Evelyn Reynolds

Gov. Gretchen Whitmer addressed the Detroit Auto Show, saying that tariffs should not be used “to punish our closest trading partners,” like Canada.Gov. Gretchen Whitmer of Michigan, a leading Democrat from a critical battleground state, on Wednesday subtly warned against President-elect Donald J. Trump’s tariff threats targeting Canada, even as she stressed her broader willingness to work with him on the cusp of his second inauguration.Her speech, at the Detroit Auto Show, offered among the clearest examples yet of how Democrats from states that Mr. Trump carried are seeking to balance fresh overtures to the incoming president with their staunch opposition to some of his policy proposals.Speaking at a convention center just across the Detroit River from Windsor, Ont., Ms. Whitmer described strong cultural and industrial ties between the two cities.Using tariffs as punishment, she said, risks “damaging supply chains, slowing production lines and cutting jobs on both sides of the border.”Ms. Whitmer did not mention Mr. Trump by name as she broached the subject, but he has threatened to impose tariffs on imports from Canada if the country does not reduce the flow of migrants and fentanyl to the United States. The Ontario Premier Doug Ford has discussed retaliation, including threatening to disrupt the electricity supply from the province to the United States.“I am not opposed to tariffs outright, but we cannot treat them like a one-size-fits-all solution, and we certainly shouldn’t use them to punish our closest trading partners,” Ms. Whitmer said, arguing that such an approach could embolden China.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 German economy contracted by 0.2% in 2024, data from statistics office Destatis showed Wednesday.
This is the country’s second consecutive yearly economic slowdown and was in line with expectations from economists polled by Reuters.
Germany has been facing a series of economic struggles, including a long-standing housebuilding crisis and pressure on its autos industry.

The skyscrapers of the Frankfurt skyline in the evening, with the Deutschherrn Bridge in the foreground.
Frank Rumpenhorst | Picture Alliance | Getty Images

The German economy contracted by 0.2% in 2024, in the country’s second consecutive yearly slowdown, data from statistics office Destatis showed Wednesday.
The drop was in line with the expectations of economists polled by Reuters, according to LSEG data. The European Commission and a group of Germany’s leading economic institutes had both independently forecast a 0.1% dip in the German GDP in 2024.

Ruth Brand, president of the German statistics agency, said that “cyclical and structural pressures” hindered stronger economic development.
“These include increasing competition for the German export industry on key sales markets, high energy costs, an interest rate level that remains high, and an uncertain economic outlook,” she said in a statement.
Destatis said that both the manufacturing and construction sectors had suffered in 2024, while the services sectors recorded growth over the period.
The country has been dealing with a long-standing housebuilding crisis, which has been attributed to higher interest rates and construction costs. Several of Germany’s key industries, including the auto sector, have also been under pressure for some time. Carmakers have been struggling with the transition to electric vehicles, as well as competition from Chinese counterparts.
The German stock index DAX was last higher after the data release, climbing by 0.47% at 10:24 a.m. London time after already having started the day in positive territory.

Germany’s economy had already contracted by 0.3% in 2023.

Fourth quarter

Destatis on Wednesday also released an early first reading of the gross domestic product (GDP) in the fourth quarter, based on currently available information. The economy fell by 0.1% in the three months to end of December, compared with the previous quarter, when adjusted for price, seasonal and calendar variations. The regular first reading of Germany’s GDP for the fourth quarter will be released later this month, Destatis noted.
Robin Winkler, chief Germany economist at Deutsche Bank, on Wednesday said that, while the annual GDP contraction should not be a surprise to anyone, the preliminary reading for the fourth quarter of 2024 was unexpected and worrisome.
“If confirmed, it would mean that the German economy lost momentum again at the start of winter. The current political uncertainty in Berlin and Washington was likely an important factor,” he said in comments translated by CNBC.
Looking ahead, German economic institute Ifo on Wednesday warned that unless economic policy reforms are introduced, the German economy would struggle to “break free from stagnation” in 2025, with the institution expecting “perceptible growth” of 0.4% over the period in this scenario.
“If no countermeasures are taken, the ifo researchers fear that manufacturing companies will continue to relocate production and investments abroad,” the institute said in a statement. “Productivity growth would also remain weak, as value added and employment in highly productive industries would be replaced by value added in service sectors with low productivity growth.”
If “the right” policies are introduced, investing and working in Germany could nevertheless become a more viable option again, and the economy could expand by as much as 1%, Ifo added. More

