by a modest 0.1 per cent over the December quarter, ending seven successive quarters of contraction. While that is welcome news, the modest uptick was not enough to stop the economy going backwards on an annual basis, with real GDP per capita falling by 0.7 per cent relative to the December quarter 2023 and marking its own seventh consecutive drop.

Second, after activity in the September quarter 2024 was almost entirely reliant on public sector final demand, growth in the December quarter was more balanced between public and private sector drivers. According to the ABS, public and private sector final demand each contributed about 0.3 percentage points to the quarterly growth result. Public demand rose by 0.9 per cent over the quarter and was up 5.7 per cent over the year, while corresponding growth rates for private demand were 0.4 per cent and 0.7 per cent, respectively.

Third, despite some recovery in private sector activity, the share of public sector demand in the economy remains unusually high by historic standards. As we have noted before, some of that just reflects cyclical weakness in the private sector. But it also captures structural change in the economy associated with a larger public sector footprint. That in turn has implications for future government budgeting decisions around the balance between tax and spend.

General government consumption was up 0.7 per cent quarter-on-quarter and 5.1 per cent higher year-on-year, contributing 0.1 percentage points to growth. The ABS pointed to consumption spending by state and local governments related to hiring across Health, Education, Policing and Environment agencies. Commonwealth government spending rose in line with expenditure on the Pharmaceutical Benefits Scheme and Aged Care. Meanwhile, public investment grew 1.8 per cent in quarterly terms and was 8.1 per cent higher on an annual basis, contributing an additional 0.1 percentage points to the quarterly growth outcome. State and local public corporations were the main drivers here according to the ABS, in the form of investments relating to major transport, water and renewables projects. There was also Commonwealth spending on telecommunications and power generation projects.

Fourth, on the private sector side of the economy, household consumption rose by 0.4 per cent over the quarter and was up 0.7 per cent over the year, contributing 0.2 percentage points to quarterly GDP growth. Discretionary spending rose by 0.4 per cent in quarterly terms, with the ABS citing strong contributions from furnishings and household equipment and from clothing and footwear, which it attributed to boosts from the Black Friday and Cyber Monday sales. The Bureau also highlighted a positive contribution from large sporting and music events, which it said helped lift spending over the quarter. Spending on essentials was up 0.5 per cent, reflecting an increase in expenditure on health goods and on utility use, with the latter coming in response to warmer than average conditions across New South Wales and Victoria.

As we’ve been noting in our discussions of monetary policy and the RBA (see here and also the section on the RBA minutes below), one key uncertainty for Australia’s economic outlook relates to the future trajectory of household consumption. The national accounts tell a mixed story. As already highlighted, private consumption spending did pick up in the final quarter of last year. On the other hand, much of that seems to have been associated with sales and other events, leaving a question over its sustainability.

Another piece of the puzzle relates to the relationship between trends in household saving, disposable income, and consumption. Here, the household saving ratio rose to 3.8 per cent in the December quarter, up from (an upwardly revised from 3.2 per cent) 3.6 per cent in the September quarter, as growth in gross disposable income ran ahead of nominal household spending. That suggests that the financial position of households was becoming a bit more robust towards the end of last year.

Fifth and finally, we have productivity growth. Once again, it proved disappointing as GDP per hour worked fell for a third consecutive quarter, sliding by 0.1 per cent over the quarter to be down 1.2 per cent over the year. The decline in market sector productivity growth was more modest (an annual drop of 0.5 per cent), suggesting that much of the decline reflected ongoing productivity challenges in the non-market sector. Even so, that decline confirms that the productivity challenge does also include the market sector. (The market sector refers to industries where prices are set in markets. The three non-market sector industries comprise Education and training, Health care and social assistance, and Public administration and safety: other industries fall into the market sector.)

The overall result of this productivity outcome was ongoing upward pressure on unit labour costs, which will not have pleased Martin Place.

Labour productivity growth or output per hour worked is the joint product of growth in capital per worker and in Multifactor Productivity (MFP), which measures how well the economy combines inputs of capital and labour to produce outputs. Capital per worker is driven by the investment rate, and in that context total private investment rose 0.3 per cent over the quarter and 0.8 per cent over the year, contributing a further 0.1 percentage points to quarterly GDP growth. Private business investment was the main driver, increasing by 0.7 per cent over the quarter (but down 0.1 per cent over the year).

Australia’s productivity problem

Sticking with productivity growth, the Productivity Commission (PC)’s Annual Productivity Bulletin 2025 contains a good discussion on recent developments in market sector MFP. The problem highlighted by the bulletin is that Australia’s performance has here been poor, as ‘recent MFP growth has been almost non-existent.’ The authors investigate why this has been the case by breaking down MFP growth into two drivers:

1. Growth at the MFP frontier represents the highest level of MFP that can be attained given current knowledge and the mix of capital and labour inputs. Think of this as how good businesses are at discovering the innovative ideas that shift this frontier outwards.

