Evelyn Reynolds

Commuters in London.
Jason Alden/Bloomberg via Getty Images

The U.K. economy has emerged from recession as gross domestic product rose 0.6% in the first quarter, official figures showed Friday, beating expectations.
Economists polled by Reuters had forecast growth of 0.4% on the previous three months of the year.

The U.K. entered a shallow recession in the second half of 2023, as persistent inflation continued to hurt the economy.
Although there is no official definition of a recession, two straight quarters of negative growth is widely considered a technical recession.
The U.K.’s production sector expanded by 0.8% in the period from January to March, while construction fell by 0.9%. On a monthly basis, the economy grew by 0.4% in March, following 0.2% expansion in February.
In output terms, the services sector — crucial to the U.K. economy — grew for the first time since the first quarter in 2023, the Office for National Statistics said. The 0.7% growth was mainly driven by the transport services industry which saw its highest quarterly growth rate since 2020.
U.K. Prime Minister Rishi Sunak, whose Conservative Party recently suffered significant losses at local elections, welcomed the news. “The economy has turned a corner,” he said in a post on social media platform X.

“We know things are still tough for many people, but the plan is working, and we must stick to it,” Sunak added.
Suren Thiru, economics director at ICAEW, a professional group for chartered accountants, struck a more measured tone. He said the positive impact of weaker inflation could be curtailed by a renewed caution to spend amid political uncertainty ahead of general elections expected later this year.
“The UK’s escape from recession is a rather hollow victory because the big picture remains one of an economy struggling with stagnation, as poor productivity and high economic inactivity limits our growth potential,” said Thiru.
The Bank of England’s Monetary Policy Committee on Thursday warned that indicators of persistent inflation “remain elevated,” and voted to keep its main interest rate at 5.25%.
The central bank forecast headline inflation close to 2% in the near-term, but said it expects an increase slightly later in the year as the effects of a sharp fall in energy prices wear off. More

After years of China being Germany’s main trading partner, the U.S. looks like it’s quietly taking that top spot as the year progresses.
Combined exports and imports between Germany and the U.S. totaled 63 billion euros ($68 billion) between January and March on 2024, while trade with China came to just below 60 billion euros.
German has adapted its China strategy, urging companies to “de-risk” from the country last year.

The flags of the U.S. and Germany are on the table at a bilateral meeting between German Economics Minister Habeck and U.S. Secretary of State Blinken at a hotel on the Gendarmenmarkt. Photo: Christoph Soeder/dpa (Photo by Christoph Soeder/picture alliance via Getty Images)
Christoph Soeder/dpa | Picture Alliance | Getty Images

After years of China being Germany’s main trading partner, the U.S. looks like it’s quietly taking that top spot as the year progresses.
Combined exports and imports between Germany and the U.S. totaled 63 billion euros ($68 billion) between January and March on 2024. Meanwhile, trade between Germany and China came to just below 60 billion euros, according to CNBC calculations. Reuters first reported the change on Thursday.

Several factors played a role in the change, Carsten Brzeski, global head of macro research at ING Research, told CNBC.
“This shift is the result of several factors: strong growth in the U.S. has boosted demand for German products. […] At the same time, decoupling from China, weaker domestic demand in China and China being able to produce goods it previously imported from Germany (mainly cars) reduced German exports to China,” he said.
China has been Germany’s biggest trading partner for years, but the gap between China and the U.S. narrowed in recent years. The U.S. has also long been a bigger market for German exports than China, Holger Schmieding, chief economist at Berenberg Bank, told CNBC.
While the U.S. share of German exports had been growing in recent years, China’s has been decreasing, he noted. “The Chinese economy is stuttering and German companies are facing stiffer competition from subsidised Chinese firms,” Schmieding said.
The key difference is that now the U.S. is also becoming more important when it comes to imports, he pointed out.

Germany has been pursuing a new China strategy, urging companies to “de-risk” from China last year. China is to remain a partner for Germany, the country’s government has stressed, and there should not be a “de-coupling” — but “systemic rivalry” has increasingly characterized the relationship between the two.
Tensions have also increased between the European Union and China, with the two launching investigations into each other’s trade practices and threatening to slap tariffs on imports.  
Last month, a survey by German economic institute Ifo found that the amount of companies who say they are dependent on China fell from 46% in February of 2022 to 37% in February of 2024. This was linked to fewer companies relying on inputs from Chinese manufacturers, the report said.
“The fact that the U.S. has become Germany’s largest trading partner indeed illustrates changing trade patterns and the gradual decoupling from China,” Brzeski said. More

