Economy

According to analysts at BofA Global Research, this new generation of AI transcends current generative AI tools, such as chatbots and copilots, by introducing autonomous, decision-making agents capable of executing complex tasks without explicit human instructions.Agentic AI refers to a class of advanced foundation models that act as operating systems for autonomous agents. These agents possess enhanced reasoning capabilities and the ability to take independent actions to achieve specific goals. Unlike earlier iterations of AI, which primarily responded to predefined inputs, Agentic AI is proactive. It can plan, learn from its environment, and interact with other systems to complete tasks ranging from software engineering to logistics, often with minimal human intervention.The emergence of Agentic AI flags the astonishing speed of AI evolution. Just two years after the debut of ChatGPT and the widespread adoption of generative AI, this third wave signals a shift toward systems that are not merely tools but autonomous collaborators. BofA suggests that this transition outpaces earlier technology waves, such as the adoption of personal computers and the internet.The implications of Agentic AI are vast. Fully autonomous fleets of digital agents and robots could revolutionize industries heavily dependent on human labor, ushering in a “corporate efficiency revolution.” Sectors such as manufacturing, customer service, logistics, and healthcare stand to benefit significantly. For example, robots integrated into warehouses by companies like Amazon (NASDAQ:AMZN) and DHL have already demonstrated the potential of such technology, achieving greater efficiency and cost-effectiveness.Moreover, the ability of Agentic AI systems to autonomously handle complex, open-ended tasks could accelerate the deployment of AI in roles traditionally requiring high levels of human skill and judgment. This includes not only routine operational tasks but also more specialized functions in fields like biopharma, education, and cybersecurity.While Agentic AI offers transformative benefits, its rapid adoption also raises concerns. The displacement of jobs, especially in fields that rely on both physical and cognitive labor, is a potential downside. For instance, BofA analysts note that within eight months of ChatGPT’s launch, freelancing roles related to writing and coding witnessed a significant decline. The expansion of Agentic AI capabilities to physical domains—such as construction, landscaping, and nursing—may further exacerbate this trend.Conversely, the rise of Agentic AI could spur innovation and create new economic opportunities. Thousands of AI-focused startups are expected to emerge, leveraging advanced technologies to introduce scalable solutions across industries. This wave of “AI dot-com” enterprises may redefine business models and generate novel job categories over the next decade.Despite the advent of Agentic AI, the AI revolution has not reached its peak yet. Instead, AI is entering a supercycle of innovation, where advancements in the field are driving the development of more sophisticated applications.Global economic growth will undergo unprecedented changes as this wave unfolds, resulting in a reshaped workforce, new business models, and enhanced productivity. More