The ongoing disaster will affect residents’ health, local industries, public budgets and the cost of housing for years to come.After decades of mounting damage from climate-fueled natural disasters, researchers have compiled many misery-filled data sets that trace the economic fallout over weeks, months and years.The fires still burning in Los Angeles are sure to rank among America’s most expensive — but there is no perfect analogue for them, making it difficult to forecast the ultimate cost.The main reason is that wildfires have typically burned in more rural locations, consuming fewer structures and attacking smaller metropolitan areas. The Los Angeles conflagration is more akin to a storm that hits a major coastal city, like Houston or New Orleans, causing major disruption for millions of people and businesses.“It looks a lot more like the humanitarian situation from a flood or a hurricane than a wildfire that people are watching in the hills,” said Amir Jina, an assistant professor at the University of Chicago’s Harris School of Public Policy, who has studied the economic impact of climate change.On the other hand, several mitigating factors could lead to lower costs and a stronger rebound relative to other places. The cinema capital’s wealth and industrial diversity, along with other natural advantages from geography and weather, may allow Los Angeles to stave off a worst-case scenario.Estimating the likely economic losses is tricky at this stage. The weather data company AccuWeather has offered a figure of $250 billion to $275 billion, though a Goldman Sachs report said it found the estimate high. (Declining to provide a breakdown because its methodology is “proprietary,” AccuWeather said it considered many factors including long-run health impacts as well as short-term losses in the value of public companies exposed to the disaster.)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

New Zealand is the latest country to sign an economic partnership with the United Arab Emirates.
New Zealand’s prime minister told CNBC that the South Pacific island nation has to look beyond its own backyard for trade opportunities.
The free trade agreement signed on Monday between New Zealand and the UAE is seen by Prime Minister Christopher Luxon as a chance to expand bilateral trade between the countries.

Cattle photographed in New Zealand. Agriculture plays a major role in New Zealand’s economy, especially when it comes to exports.
David Clapp | Stone | Getty Images

New Zealand’s prime minister told CNBC the country has to look beyond its own backyard for trade opportunities, as the South Pacific island nation signs an economic partnership with the United Arab Emirates (UAE).
The free trade agreement, known formally as the Comprehensive Economic Partnership Agreement (CEPA), is seen by Prime Minister Christopher Luxon as a chance to expand bilateral trade between the countries and makes the UAE one of the island’s largest markets in the Middle East.

“We’ve had a long-standing relationship over 40 years of diplomatic recognition, and really the chance now for us is to deepen and to broaden the economic relationship,” Luxon told CNBC Monday.
“That’s why the signing of the CEPA and also the bilateral investment treaty is really important, because actually these are two small advanced economies in the world that actually have a lot in common and alot of common values, and we want to be able to work together and build out that relationship.”
New Zealand’s key exports to the UAE include dairy, industrial products, meat, horticultural products and travel services, the government said as it announced the deal. The agreement, expected to come into force later this year, comes as the government aims to double the value of exports in 10 years. It said the CEPA will mean that 99% of New Zealand goods exporters are able to access the UAE market duty free.
“This includes all New Zealand’s dairy, red meat, horticultural and industrial products immediately when the Agreement enters into force,” it noted. 
“One in four of our jobs in New Zealand are tied very much to trade,” Luxon, head of the center-right New Zealand National Party who’s been in power since late 2023, told CNBC’s Dan Murphy in Abu Dhabi Monday.

“When you see a New Zealand company that’s exporting out to the world, it’s able to pay its workers7% higher salaries and wages, and they’re often our more productive companies. The message to people at home is that they understand that we are a trading nation. We don’t get rich just selling stuff to each other in the South Pacific or within New Zealand,” he said.
“We actually need to send out great products and services out into the world, of which there’s huge demand for, and make sure we open up new markets like the Middle East to actually get those products too. In doing that, we bring more money back at home, and that, obviously, is the way in which we can afford better public services like health and education,” Luxon added.
New Zealand is in need of an economic boost after its economy contracted last year and entered recession territory in the third quarter. The economy shrunk by 1% in the July-September quarter, data released in December showed.
The fall followed a 1.1% contraction in the previous quarter. Two straight quarters of negative growth is widely considered a technical recession.