Fed officials still think their next move will be to cut rates, but they are not entirely ruling out the possibility that they might have to raise them.Investors do not expect the Federal Reserve to raise interest rates again, and officials have made it clear that they see further increases as unlikely. But one important takeaway from recent Fed commentary is that unlikely and inconceivable are not the same thing.After the central bank held rates steady at 5.3 percent last week, the Fed’s chair, Jerome H. Powell, delivered a news conference where what he didn’t say mattered.Asked whether officials might raise interest rates again, he said he thought they probably would not — but he also avoided fully ruling out the possibility. And when asked, twice, whether he thought rates were high enough to bring inflation fully under control, he twice tiptoed around the question.“We believe it is restrictive, and we believe over time it will be sufficiently restrictive,” Mr. Powell said, but he tacked on a critical caveat: “That will be a question that the data will have to answer.”There was a message in that dodge. While officials are most inclined to keep interest rates at their current levels for a long time in order to tame inflation, policymakers could be open to higher interest rates if inflation were to pick back up. And Fed officials have made that clear in interviews and public comments over the past several days.Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on Tuesday that he was wary about a scenario in which inflation gets stuck at its current level, and hinted that it was possible that rates could rise more.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Jobless claims totaled a seasonally adjusted 231,000 for the week ended May 4, up 22,000 from the week before the highest since late August 2023.
Continuing claims, which run a week behind, increased to 1.78 million, up 17,000 from the previous week.

Jobseekers during a Construction Career Fair at Cape Fear Community College in Wilmington, North Carolina, US, Wednesday, March 15, 2023. 
Allison Joyce | Bloomberg | Getty Images

Initial filings for unemployment benefits hit their highest level since late August 2023 in a potential sign that an otherwise robust labor market is changing.
Jobless claims totaled a seasonally adjusted 231,000 for the week ended May 4, up 22,000 from the previous period and higher than the Dow Jones estimate for 214,000, the Labor Department reported Thursday. It was the highest claims number since Aug. 26, 2023.

The increase in claims follows a string of mostly strong hiring reports, though hiring in April was light compared to expectations. Also, job openings have been declining amid expectations that the labor market is likely to slow through the year.
Along with the move higher in layoffs, the report showed that continuing claims, which run a week behind, increased to 1.78 million, up 17,000 from the previous week. The four-week moving average of claims, which helps smooth out weekly volatility in numbers, increased to 215,000, up 4,750 from the previous week.
“Weekly jobless claims are one of the timeliest indicators of when the economy is starting to undergo serious deterioration, and the magnitude of new layoffs this week looks worrisome,” wrote Christopher Rupkey, chief economist at FWDBONDS. “One week does not a trend make, but we can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
Nonfarm payrolls increased by 175,000 in April, below the Wall Street estimate of 240,000 and the smallest gain since October 2023. However, the unemployment rate was at 3.9%, continuing a string since February 2022 of holding below 4%.
Markets reacted little to the jobless claims release, with stock market futures slightly negative and Treasury yields mixed.

Excluding seasonal adjustments, claims totaled 209,324, up 10.4% from the previous week. New York alone saw an increase of more than 10,000, accounting for more than half the total rise.
“A low number of claims had become almost monotonous, and while this surprising spike could well be a blip, we should expect more volatility and a trend toward higher claims as the labor market normalizes,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Federal Reserve officials are watching the jobs numbers closely as they continue in efforts to bring inflation back to 2%. Following their meeting last week, policymakers noted that “job gains have remained strong,” though that came before the April employment report release.
Markets are expecting the central bank to begin lowering interest rates in September. More

