Economy

Shares of Accenture tumbled about 7.3% after the consulting firm said efforts to tighten federal spending are starting to weigh on its revenues.
Accenture is among the first of the U.S. corporate giants to get hit by the Trump administration’s so-called Department of Government Efficiency.
“As you know, the new administration has a clear goal to run the federal government more efficiently,” Accenture CEO Julie Spellman Sweet said on an earnings call. “During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue.”

Accenture signage is pictured in Warsaw, Poland, on Aug. 7, 2024.
leksander Kalka | Nurphoto | Getty Images

Shares of Accenture slid Thursday after the consulting firm said efforts to tighten federal spending have begun to weigh on its revenues.
Shares tumbled 7.3% after Accenture’s chief executive officer said in a fiscal second-quarter earnings call that the company’s Federal Services business has lost contracts with the U.S. government after recent reviews.

“Federal represented approximately 8% of our global revenue and 16% of our Americas revenue in FY 2024. As you know, the new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue,” chief executive Julie Spellman Sweet said in the Thursday call to several Wall Street analysts.
Accenture is among the first of the U.S. corporate giants to get hit by the Trump administration’s so-called Department of Government Efficiency, an effort headed by billionaire Elon Musk to downsize federal agencies and consolidate their office spaces.
Sweet said that Accenture’s Federal Services was also affected by guidance from the U.S. General Services Administration to all federal agencies to review their contracts with the top 10 highest paid consulting firms contracting with the U.S. government, and then end contracts that are not considered mission-critical to relevant agencies.
“While we continue to believe our work for federal clients is mission-critical, we anticipate ongoing uncertainty as the government’s priorities evolve and these assessments unfold,” Sweet said.
“We are seeing an elevated level of what was already a significant uncertainty in the global economic and geopolitical environment, marking a shift from our first quarter FY 2025 earnings report in December,” Sweet added. “At the same time, we believe the fundamentals of our industry remain strong.”

Investors’ concerns about risks tied to slowing U.S. government spending outweighed Accenture’s better-than-expected quarterly earnings and revenue results released before Thursday’s market open. The company reported earnings of $2.82 per share on revenue of $16.66 billion, just higher than expectations of $2.81 per share in earnings on revenue of $16.62 billion, per FactSet.
Accenture shares have plunged 22.9% over the past month, bringing the stock down nearly 14.5% year to date.
Shares of consulting firm Booz Allen Hamilton slipped 8.1% on Thursday in sympathy. More

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Vithun Khamsong | Moment | Getty Images

It is becoming harder for Americans to raise funds in case of an emergency, according to a recent survey from the New York Federal Reserve.
The bank’s Survey of Consumer Expectations for February found that the average likelihood of Americans being able to come up with $2,000 within a month if an unexpected need arose hit 62.7%. That’s the lowest level since the survey began tracking the data point in October 2015.

“Taking into account that the CPI [consumer price index] level today is 35% higher than in 2015, the situation is even worse,” said Torsten Sløk, chief economist at Apollo.

While the latest CPI data for February showed prices moved up less than expected, there are concerns about the impact of Trump administration tariffs on the economy. Economic projections by the Federal Reserve suggest officials expect inflation to move higher this year more rapidly than previously expected.
“Inflation has started to move up now. We think partly in response to tariffs and there may be a delay in further progress over the course of this year,” Federal Reserve Chair Jerome Powell said at a news conference Wednesday.
However, Powell said he doesn’t expect the levies to have a long-lasting effect.

Retailers have also been seeing the impact, with many warning first-quarter sales were softer than expected.

“I do think it’s just a bit of an uncertain world out there right now,” Ed Stack, chairman of Dick’s Sporting Goods, told CNBC when asked about the company’s guidance. “What’s going to happen from a tariff standpoint? You know, if tariffs are put in place and prices rise the way that they might, what’s going to happen with the consumer?”
Walmart CEO Doug McMillon recently told an audience at an Economic Club of Chicago event that he has seen some customers that are under budget pressures exhibit stress behaviors.
“You can see that the money runs out before the month is gone. You can see that people are buying smaller pack sizes at the end of the month,” he said.
— CNBC’s Jeff Cox and Gabrielle Fonrouge contributed reporting.