WELLINGTON, NEW ZEALAND – NOVEMBER 03: Incoming Prime Minister and National Party leader Christopher Luxon speaks during a media stand-up at Parliament on November 03, 2023 in Wellington, New Zealand. Special votes cast overseas and by mail were certified on Friday, finally sealing the results of New Zealand’s general elections. The Labour party was soundly defeated by the National Party, led by Christopher Luxon, winning the most votes. National will however need the support of both ACT and NZ First parties to form the next coalition Government. (Photo by Hagen Hopkins/Getty Images)
Hagen Hopkins | Getty Images News | Getty Images

Luxon said there was no doubt that the past three years had been “a very challenging time” for the country, but said inflation, at 2.2% in October, was under control and interest rates were coming down. The country’s central bank has flagged that further easing is to come at its next meeting on Feb. 19.
“We’ve got business confidence at a 10-year high. We’ve got consumer confidence at a three-year high. We’ve got farmer confidence the highest it’s been since 2017 so we know we’ve got the conditions that people are believing there’s a better future,” he added.
“Now we’ve got to convert and really drive into growth, and that’s where these stronger international trading connections are, but also encouraging inbound investment to New Zealand as well.”
Asked how he felt about Donald Trump returning to power in the U.S., and the possibility of tariffs on exports to the States as the president-elect has widely signaled (with a potential universal tariff of 10% or 20% on all goods imported to the U.S.), Luxon said he was in “wait-and-see” mode.
“We’re going to work well with whichever Administration the Americans select, and they’veselected Donald Trump and the Republican Administration. And I’ve got every confidence we’ll work very constructively with them. We’ll have to wait and see as to what is the tariff policy in terms of how it actually does get played out, or what gets played out,” he said. More

It’s too soon to know how the Los Angeles fires will change life in California, but it may heavily depend on the answer to a single question: Will a once-obscure insurance program run out of money?That program, the California FAIR Plan, was created by state lawmakers in 1968 to cover people who couldn’t get standard home insurance for various reasons. But as climate change makes wildfires more frequent and intense, causing commercial insurance companies to pull back from the state, the rapidly growing FAIR Plan has become the linchpin holding together California’s increasingly fragile insurance market.Because of the fires that started last week, that linchpin may be about to break, with consequences that would reverberate throughout California’s economy.As of last Friday, the FAIR Plan had just $377 million available to pay claims, according to the office of Senator Alex Padilla, Democrat of California. It’s not yet known how much in claims the plan will face but the total insured losses from the fires so far has been estimated at as much as $30 billion. Because the fires are still burning, that number could grow.Unlike regular insurance companies, the FAIR Plan can’t refuse to cover homes just because they’re in vulnerable areas. As a result, as the risk of wildfires grows, homes deemed too dangerous by major insurers have been piling up on the FAIR Plan’s books.Between 2020 and 2024, the number of homes covered by the plan more than doubled, to almost half a million properties with a value that tripled to about half a trillion dollars.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 three-month fiscal year 2025 deficit rose to $710.9 billion, some $200 billion more than the comparable period in the prior year, or 39.4%.
Rising financing costs along with continued spending growth and declining tax receipts have combined to send deficits spiraling and have pushed the national debt past the $36 trillion mark.

A view from the United States Department of the Treasury building in Washington DC, United States on December 30, 2024. The US Treasury Department was cyberattacked by a Chinese state-sponsored actor in early December. 
Celal Gunes | Anadolu | Getty Images

The federal budget sank further into red ink during December, leaving the first fiscal quarter deficit nearly 40% higher than it was the prior year.
For the final calendar month of 2024, the shortfall totaled $86.7 billion, which actually represented a 33% decline for the same period a year prior, according to a Treasury Department report Tuesday. However, that brought the three-month fiscal year total to $710.9 billion, some $200 billion more than the comparable period in the prior year, or 39.4%.