2. Inefficiency, which measures the gap between actual MFP and the frontier. Think of this as how effectively businesses can apply or use innovative ideas, once they have been discovered, then move towards best practice.

Australia’s MFP problem turns out to reflect underperformance on both fronts. Growth in the frontier has slowed since the mid-2000s, suggesting the economy has been finding fewer improvements in how it can organise production for some time now. And at the same time, the economy has also become more inefficient since the 2000s, indicating that businesses are failing to use their capital and labour inputs in the most efficient ways currently available.

This aggregate picture reflects different stories at the level of individual industries:

• In the case of business services, for example, MFP was stagnant between the mid-1990s and late 2000s, even though the MFP frontier for that sector grew continually over the period. That was because business services firms became progressively less efficient until the late 2000s, with only a partial recovery thereafter.

• In contrast, distribution services have seen steady MFP growth from the mid-1990s reflecting a combination of ongoing frontier growth plus sustained efficiency.

• Personal services and the goods sector (excluding mining) have followed similar paths to each other, with rapid MFP growth until the late 2000s driven by an expanding frontier later succeeded by stagnation during the 2010s due to a combination of a stalling at the frontier and rising inefficiency. Both sectors have also seen frontier expansion again more recently.

• The utilities and construction sectors have both performed poorly, with MFP stagnant between the mid-1990s and early 2010s due to growing inefficiency that offset frontier growth. Since then, their performance has worsened as MFP has fallen continuously due to a combination of a stagnant frontier and rising inefficiency.

• The analysis excludes mining from the market sector. Here, the PC’s methodology would have attributed falls in mining MFP to the combined impact of no movement in the mining frontier and increased inefficiencies since 2000-01. But in this case, the authors caution that in practice the long-term decline in mining MFP is instead likely to reflect the fact that easier-to-mine resources have been depleted over time, even as rising commodity prices have made it profitable for businesses to extract those harder-to-mine resources.

The bulletin explains differences in the growth of the MFP frontier in terms of some industries being better placed to exploit new technologies for MFP growth. For example, the PC has found that the extent to which services industries can use WFH/offshoring/remote delivery is positively correlated with MFP growth, reflecting the innovation- and competition-boosting impact of improvements in ICT. In contrast, personal services, utilities and construction all tend to require face to face contact or physical delivery. Education differences could be another driver of differences at the frontier, with the educational quality of workers in business and distribution services growing by more than those in other industries. The authors reckon that differences in efficiency across industries are harder to explain but could be due to factors such as the impact of measurement error or the effect of regulation.

RBA cautious on further monetary easing

The Minutes of the RBA’s February 2025 monetary policy meeting depict board members weighing up the case for the status quo versus a rate cut. According to the Minutes, there were three potential reasons for leaving the cash rate unchanged:

1. The strength of the Australian labour market, where ‘the staff’s judgement was that the tightness in the labour market was not consistent with inflation being at the target’.

2. The possibility that activity might pick up faster than the RBA’s forecast, perhaps because of a stronger recovery in household consumption or an increase in global growth (in the case that ‘any adverse impact on growth of evolving US Government policy might not be material’.)

3. If board members decided that despite the RBA staff assessment that a cash rate target of 4.1 per cent would still be restrictive, a post-cut monetary policy stance would nevertheless not be restrictive enough.

What about the case for a cut? According to the Minutes there were two main arguments:

1. The ‘strongest reason to lower the cash rate…was based on the signal from recent trends in inflation and wages.’ December quarter 2024 inflation printed weaker than the RBA had expected and wage growth likewise proved to be a little softer than Martin Place anticipated.

2. The case for a rate cut ‘could be further supported if members assessed that the risks surrounding the outlook for economic growth were, on balance, to the downside’. Recovery in domestic consumption was ‘not yet assured’ while internationally, ‘uncertainty about US Government policy was high and…this could have a material adverse effect on the propensity of firms and possibly also households to spend. Activity in the Chinese economy was also expected to slow’.

And as we know, of course, the final decision was to cut the cash rate target by 25bp:

‘…members decided that the case to lower the cash rate target at this meeting was, on balance, the stronger one…the continued fall in underlying inflation, and at a somewhat faster pace than expected, meant that the upside risks to inflation had abated enough that they no longer needed the insurance they had taken out when raising the cash rate target in November 2023. Members tended to place more weight on the downside risks to the economy, and on the possibility identified by the staff that capacity in the labour market might be somewhat greater than embodied in the central projection…members were particularly mindful of the risk of keeping monetary policy tight for too long, with adverse impacts on economic activity, the labour market and inflation.’

