Evelyn Reynolds

The Organisation for Economic Co-operation and Development on Tuesday downgraded its growth forecasts for both the U.S. and global economy.
The U.S. growth outlook was revised to just 1.6% this year and 1.5% in 2026.
Tariffs and policy uncertainty were among the key factors cited by the OECD to explain the reductions.

Old Navy and Gap retail stores are seen as people walk through Times Square in New York City on April 9, 2025.
Angela Weiss | Afp | Getty Images

Economic growth forecasts for the U.S. and globally were cut further by the Organisation for Economic Co-operation and Development as President Donald Trump’s tariff turmoil weighs on expectations.
The U.S. growth outlook was downwardly revised to just 1.6% this year and 1.5% in 2026. In March, the OECD was still expecting a 2.2% expansion in 2025.

The fallout from Trump’s tariff policy, elevated economic policy uncertainty, a slowdown of net immigration and a smaller federal workforce were cited as reasons for the latest downgrade.
Global growth, meanwhile, is also expected to be lower than previously forecast, with the OECD saying that “the slowdown is concentrated in the United States, Canada and Mexico,” while other economies are projected to see smaller downward revisions.
“Global GDP growth is projected to slow from 3.3% in 2024 to 2.9% this year and in 2026 … on the technical assumption that tariff rates as of mid-May are sustained despite ongoing legal challenges,” the OECD said.
It had previously forecast global growth of 3.1% this year and 3% in 2026.
“The global outlook is becoming increasingly challenging,” the report said. “Substantial increases in barriers to trade, tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty will all have marked adverse effects on growth prospects if they persist.”

Frequent changes regarding tariffs have continued in recent weeks, leading to uncertainty in global markets and economies. Some of the most recent developments include Trump’s reciprocal, country-specific levies being struck down by the U.S. Court of International Trade, before then being reinstated by an appeals court, as well as Trump saying he would double steel duties to 50%.
“The reasons why we downgraded almost everybody in our forecast is that trade uncertainty and economic policy uncertainty has reached unprecedented levels,” OECD Chief Economist Alvaro Pereira told CNBC’s “Squawk Box Europe” Tuesday.
“As a consequence, we’ve been seeing that consumption and investment has come down, and in fact, activity indicators also have come down. And if you take this into account, and we also try to estimate in our models, you see that there’ll be less growth, less jobs, and more inflationary pressures going forward.”

U.S. inflation to rise

The OECD adjusted its inflation forecast, saying “higher trade costs, especially in countries raising tariffs, will also push up inflation, although their impact will be offset partially by weaker commodity prices.”
The impact of tariffs on inflation has been hotly debated, with many central bank policymakers and global analysts suggesting it remains unclear how the levies will impact prices, and that much depends on factors like potential countermeasures.
The OECD’s inflation outlook shows a notable difference between the U.S. and some of the world’s other major economies. For instance, while G20 countries are now expected to record 3.6% inflation in 2025 — down from 3.8% in March’s estimate — the projection for the U.S. has risen to 3.2%, up from a previous 2.8%.
U.S. inflation could even be closing in on 4% toward the end of 2025, the OECD said.

‘On the cusp of something quite significant’

The OECD’s Pereira also discussed developments in technology such as AI, and how they are impacting productivity — and giving the U.S. an advantage.
“Productivity has been very strong in the United States, and we expect that likely this will widen the gap between the United States [and] the rest of the world, exactly because the exposure to AI by sectors in the U.S. are higher,” he said. 
With technology like AI, robotics and quantum computing, there is the possibility of a “significant productivity revival,” he said — but only if trade barriers are lowered and investment and consumption increase.
“I think if we are able to get trade agreements between countries, not only between China, United States, but also other parts of the world and if we are able to reduce uncertainty, we do believe that we might be on the cusp of something quite significant,” Pereira said. More

Euro zone inflation fell by more than expected to 1.9% in May according to flash data from statistics agency Eurostat.
This is below the European Central Bank’s 2% inflation target.
Economists polled by Reuters had expected the May reading to come in at 2%.

Shoppers buy fresh vegetables, fruit, and herbs at an outdoor produce market under green-striped canopies in Regensburg, Upper Palatinate, Bavaria, Germany, on April 19, 2025.
Michael Nguyen/NurPhoto via Getty Images

Euro zone inflation fell below the European Central Bank’s 2% target in May, hitting a cooler-than-expected 1.9% on sharp declines in services, flash data from statistics agency Eurostat showed Tuesday.
Economists polled by Reuters had expected the May reading to come in at 2%, compared to the previous month’s 2.2% figure.