The president’s visit will highlight the investment by Microsoft and point to a failed Foxconn project negotiated by Donald J. Trump.President Biden will travel to Wisconsin on Wednesday to announce the creation of an artificial intelligence data center, highlighting one of his administration’s biggest economic accomplishments in a crucial battleground state — and pointing up a significant failure by his immediate predecessor and 2024 challenger.At a technical college in Racine, Mr. Biden will announce that Microsoft will invest $3.3 billion to build the center, which the tech giant estimates will create 2,300 union construction jobs and 2,000 permanent jobs, according to the White House. The project is part of Mr. Biden’s “Investing in America” agenda, which has focused on bringing billions of private-sector dollars into manufacturing and industries such as clean energy and artificial intelligence.In his fourth trip to Wisconsin this year, Mr. Biden will continue an aggressive campaign to paint a contrast between him and former President Donald J. Trump, the presumptive Republican nominee, who is in the fourth week of his criminal trial in connection with payments to a pornographic film star. While in Wisconsin, Mr. Biden will also attend a campaign event, where he will speak to Black voters about the stakes in the election.In a fact sheet released by the White House, the administration said that Mr. Biden’s visit to Racine would showcase “a community at the heart of his commitment to invest in places that have been historically overlooked or failed by the last administration’s policies.”The Microsoft data center will be built on grounds where Mr. Trump, as president, announced in 2017 that Foxconn, the Taiwanese electronics manufacturer, would build a $10 billion factory for making LCD panels. The Foxconn factory was supposed to be one of Mr. Trump’s marquee domestic manufacturing victories: the first major factory run by the electronics supplier in Wisconsin, with a promised 13,000 jobs.Instead, the ill-fated project never materialized as promised, even after receiving millions in subsidies and bulldozing homes and farms to build the factory. The company abandoned its plans and produced only a small fraction of the promised jobs, dealing a major blow to Mr. Trump’s pledge to revitalize American manufacturing as well as to Racine, which lost about 1,000 manufacturing jobs during his four years in office. The information issued by the White House ahead of Mr. Biden’s visit said the new data center would add to the more than 4,000 jobs created in Racine since the president took office.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Jen Forbus turned 50 this year. She is in good health and says her life has only gotten better as she has grown older. Forbus resides in Lorain, Ohio, not far from Cleveland; she is single and has no children, but her parents and sisters are nearby. She works, remotely, as an editorial supervisor for an educational publishing company, a job that she loves. She is on track to pay off her mortgage in the next 10 years, and having recently made her last car payment, she is otherwise debt-free. By almost any measure, Forbus is middle class. Listen to this article, read by Malcolm HillgartnerStill, she worries about her future. Forbus would like to stop working when she is 65. She has no big retirement dreams — she is not planning to move to Florida or to take extravagant vacations. She hopes to spend her later years enjoying family and friends and pursuing different hobbies. But she knows that she hasn’t set aside enough money to ensure that she can realize even this modest ambition.A former high school teacher, Forbus says she has around $200,000 in total savings. She earns a high five-figure salary and contributes 9 percent of it to the 401(k) plan that she has through her employer. The company also makes a matching contribution that is equivalent to 5 percent of her salary. A widely accepted rule of thumb among personal-finance experts is that your retirement income needs to be close to 80 percent of what you earned before retiring if you hope to maintain your lifestyle. Forbus figures that she can retire comfortably on around $1 million, although if her house is paid off, she might be able to get by with a bit less. She is not factoring Social Security benefits into her calculations. “I feel like it’s too uncertain and not something I can depend on,” she says. But even if the stock market delivers blockbuster returns over the next 15 years, her goal is going to be difficult to reach — and this assumes that she doesn’t have a catastrophic setback, like losing her job or suffering a debilitating illness. She also knows that markets don’t always go up. During the 2008 global financial crisis, her 401(k) lost a third of its value, which was a scarring experience. From the extensive research that she has done, Forbus has become a fairly savvy investor; she’s familiar with all of the major funds and has 60 percent of her money in stocks and the rest in fixed income, which is generally the recommended ratio for people who are some years away from retiring. Still, Forbus would prefer that her retirement prospects weren’t so dependent on her own investing acumen. “It makes me very nervous,” she concedes. She and her friends speak with envy of the pensions that their parents and grandparents had. “I wish that were an option for us,” she says. We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Billionaire investor Stanley Druckenmiller on Tuesday blasted fiscal and monetary authorities, including Treasury Secretary Janet Yellen and Fed Chair Jerome Powell, for causing high inflation.
“Bidenomics, If I was a professor, I’d give him an ‘F,'” Druckenmiller said.
Druckenmiller also called himself a “man without a candidate” as he feels a Donald Trump presidency would fuel inflation.
“To some extent, I feel like they fumbled on the five yard line,” he said of the Fed.

Reckless government spending enabled by the Federal Reserve is hurting average Americans and endangering President Joe Biden’s chances at getting reelected, billionaire investor Stanley Druckenmiller said Tuesday.
During an appearance on CNBC’s “Squawk Box,” the head of Duquesne Family Office who made his name betting against the British pound in the early 1990s blasted fiscal and monetary authorities, including Treasury Secretary Janet Yellen and Fed Chair Jerome Powell.

In addition, he called “Bidenomics” a failure and said consumers are paying the price in terms of higher inflation.
“There does seem to be a lot more recognition … of the fiscal situation facing us. Everybody seems to get it but Yellen, who just keeps spending and spending,” Druckenmiller said. “I think it’s dumb politically because it’s causing inflation and it doesn’t take a genius to figure out that the average American is getting hurt by the inflation.”
Druckenmiller’s comments come with the Fed still trying to bring inflation down, as policymakers have dashed investors’ hopes for aggressive interest rate cuts this year.
Getting markets enthused about rate reductions was a mistake because it set financial conditions “on fire,” he said.
“It seemed to me the Fed was in a perfect position. Inflation was coming down, financial conditions were tightening,” he said. “To some extent, I feel like they fumbled on the five-yard line.”