Strikingly, the Minutes confirm that the Board decided that even though a rate cut under these conditions entailed a risk to the inflation outlook that might ultimately require either an extended period on hold or ‘even tightening policy if the outlook for inflation was to rise materially’, it nevertheless judged that the risk of suffering such an embarrassing policy reversal ‘was preferable to accepting the risk of holding interest rates high for too long.’

Despite that apparent gamble, and as we noted at the time, this was still sold by the RBA as a cautious rate cut and in line with this, the Minutes are at some pains to note (as was Governor Bullock last month) that February’s move did not signal the onset of a rapid easing cycle:

‘…members agreed that their decision at this meeting did not commit them to further reductions in the cash rate target at subsequent meetings. While economic outcomes had given members more confidence that they could return inflation to target at the same time as preserving most of the gains in the labour market with a lower cash rate, they agreed that this was not yet assured. As a result, members expressed caution about the prospect of further policy easing….’

For more on the RBA’s thinking, see the roundup section below which includes a link and brief discussion of this week’s speech from the RBA Deputy Governor, which covers similar ground.

What else happened on the Australian data front this week?

Australia recorded a seventh consecutive current account deficit in the December quarter of last year. The ABS said the deficit narrowed by $1.3 billion, contracting from $13.9 billion in the September quarter 2024 to a bit more than $12.5 billion last quarter. The decline in the deficit was driven by a $3.7 billion rise in Australia’s trade surplus to $7.5 billion, reflecting higher export revenues from rural goods, iron ore and intellectual property services related to pharmaceuticals and computer software. This was partially offset by a $2.3 billion increase in the net primary income deficit due to higher debt interest payments and increased dividends to overseas investors. Australia’s terms of trade rose 1.7 per cent over the quarter, marking the first quarterly increase since December 2023, driven by higher export prices for gold and iron ore. On an annual basis the terms of trade were still down 4.8 per cent.

The seasonally adjusted balance on Australia’s goods trade account rose by $0.7 billion in January 2025 to $5.6 billion. Exports were up $0.6 billion (1.3 per cent) over the month while imports were down $0.1 billion (a 0.3 per cent fall).

Australia’s general government net operating balance changed by $15.4 billion to a deficit of $3.5 billion in the December quarter 2024, down from a deficit of $18.9 billion in the previous quarter, according to the ABS. See also ABS Insights into Government Finance Statistics for a look at developments in taxation revenue.

The ABS said Australian retail trade rose 0.3 per cent over the month (seasonally adjusted) in January 2025 to be up 3.8 per cent over the year. The Bureau said the monthly increase was mostly driven by food-related spending, with rises in both cafes, restaurants and takeaway food services and in food retailing, citing big crowds across large-scale events including the Australian Tennis Open and cricket matches.

ANZ-Indeed Australian Job Ads fell 1.4 per cent over the month in February 2025. The drop follows an (upwardly revised) 1.3 per cent monthly increase in January to give a cumulative decline of just 0.1 per cent over the year to date. In annual terms, Job Ads were down 9.2 per cent on their February 2024 levels but still 14.7 per cent above their pre-COVID 2019 average.

The ANZ-Roy Morgan Australian Consumer Confidence Index fell 2.1 points to 87.7 in the week ending 2 March 2025. All five subindices reported modest falls with the largest decline for the ‘future financial conditions’ measure, which was down 5.9 points. That drop in the overall index marked a partial retreat from the previous week’s jump but still left Confidence up 2.6 points in the aftermath of last month’s RBA rate cut. Inflation expectations rose 0.3 percentage points to 4.5 per cent.

The ABS published Business Indicators for the December quarter 2024. According to the Bureau, company gross operating profits rose 5.9 per cent over the quarter but fell 6.2 per cent over the year, while wages and salaries were up 1.4 per cent quarter-on-quarter and 4.7 per cent higher year-on-year (seasonally adjusted, current prices).

The CoreLogic National Home Value Index (HVI) rose 0.3 per cent in February 2025, bringing to an end the previous run of three consecutive months of falling values. That monthly increase was enough to leave the HVI up 7.6 per cent over its February 2024 value. The Combined Capitals index was also up 0.3 per cent over the month and was 6.9 per cent higher in annual terms. Home values were up over the month in every capital city except Darwin (which registered a modest 0.1 per cent decline), with gains ranging from a low of 0.2 per cent (Brisbane and Canberra) to a high of 0.4 per cent (Hobart and Melbourne). CoreLogic pointed to expectations of lower interest rates driving improved buyer sentiment. The latter was also visible in an improvement in auction rates which have returned to long-run average levels. National rents rose by 0.6 per cent over the month, which marked the strongest monthly increase since May 2024, and in annual terms rents were up 4.1 per cent. The latter marks the slowest annual growth since the year to March 2021 but still means rental increases are running at double their pre-pandemic average of two per cent per annum.