The closely watched services inflation print cooled significantly to 3.2% last month, compared to the previous 4% reading. So-called core inflation, which excludes energy, food, tobacco and alcohol prices, also eased, falling from 2.7% in April to 2.3% in May.
“May’s steep decline in services inflation, to its lowest level in more than three years, confirms that the previous month’s jump was just an Easter-related blip and that the downward trend in services inflation remains on track,” Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics said in a note.
Inflation has been moving back towards the 2% mark throughout 2025 amid uncertainty for the euro zone economy.
The latest figures will be considered by the European Central Bank as it prepares to make its next interest rate decision later this week. Back in April, the central bank took its key rate, the deposit facility rate, to 2.25% — nearly half of the high of 4% notched in the middle of 2023.
Markets were last pricing in an around 95% chance of interest rates being cut by a further 25-basis-points on Thursday. Given the widely anticipated upcoming interest rate trim, the Tuesday data might not strongly influence this week’s ECB decision, Allen-Reynolds said.

“But May’s inflation data strengthen the case for another cut at the following meeting in July,” he noted.
But the global economic outlook remains muddied. U.S. President Donald Trump’s protectionist tariff plans have been casting shadows over the global economic outlook, with his so-called “reciprocal” duties — which are also set to affect the European Union — widely seen as harmful to economic growth. Their immediate potential impact on inflation is less clear, with central bank policymakers and analysts noting that it could depend on any potential countermeasures.
Despite the transatlantic tumult, the Organisation for Economic Co-operation and Development in its latest Economic Outlook report out on Tuesday said it was expecting the euro area to expand by 1% in 2025, unchanged from its previous forecast. Euro area inflation is meanwhile projected to come in at 2.2% this year, also in line with the March report.
Euro country bond yields were last lower after the fresh inflation data, with the German 10-year bond yield falling by over two basis points to 2.499%, while the yield on the French 10-year bond was last down by more than one basis point to 3.169%.
The euro was meanwhile last around 0.3% lower against the dollar. More

Campell’s reported the highest rate of consumers cooking at home since early 2020, when the pandemic was first taking hold.
This comes as President Donald Trump’s tariffs raise fears of a recession and weigh on consumer sentiment.

A worker arranges cans of Campbell’s soup on a supermarket shelf in San Rafael, California.
Getty Images

Campbell’s has seen customers prepare their own meals at the highest rate in about half a decade, offering the latest sign of everyday people tightening their wallets amid economic concerns.
“Consumers are cooking at home at the highest levels since early 2020,” Campbell’s CEO Mick Beekhuizen said Monday, adding that consumption has increased among all income brackets in the meals and beverages category.

Beekhuizen drew parallels between today and the time when Americans were facing the early stages of what would become a global pandemic. It was a period of broad economic uncertainty as the Covid virus affected every aspect of everyday life and caused massive shakeups in spending and employments trends.
The trends seen by the Pepperidge Farm and V-8 maker comes as Wall Street and economists wonder what’s next for the U.S. economy after President Donald Trump’s tariff policy raised recession fears and battered consumer sentiment.
More meals at home could mean people are eating out less, showing Americans tightening their belts. That can spell bad news for gross domestic product, two thirds of which relies on consumer spending. A recession is commonly defined as two straight quarters of the GDP shrinking.
It can also underscore the souring outlook of everyday Americans on the national economy. The University of Michigan’s consumer sentiment index last month fell to one of its lowest levels on record.
Campbell’s remarks came after the soup maker beat Wall Street expectations in its fiscal third quarter. The Goldfish and Rao’s parent earned 73 cents per share, excluding one-time items, on $2.48 billion in revenue, while analysts polled by FactSet anticipated 65 cents and $2.43 billion, respectively.
Shares added 0.8% before the bell on Monday. The stock has tumbled more than 18% in 2025. More