The past year saw remarkable gains, with the S&P 500 posting its best two-year performance since the late 1990s. The Federal Reserve’s rate cuts, a soft landing for the economy, and the relentless momentum of AI-driven growth created a backdrop of economic stability and investor confidence. But as analysts at the Sevens Report point out, the year ahead starts with great expectations, and the stakes are higher than ever. A handful of critical events in January will determine whether the optimism of 2024 carries over or gives way to disappointment.The first key test comes almost immediately with the Speaker of the House election on January 3. This event, while political in nature, holds economic and market implications. It will serve as a litmus test for Republican unity and their ability to pass pro-growth measures. President-elect Donald Trump’s endorsement of Speaker Johnson has heightened the stakes, with investors watching closely for signs of a cohesive Republican majority. A swift, drama-free election could reinforce market confidence in legislative efficiency. On the other hand, a protracted or contentious process would signal fractures within the party, raising doubts about its ability to deliver on its agenda.The labor market will take center stage just a week later with the release of the January jobs report on January 10. Labor market data has consistently shaped investor sentiment, and this report is no exception. Markets are walking a fine line: a weak report could stoke fears of an economic slowdown, reminiscent of the growth scare that rattled markets last August. Conversely, an unexpectedly strong jobs number could reduce expectations for further Federal Reserve rate cuts, pushing Treasury yields higher and potentially weighing on stocks. The ideal outcome for markets would be a “Goldilocks” scenario—moderate job growth that keeps both growth fears and inflationary pressures at bay.Corporate earnings season begins on January 13, and it may be the most consequential earnings period in years. After a blockbuster 2024 fueled by tech and AI-driven companies, the market is banking on continued earnings strength to justify high valuations. Consensus estimates for 2025 earnings growth are ambitious, at roughly 15%, more than double the historical average. This optimism has set a high bar for companies to clear, particularly for major tech firms like the so-called “Mag 7.” If corporate earnings fall short of expectations or if guidance suggests a slowdown, markets could face renewed volatility as concerns about valuation sustainability resurface.Inflation data will follow closely, with the release of the Consumer Price Index (CPI) on January 15. Inflation, which largely receded in 2024, has shown signs of rebounding slightly, prompting the Federal Reserve to temper its guidance on further rate cuts in 2025. The January CPI report will be pivotal in shaping inflation expectations for the year ahead. A lower-than-expected reading would likely reignite hopes for additional monetary easing, providing a tailwind for markets. However, a hotter-than-expected report would reinforce fears of persistent inflation, driving Treasury yields higher and potentially derailing the equity rally.Finally, the month will culminate in the Federal Reserve’s policy meeting on January 29. While no rate cuts are expected this time, the tone of the meeting will be critical. Market optimism hinges on the Fed maintaining its dovish stance, even if only incrementally. Any hint that the Fed may pause its rate-cutting cycle would be viewed as a significant negative, potentially undermining the foundation of the bull market. Investors will closely analyze the Fed’s language for clues on its commitment to supporting economic growth through 2025.As January unfolds, the markets are at a crossroads. The foundation of strong earnings, moderating inflation, and Fed support remains intact, but expectations are high, leaving little room for error. Analysts at the Sevens Report note that the early events of 2025 will set the tone for the rest of the year. A smooth start could rekindle the rally of 2024, while missteps could amplify the pullback seen in late December.  More

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Pan met top executives at HSBC, Standard Chartered (OTC:SCBFF) Bank and London Stock Exchange (LON:LSEG) on Friday, the PBOC said.The meetings happened during British finance minister Rachel Reeves’ two-day visit to China, where she is seeking to revive high-level economic and financial talks that have been frozen for nearly six years. More

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Health care and government were the two sectors that saw the most job growth in both 2024 and 2023.
But a second Trump administration may pose risks to growth in both areas.
Conversely, Trump’s proposed tariffs could boost lagging sectors, such as manufacturing.

Shapecharge | E+ | Getty Images

The labor market may be poised for dislocation with President-elect Donald Trump set to take office for the second time later this month.
For the past two years, health care has dominated all other industries in terms of growth, aided partly by Covid-related spending. The health care and social assistance sectors added 902,000 jobs in 2024, according to Friday’s employment report from the Bureau of Labor Statistics, almost as many as the 966,000 jobs they created in 2023.

The government sector came in a distant second, creating some 440,000 jobs in 2024, down from 709,000 in 2023.
Part of the growth in health care jobs is also tied to rising population and a burgeoning number of retirees, said Elise Gould, senior economist at the Economic Policy Institute.

“Healthcare and social insurance has been rising gangbusters for years now,” Gould told CNBC in a Friday interview. “Some of that is an aging population, some of it is just population growth.”
Looming change
But that could change in a second Trump administration, especially if it brings mass deportations and a renewed debate over foreign labor visas. Immigrants accounted for nearly 18% of health care workers in 2021, according to the Migration Policy Institute.
“There’s already such high demand there and if we have mass deportations, that’s certainly going to come at a cost for the services that can be provided in those sectors,” Gould said. “You could then have shortages that could lead to more inflation because you’re going to have employers trying to beat out each other to try to get the fewer workers that there might be, and that could cause problems in the macroeconomy.”

The government sector has been the second-fastest growing sector the past two years. Much of that growth has happened at the state level, Gould said. The state-level government workforce grew at a faster pace than local last year, while the federal government employee base rose at roughly the national rate.