The ABS said total dwellings approved in January 2025 were up 6.3 per cent over the month (seasonally adjusted) and 21.7 per cent over the year, at 16,579. Approvals for private sector houses were up 1.1 per cent month-on-month and 8.9 per cent year-on-year, while approvals for private sector dwellings excluding houses jumped 12.7 per cent month-on-month and 41.6 per cent year-on-year.

Last Friday, the ABS published provisional mortality statistics for Australia covering January-November 2024.

Other things to note . . .

• RBA Deputy Governor Andrew Hauser gave a speech on Monetary Policy in a VUCA (Volatile, Uncertain, Complex and Ambiguous) World. Hauser highlighted two key uncertainties: (1) Global trade policy and (2) Capacity in the domestic economy. He also discussed the decision to cut the cash rate target last month, explaining that ‘the encouraging news on price and wage inflation gave us somewhat greater confidence that underlying inflation is on track to return to the target range in the near term – if anything, a little more rapidly than previously expected.’ After reminding his audience that the RBA sets ‘monetary policy such that inflation is expected to return to the midpoint of the target range’, Hauser explained that ‘the rate cut in February reduces the risks of inflation undershooting that midpoint, but the Board does not currently share the market’s confidence that a sequence of further cuts will be required.’
• According to the latest Household, Income and Labour Dynamics in Australia (HILDA) Survey, income inequality in Australia has risen to its highest since the HILDA survey started operating in 2001. In 2022, the Gini coefficient measure of income inequality rose above 0.31 for the first time in the survey’s history. The rise reflected the combined impact of growth in high incomes relative to middle incomes (measured by a rise in the ratio of the 90^th percentile to the median) and falls in low incomes relative to middle incomes (measured by a rise in the ratio of the median to the 10^th percentile). Note that the same survey also reports a considerable decline in wealth inequality as measured by Gini coefficient between 2018 and 2022. A summary of these and other findings here.
• The Productivity Commission presents a selection of the ideas submitted to the Commission to make Australia more productive and prosperous.
• Peter Bowers and Joseph Walker have produced a literature review on Australia’s State Capacity. They argue that on a series of international rankings, Australia’s government is ‘incredibly effective’ by global standards. Potential explanations for our relative high state capacity they identify include cabinet government, cultural factors (obedience to institutional authority and relying on the state), a relative lack of adversarial legalism and prescriptive legislation, our federal structure, well-paid public servants, and a stable political system. The review is a background piece for this Walker podcast with Richard Holden and Steven Hamilton on state capacity which starts with Australia’s pandemic experience and then expands to broader issues.
• Greg Earl casts an eye over Australia’s fairytale response to Trump’s tariffs.
• In the AFR, Richard Holden reckons Australia’s fiscal position is not as healthy as it looks.
• The ABS released data on recorded crime – offenders for the 2023-24 financial year. There were 340,681 offenders proceeded against police that year, marking the lowest number since the series began in 2008-09. According to the Bureau, the decline is the product of falls in illicit drug and public order offences, with both categories also falling to record lows in 2023-24.
• The latest IMF Article IV report on the Indian economy. Related, the Economist’s Free Exchange column says India’s success has undermined a development myth – that the eradication of poverty requires a manufacturing miracle.
• Also from the IMF, new research on the macroeconomic consequences of housing booms finds that while booms deliver stronger growth in both GDP and private consumption during their expansion phase, the subsequent sharp reversals are associated with severe housing contractions and significant net negative effects on the real economy. The stronger the preceding boom, the more challenging the post-boom recovery. Importantly, the authors also find evidence that economies with less restrictive housing supply constraints tend to see less painful economic adjustments during a housing contraction.
• Related, new BIS data on global house prices.
• The Economist magazine again, this time channelling Pride and Prejudice on the rise of the ‘inheritocracy’. Rising wealth (especially housing-related), shifting demography and slower economic growth together mean that today’s rich countries are starting to resemble Jane Austen’s world.
• Jonathan Fenby on Xi Jinping’s moment of truth.
• The WSJ on the return of the structured finance industry – which is now booming like it was pre-GFC.
• Also from the WSJ, a handy guide on how much tariffs raise prices in practice. And some useful background on how the North American auto industry worked pre-tariffs through the prism of transmission modules (seven border crossings are involved in their manufacture) and pistons (six crossings). This might give some insight as to why the United States has decided to ‘pause’ some of the auto tariffs component of the Mexican and Canadian tariffs this week.
• Insights on WFH from six US surveys.
• The Odd Lots podcast talks to Ray Dalio about the coming crisis in US debt. And Bloomberg’s Trumponomics podcast asks, is a Trump Recession inbound?
• The FT Economics Show in conversation with Adair Turner on can the world decarbonise fast enough?
• The Conversations with Tyler podcast talks to Carl Zimmer on the hidden life in the air we breathe.