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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe writer is Canada’s minister for transport and internal trade. This is adapted from her speech accepting the Foreign Policy Association Medal last weekThe world is at an inflection point. One of the battle lines is in Ukraine. Yes, the fight there between democracy and dictatorship is a conflict between a specific democracy and a specific tyranny. But it is also a broader contest between democracy and dictatorship. Every democracy in the world will be stronger if Ukraine wins, and every tyrant will rejoice if Vladimir Putin does.The second reason Ukraine’s success matters is because it is fighting both for its own survival and for the rules-based international order. At the heart of this is a simple principle: sovereign states don’t invade each other.In the eight decades since it was created, the rules-based international order has been imperfectly observed, to be sure. But for the democracies of what is sometimes called the “non-geographic west”, it has guaranteed the most successful era of widely shared peace and prosperity in our history.Three years ago, when Russia launched its full-scale invasion of Ukraine, Canada understood that Putin was undermining a core principle. But today, we Canadians feel the fragility of that rules-based international order more urgently and more personally than at any time since the second world war. President Donald Trump has repeatedly said he would like us to become the “cherished” 51st state and has threatened to use economic coercion to make it so. I am proud of my country’s spontaneous, unanimous and unequivocal response to these threats. Hockey fans are belting out our national anthem. Restaurants are pulling US wine from their menus. Snowbirds are not flying south this winter. Our country is standing strong and our government is taking necessary retaliatory measures to show Trump that Canada is not for sale and our sovereignty is not negotiable. As Prime Minister Mark Carney said, we “will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade”.We know what is at stake and we know what we are fighting for. I am not sure the same can be said of our American neighbours. At a pocketbook level, these threats to Canada’s sovereignty, and the tariff war that goes along with them, lack any coherent rationale. Our economic relationship with the US is balanced and mutually beneficial. Economic warfare with Canada will make groceries and petrol more expensive for Americans — and has already battered the US stock market.Whether it is the Canadian electricity that keeps the lights on in New York, or the Canadian potash that fertilises fields in the midwest, or the Canadian uranium that powers the nuclear industry, America needs what Canada sells. And the US exports more to Canada than to China, Japan, the UK and France combined. We are America’s biggest customer, and America is the country where the customer is always right.When the Trump administration started to threaten Canada, we were hurt. Then we got angry. Now, we are rolling up our sleeves and getting to work.In the face of this existential challenge, we are determined to build a Canada which is stronger, more resilient, and more independent of the US. Now, as the prime minister has said, is the time to build in Canada, to cut barriers to trade within our own country and to get big things done. Canada is ready to get to work. So much so that former prime minister Jean Chrétien has joked that he would like to nominate the American president for the Order of Canada — as thanks for helping us get our act together.Canadians are ready for tough times ahead. And we know that, in the end, we will be just fine. We will stand with Ukraine. We will keep fighting for democracy at home and around the world. And we will work with like-minded countries to shore up the rules-based international order, and make it fit for purpose in the 21st century.I must admit, however, that it would be so much better to do this work alongside our American friends and neighbours. Canadians remember that our North American partnership is at its best when we fight together for freedom and democracy.As Ronald Reagan put it: “Canada and the United States . . . share much more than a common border; we share a democratic tradition, and we share the hopes, dreams and aspirations of free people.”His words eloquently describe our shared and constructive past. They should be a guide to our future, too. More

After largely staying out of the Fed’s business for his first two months in office, President Donald Trump is encouraging the central bank to cut interest rates as a backstop for his tariff plans.
Lower rates, however, could combine with tariffs to stir more inflation. Markets expect the Fed will wait until June before cutting.

U.S. President Donald Trump reacts as he meets NATO Secretary General Mark Rutte (not pictured), in the Oval Office at the White House in Washington, D.C., U.S., March 13, 2025. 
Evelyn Hockstein | Reuters

After largely staying out of the Federal Reserve’s business during his first two months in office, President Donald Trump is pushing the central bank to cut interest rates as a backstop for his tariff plans.
In a post Wednesday night on Truth Social, Trump encouraged Chair Jerome Powell and his colleagues to ease policy as the administration enters the next phase of its aggressive trade policy.

“The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy,” Trump wrote. “Do the right thing. April 2nd is Liberation Day in America!!!”
The missive appeared just hours after the Powell-led Federal Open Market Committee voted to keep its key interest rate steady but indicated that two rate reductions are likely by the end of the year, assuming the quarter percentage point increments that policymakers prefer.
The April 2 reference is to when the administration will reveal the results of a study into global trade, likely resulting in further tariffs in an effort to level what it considers an unfair playing field.
At his post-meeting news conference, Powell addressed the tariff issue multiple times, largely reiterating the uncertain impact they could have as justifying the Fed’s cautious current stance. In addition, Powell indicated that the duties could raise inflation in the short run but the impacts then would recede over time.
“I think that’s kind of the base case. But as I said, we really can’t know that. We’re going to have to see how things actually work out,” he said.

Lower rates, however, could combine with tariffs to stir more inflation. Markets expect the Fed will wait until June before cutting. Fed rate reductions also don’t always feed directly into lower borrowing rates. In the best-case scenario, lower rates would help buttress rising prices that are expected to come from the levies.
In contrast to his first term in office, Trump had thus far taken a mostly hands-off approach to Fed policymaking, aside from a few comments he made shortly after taking office also coaxing the central bank to lower rates. Trump in January said he would “demand that interest rates drop immediately,” though he didn’t follow through on the threat.
In fact, Treasury Secretary Scott Bessent has said that the White House is more focused on bringing down the 10-year Treasury yield to lower long-term borrowing costs than it is on the short-term federal funds rate that the Fed controls.
Trump berated Powell and the Fed the last time around for raising rates, at one point calling them “boneheads” and comparing the chair to a golfer who couldn’t putt.
Fed projections Wednesday indicated a full percentage point of cuts over the next three years for the funds rate, which is currently targeted between 4.25%-4.5%.