The president is set to raise tariffs on steel and aluminum this week, even as the courts are challenging the legitimacy of other levies.The legitimacy of President Trump’s tariffs is being questioned by U.S. courts, but the president is showing no signs of backing off his favorite tool.On Wednesday, the tariffs that Mr. Trump imposed on foreign steel and aluminum are set to double to 50 percent, a move that the president has said will better protect domestic metal makers.In the coming days, the U.S. government is set to face off with states and businesses that have sued over the president’s tariffs, and both sides will be required to submit more information as judges work toward final decisions on the legality of Mr. Trump’s steepest tariffs.Last Wednesday, the Court of International Trade ruled that some of the steep tariffs that Mr. Trump had imposed were illegal, a significant setback for the president’s agenda.Less than 24 hours later, a separate court temporarily paused that decision. As judges weigh that appeal, the tariffs in question — which include the levies Mr. Trump imposed on Canada, Mexico and China for what he said was their role in the fentanyl trade, as well as the global tariffs Mr. Trump announced, and then quickly paused, in April — are expected to remain in effect at least until June 9.On Sunday, one of Mr. Trump’s top trade advisers insisted that the president would continue to find ways to hit other countries with tariffs even after the trade court ruled against the defining element of Mr. Trump’s strategy.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

The new blueprint shows that a vast array of education, health, housing and labor programs would be hit, including aid for college and cancer research.The Trump administration on Friday unveiled fuller details of its proposal to slash about $163 billion in federal spending next fiscal year, offering a more intricate glimpse into the vast array of education, health, housing and labor programs that would be hit by the deepest cuts.The many spending reductions throughout the roughly 1,220-page document and agency blueprints underscored President Trump’s desire to foster a vast transformation in Washington. His budget seeks to reduce the size of government and its reach into Americans lives, including services to the poor.The new proposal reaffirmed the president’s recommendation to set federal spending levels at their lowest in modern history, as the White House first sketched out in its initial submission to Congress transmitted in early May. But it offered new details about the ways in which Mr. Trump hoped to achieve the savings, and the many functions of government that could be affected as a result.The White House budget is not a matter of law. Ultimately, it is up to Congress to determine the budget, and in recent years it has routinely discarded many of the president’s proposals. Lawmakers are only starting to embark on the annual process, with government funding set to expire at the end of September.The updated budget reiterated the president’s pursuit of deep reductions for nearly every major federal agency, reserving its steepest cuts for foreign aid, medical research, tax enforcement and a slew of anti-poverty programs, including rental assistance. The White House restated its plan to seek a $33 billion cut at the Department of Housing and Urban Development, for example, and another $33 billion reduction at the Department of Health and Human Services.Targeting the Education Department, the president again put forward a roughly $12 billion cut, seeking to eliminate dozens of programs while unveiling new changes to Pell grants, which help low-income students pay for college.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

President Trump said that Beijing was not honoring the terms of a temporary agreement and warned of further confrontation.President Trump and his advisers on Friday leveled sharp attacks against China over trade, reviving an economic dispute that led to steep tariffs and a confrontation over critical next-generation technologies.In a post on Truth Social, Mr. Trump accused Beijing of violating the terms of a fragile truce struck earlier this month between the two countries that included rolling back tariffs and other trade barriers. The agreement was intended to give both sides time to reach a larger deal that would avert an all-out trade war.Mr. Trump’s accusations alluded to China’s promise to reduce export restrictions around rare earth minerals that are key components in many technology and military products. The president suggested that China had continued to limit access to those goods, as he appeared to adopt a more confrontational posture on trade.“So much for being Mr. NICE GUY!” he proclaimed.Speaking to reporters later in the day, Stephen Miller, the White House deputy chief of staff for policy, stressed that the president prefers cooperation. But, he warned, China’s behavior “opens up all manner of action for the United States.”The standoff between the two nations has created significant concern for businesses and investors, and has raised fears of a global economic downturn in recent months. Stocks were down slightly on Friday.The new dispute arrives at a moment of great uncertainty for Mr. Trump’s ability to brandish steep tariffs to force other countries to make trade concessions. A federal trade court earlier this week declared many of the president’s duties to be illegal, including some that he imposed on China on emergency grounds. An appeals court later restored that power temporarily until a panel of judges can hear the government’s arguments fighting the original ruling.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