The Fed’s mistake

Though Druckenmiller said his firm was “a major beneficiary” of the jump in asset prices and easing conditions, he still thinks the Fed’s pivot in late 2023 to push harder on the idea that rate cuts were coming was a mistake. The Fed at that point only upped its unofficial forecast from two to three cuts. However, investors interpreted comments from Powell in December to mean that a substantial policy easing was ahead.
Elected officials generally welcome low interest rates. Druckenmiller said Powell didn’t do Biden any favors.
Biden is in a tight battle with former President Donald Trump heading into the November election.
“Bidenomics, If I was a professor, I’d give him an ‘F,'” Druckenmiller said. “Basically, they misdiagnosed Covid and thought [the economy] was going into a depression. The Fed did, too.”
“Treasury is still acting like we’re in a depression,” he added. “They’ve spent and spent and spent, and my new fear now is that spending and the resulting interest rates on the debt that’s been created are going to crowd out some of the innovation that otherwise would have taken place.”
The pandemic onset occurred under the Trump administration, which signed into law a $2.3 trillion coronavirus relief package in 2020. Biden then signed another nearly $2 trillion relief package in 2021.
Druckenmiller also didn’t have many good things to say about Trump, who he said was likely to see inflation under his presidency as well.
During his time in office, Trump was a fierce Fed critic and repeatedly hectored Powell and his colleagues to lower interest rates. In addition, Trump advocated heavy tariffs and has indicated he would do so again if he wins in November.
“With Biden, I’m more worried about stagflation, with all the government spending, with all the tricks that Yellen has been using to manipulate yield curve, with the way the Fed seems to have reignited financial conditions. I think the inflationary outcome could be there,” Druckenmiller said. “But I also fear regulation and everything else preventing productivity.”
“So, I’m basically a guy without a candidate,” he added. “I’m an old-style Reagan, free markets, pro-immigration and anti-tariff Republican.”

Don’t miss these exclusives from CNBC PRO More

The share of renters who believe that they one day will be able to afford a home, fell to a record low 13.4%, according to a New York Federal Reserve survey released Monday.
There’s not a lot of good news on the renting front, either. Respondents expect rental costs to increase by 9.7% over the next year.

A sign advertising a home for sale is displayed outside of a Manhattan building on April 11, 2024 in New York City. 
Spencer Platt | Getty Images

The dream of home ownership has gotten even further away for renters, with higher housing costs and elevated interest rates standing in the way of the American housing dream, according to a New York Federal Reserve survey released Monday.
The share of renters as of February who possess hopes of “residential mobility,” or the belief from renters that they one day will be able to afford a home, fell to a record low 13.4% in the central bank’s annual housing survey for 2024.

That’s down from 15% in 2023 and well off the 20.8% series high back in 2014.
Pessimism about future prospects comes amid a confluence of factors conspiring against the likelihood of renters being able to transition to home ownership.
For one, some 74.2% of renters viewed obtaining a mortgage as somewhat or very difficult, which the New York Fed said has “deteriorated substantially” from the 66.5% level in 2023 and 63.1% in 2022.
Moreover, mortgage rates have remained high by historical standards. A 30-year fixed-rate mortgage now carries an average 7.22% borrowing rate, the highest since late November 2023, according to Freddie Mac.
Housing affordability has improved little, with the median price in February at $388,700, the highest since November, according to the National Association of Realtors. The NAR’s housing affordability index was at 103 in February, down slightly from January but still at elevated levels with average monthly housing payments at $2,040.

Survey respondents expect housing prices to increase 5.1% over the next year, nearly double the 2.6% expected rate in February 2023 and above the pre-pandemic mean of 4.2%.
Despite prospects for the Fed to cut interest rates before the end of 2024, respondents think mortgage rates are only going to go higher. The outlook for a year from now is that borrowing costs will be 8.7%, and 9.7% in three years, both survey records.
There’s not a lot of good news on the renting front, either. Respondents expect rental costs to increase by 9.7% over the next year, up 1.5 percentage points from last year’s survey and the second highest in series history.
The results come a week after the Federal Open Market Committee voted to hold benchmark interest rates steady while indicating that there has been “a lack of further progress” in its efforts to bring the annual inflation rate back down to 2%.
Futures market pricing is indicating that the Fed will begin lowering rates in September, with a another cut likely to come in December.

Don’t miss these exclusives from CNBC PRO More