But, as with health care, the government sector could see workforce reductions under President-elect Trump’s new Department of Government Efficiency, a strictly advisory body headed by Elon Musk and Vivek Ramaswamy that aims to slash government spending.
“If you get rid of that kind of a policy at the federal level, you’re going to lose lots of highly productive workers, and so that could be a detriment to the services that they provide and obviously to the overall economy,” Gould said. “Unemployment can go up … So many things can happen if you damage that vital federal workforce, and if there’s less funding at the same local level that can be problematic as well.”
Manufacturing growth — maybe
Conversely, a Trump administration may prove positive for sectors such as manufacturing and mining and logging, the two groups that saw the weakest job creation in 2024. Trump’s proposed tariffs could boost growth in these industries, but Gould said it’s impossible to predict by how much.
With concerns around sticky inflation looming into the new year, Gould said that the focus on the labor economy moving forward should be the share of corporate sector income that goes to workers versus profits, which she said is still “very, very low.”
“When workers have money in their pockets and they spend it on goods and services, that drives the production of goods and the provision of services,” she said. “Even though we’ve seen productivity growth and we’ve had inflation come down, there is just a lot more room for wages to rise without putting upward pressure on inflation.” More

WASHINGTON (Reuters) – The International Monetary Fund will forecast steady global growth and continuing disinflation when it releases an updated World Economic Outlook on Jan. 17, IMF Managing Director Kristalina Georgieva told reporters on Friday.Georgieva said the U.S. economy was doing “quite a bit better” than expected, although there was high uncertainty around the trade policies of the administration of President-elect Donald Trump that was adding to headwinds facing the global economy and driving long-term interest rates higher.With inflation moving closer to the U.S. Federal Reserve’s target, and data showing a stable labor market, the Fed could afford to wait for more data before undertaking further interest rate cuts, she said. Overall, interest rates were expected to stay “somewhat higher for quite some time,” she said.The IMF will release an update to its global outlook on Jan. 17, just days before Trump takes office. Georgieva’s comments are the first indication this year of the IMF’s evolving global outlook, but she gave no detailed projections.In October, the IMF raised its 2024 economic growth forecasts for the U.S., Brazil and Britain but cut them for China, Japan and the euro zone, citing risks from potential new trade wars, armed conflicts and tight monetary policy.At the time, it left its forecast for 2024 global growth unchanged at the 3.2% projected in July, and lowered its global forecast for 3.2% growth in 2025 by one-tenth of a percentage point, warning that global medium-term growth would fade to 3.1% in five years, well below its pre-pandemic trend.”Not surprisingly, given the size and role of the U.S. economy, there is keen interest globally in the policy directions of the incoming administration, in particular on tariffs, taxes, deregulation and government efficiency,” Georgieva said.”This uncertainty is particularly high around the path for trade policy going forward, adding to the headwinds facing the global economy, especially for countries and regions that are more integrated in global supply chains, medium-sized economies, (and) Asia as a region.”Georgieva said it was “very unusual” that this uncertainty was expressed in higher long-term interest rates even though short-term interest rates had gone down, a trend not seen in recent history.The IMF saw divergent trends in different regions, with growth expected to stall somewhat in the European Union and to weaken “a little” in India, while Brazil was facing somewhat higher inflation, Georgieva said.In China, the world’s second-largest economy after the United States, the IMF was seeing deflationary pressure and ongoing challenges with domestic demand, she said.Lower-income countries, despite reform efforts, were in a position where any new shocks would hit them “quite negatively,” she said.Georgieva said it was notable that higher interest rates needed to combat inflation had not pushed the global economy into recession, but headline inflation developments were divergent, which meant central bankers needed to carefully monitor local data.The strong U.S. dollar could potentially result in higher funding costs for emerging market economies and especially low-income countries, she said.Most countries needed to cut fiscal spending after high outlays during the COVID pandemic and adopt reforms to boost growth in a durable way, she said, adding that in most cases this could be done while protecting their growth prospects.”Countries cannot borrow their way out. They can only grow out of this problem,” she said, noting that the medium-growth prospects for the world were the lowest seen in decades. More