Made quickly and with minimal fuss, a park for skateboarders revived a downtown site — and offered a few lessons for urban revitalization.Two years ago, United Nations Plaza was vying for the title of “Saddest Place in San Francisco.” A sunny brick promenade surrounded by government buildings, the plaza had become a trash-strewn dumping ground for the city’s most vexing problems.A typical weekday scene might have included a team of paramedics reviving a limp teenager overdosing on fentanyl, against a backdrop of merchants selling stolen cellphones and a fountain being repurposed as a toilet.For a city struggling to recover after the Covid-19 pandemic, the images of suffering and bedlam could not have been more inconveniently placed: U.N. Plaza, a block from City Hall, has a busy rail station and is bordered by Market Street, a major thoroughfare that double-decker tour buses cruise daily. In 2023, after a big, international conference announced that it was coming to the hobbled city, the parks department scrambled to find a new life for the site.That turned out to be a skateboard park. On a recent sunny morning, kids in baggy pants slid the railings around a flagpole and cruised over a volcano-shaped embankment. The old granite ledges that used to be illegal to skate on were now open to grind and slide.An overview of U.N. Plaza.Inviting a bunch of skaters to rip around, scuffing ledges, is not the use San Francisco had in mind in 1975 when the plaza was dedicated to commemorate the founding of the United Nations in the city. U.N. Plaza was part of a larger redevelopment meant to attract affluent shoppers to San Francisco from the suburbs. Instead, for the next four decades, the city produced regular reports of failure that highlighted assaults and drug use on the plaza, and high vacancies in the buildings surrounding it. For all the thought that went into the open design and gushing fountain, it was never clear what people were supposed to do there.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

Germany’s harmonized consumer inflation fell to 2.1% in May, according to preliminary data.
The rate is nearing the European Central Bank’s 2% target.
Economists polled by Reuters had been expecting the reading to come in at 2%.

19 May 2025, Berlin: Apricots are sold at a greengrocer for 7.98 euros per kilogram. Grapes and papaya are also on offer.
Photo by Jens Kalaene/picture alliance via Getty Images

Germany’s annual inflation hit 2.1% in May approaching the European Central Bank’s 2% target but coming in slightly hotter than analyst estimates, preliminary data from statistics office Destatis showed Friday.
The print compares with a 2.2% reading in April and with a Reuters projection of 2%.

The print is harmonized across the euro zone for comparability.
So-called core inflation, which strips out more volatile food and energy prices, dipped slightly from April’s 2.8% to 2.9% in May. The closely watched services print meanwhile eased sharply, coming in at 3.4% compared to 3.9% in the previous month.
Energy prices fell markedly for the second month in a row, tumbling by 4.6% in May.
Germany’s consumer price index has been closing in on the European Central Bank’s 2% target over recent months, in a positive signal amid ongoing uncertainty about the economic outlook for Europe’s largest economy.
This target should be met in the coming months, Carsten Brzeski, global head of macro at ING, said in a note on Friday.

“Looking ahead, at least in the nearer term, German inflation is likely to continue its downward trend, probably dropping below 2% over the coming months,” he said.
Opposing developments are expected to shape the outlook for inflation, and — paired with lower energy prices — lead to the print hovering around the 2% mark throughout the second half of the year, Brzeski noted.
“On the one hand, the cooling of the labour market should take away wage pressures and consequently inflationary pressures; on the other hand, the government’s fiscal stimulus is likely to push up inflationary pressure towards the end of the year and beyond,” he explained.
Domestic and global issues have mired expectations for Germany’s financial future.
One the one hand, U.S. President Donald Trump’s tariffs could damage economic growth, given Germany’s status as an export-reliant country, though the potential impact of such duties on inflation remains unclear. But frequent policy shifts and developments have been muddying the picture.
On the other hand, Germany’s newly minted government is starting to get to work and has made the economy a top priority. Questions linger about when and to what extent the new Berlin administration’s policy plans might be realized.
The ECB is set to make its next interest rate decision on June 5, with traders last pricing in an over 96% chance of a quarter point interest rate reduction, according to LSEG data. Back in April, the central bank had cut its deposit facility rate by 25 basis points to 2.25%.
ING’s Brzeski said Friday’s German inflation print should bring “relief” to the ECB as it suggests disinflation is continuing, and added that despite the latest developments regarding tariffs, the central bank has a stronger case for a further rate cut than a hold.
German bund yields were slightly higher after the data was released. The 2-year bund yield was up over one basis point to 1.719%, while the yield on the 10-year bund was less than one basis point higher to 2.521%. More