Rising financing costs along with continued spending growth and declining tax receipts have combined to send deficits spiraling, pushing the national debt past the $36 trillion mark.
Though short-term Treasury yields have held fairly steady over the past month, rates at the far end of the duration curve have surged. The benchmark 10-year note most recently yielded close to 4.8%, or about 0.4 percentage point above where it was a month ago.
At the same time, outlays during the first quarter were 11% higher than a year ago while receipts fell by 2%.
Interest on the national debt has totaled $308.4 billion in fiscal 2025, up 7% from a year ago. Financing costs are projected to top $1.2 trillion for the full year, which would surpass 2024’s record.
The government this year has spent more on interest payments than any other category but Social Security, defense and health care.

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The producer price index rose 0.2% in December, less than the 0.4% increase in November and below the Dow Jones consensus estimate for 0.4%.
Excluding food and energy, the so-called core PPI was flat compared with the forecast for a 0.3% rise.
The release is the first of two key inflation readings this week that likely will figure into the Federal Reserve’s interest rate decision later in January.

A measure of wholesale prices increased less than expected in December, providing indication that pipeline inflation pressures eased to close the year though likely not enough to provoke another Federal Reserve interest rate cut anytime soon.
The producer price index rose just 0.2% on the month, less than the 0.4% increase in November and below the Dow Jones consensus estimate for 0.4%, according to a Bureau of Labor Statistics report Tuesday.

Excluding food and energy, the so-called core PPI was flat compared with the forecast for a 0.3% rise. Excluding food, energy and trade services, the measure rose just 0.1%.
On an annual basis, headline PPI rose 3.3% for the full year, well ahead of the 1.1% increase in 2023.
Goods prices increased 0.6%, pushed by a 9.7% surge in gasoline prices. Upward moves in several food- and energy-related measures were offset by a 14.7% slide in prices for fresh and dry vegetables.
On the services side, prices were flat, despite a 7.2% increase in passenger transportation that was offset by a fall in prices for traveler accommodation.
Stock market futures shot higher following the report while Treasury yields moved lower after pushing sharply higher in the early days of 2025.

The release is the first of two key inflation readings this week that likely will figure into the Federal Reserve’s interest rate decision later in January.
On Wednesday, the BLS will release its more closely watched reading on the consumer price index. That is expected to show 0.3% monthly gains on both the headline and core readings and respective annual inflation rates of 2.9% and 3.3%.
Though the central bank focuses more on the Commerce Department’s personal consumption expenditures price index as its main inflation gauge, the PPI and CPI readings figure into that calculation.
Markets pricing overwhelmingly points to the Fed staying on hold at the Jan. 28-29 meeting. However, policymakers, and Chair Jerome Powell in particular, could lay the groundwork for what is ahead as far as rates go.
Fed funds futures pricing Tuesday implied just one rate cut through the rest of the year; Bank of America economists on Monday said they think the Fed could be done this year. Fed officials at their December meeting penciled in the equivalent of two cuts this year, assuming quarter percentage point moves.

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The administration announced it would penalize its largest-ever batch of companies linked to Xinjiang, including major suppliers of critical minerals and textiles.The Biden administration said on Tuesday that it would block imports from more than three dozen Chinese companies, citing their alleged ties to forced labor in the Xinjiang region of China.The administration’s move is the single largest batch of additions to a list of companies that are barred from bringing products into the United States because of concerns about human rights violations.The action was taken under a 2021 law, the Uyghur Forced Labor Prevention Act, which prevents the United States from importing products that are made in whole or in part in Xinjiang, a far-western region of China where the government has detained and surveilled large numbers of minorities, including Uyghurs.China denies the presence of forced labor in Xinjiang, but the U.S. government has said the Chinese government uses forced labor, mass detentions and other coercive practices to subdue the region’s predominantly Muslim ethnic groups, particularly the Uyghurs.The 37 entities that were added on Tuesday to a special list created by the law include subsidiaries of a major supplier of critical minerals, Zijin Mining. The New York Times reported in 2022 that Zijin Mining had links with labor transfer programs in Xinjiang.The additions also include one of the world’s largest textile manufacturers, Huafu Fashion, and 25 of its subsidiaries. It’s not clear which retailers Huafu currently supplies, but H&M previously said that it had an indirect relationship with a mill belonging to Huafu Fashion and that it would cut those ties.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