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Interest payments are swallowing the biggest portion of rich nations’ economic output since at least 2007, outstripping their spending on defence and housing, according to figures from the OECD. Debt service costs as a percentage of GDP for the 38 OECD countries climbed to 3.3 per cent in 2024, a sharp rise from 2.4 per cent in 2021, according to the group’s Global Debt Report on Thursday. In contrast, the World Bank estimates that the same group spent 2.4 per cent of GDP on their militaries in 2023. Interest costs were 4.7 per cent of GDP in the US, 2.9 per cent in the UK and 1 per cent in Germany.Borrowing costs have risen in recent months as bond investors brace for persistent inflation in large economies and rising issuance as many governments expand spending on defence and other fiscal stimulus policies. The OECD warned that the double hit of rising yields and growing indebtedness risked “restricting capacity for future borrowing at a time when investment needs are greater than ever”. It highlighted a “difficult outlook” for global debt markets. Sovereign borrowing among the high-income group of countries is expected to reach a fresh record of $17tn in 2025, compared with $16tn in 2024 and $14tn in 2023, according to the OECD report. This wave of debt issuance has fuelled concerns over sustainability in countries such as the UK, France and even the US. The large debt burden itself was “not negative”, said Carmine Di Noia, the OECD’s director for financial and enterprise affairs. But a lot of the borrowing over the past 20 years had been spent on recovering from the 2008 financial crisis and the Covid-19 pandemic, he added, arguing that “now there are needs to shift from recovery to investment”, such as spending on infrastructure and climate projects. “Borrowing must increase growth” so that governments can eventually be “stabilising and actually reducing the debt-to-GDP ratio”, said Di Noia. But the picture is complicated by higher bond yields, which make it more expensive to refinance existing debt.The report noted that almost 45 per cent of OECD sovereign debt would mature by 2027. “There has been a lot of issuance in favourable conditions,” said Di Noia, adding that those conditions have altered for the worse.Adding to the expensive debt-servicing conditions was a changing profile of holders of sovereign bonds, the OECD said. As policymakers unwind emergency bond-buying programmes, central bank holdings of government bonds have fallen by $3tn from their 2021 peak and are expected to fall by another $1tn this year. This means that private investors — whom Di Noia said were “more price sensitive” — will be making up the difference. The sensitivity left issuers open to more volatility and made them more exposed to “heightened geopolitical and macroeconomic uncertainty”, he added. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.This article is an on-site version of our Unhedged newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. The new European defence fund says it will only buy weapons from EU sources, or from countries with defence agreements with the bloc. This strikes us as sensible from the European point of view but, as believers in global capitalism, it makes us despair a bit. Email us and tell us how we ought to feel: robert.armstrong@ft.com and aiden.reiter@ft.com.The Fed’s outlook and the market’s responseThe market liked what it heard from Jay Powell and the Federal Open Market Committee yesterday. No one was doing cartwheels, but stocks, which had been enjoying a solid day before the statement and the press conference, rose further afterward, though enthusiasm waned a bit at the end of the day. Treasury yields fell — the two year by three basis points, then the 10-year by one. A dovish meeting, then?Not really. It’s easy to imagine a world in which investors listened to what the bank had to say yesterday and didn’t like it one bit. The committee reduced its outlook for growth meaningfully, increased its outlook for unemployment by a hair, and bumped up its inflation outlook, too. Here are the median numbers as presented in the Fed’s summary, with arrows added by Unhedged:There is a word for this sort of thing, and it is a bad word: stagflation. Not that the Fed is forecasting a bad case of the big S, but still, expectations are trending the wrong way on both sides of the central bank’s mandate. And the Fed was clear about the reason for this: the sharp decline in investor, business and consumer sentiment precipitated largely by worries about the Trump administration’s policies, particularly tariffs.Yes, the projection for interest rate policy stayed the same. But that projection is an average, and it conceals a move towards tighter policy. Trim the three highest and lowest individual estimates and the “central tendency” expectation for policy went from a range of 3.6-4.1 per cent to 3.9-4.4 per cent. That’s not nothing. In the press conference Powell drew attention to committee members’ rising uncertainty about their projections — uncertainty that is not just higher, but asymmetrical and almost entirely on the side of slower growth and higher inflation. Below is the Fed’s chart of committee members’ uncertainty about the unemployment rate (relative to historical levels) and which side they place it on:This is all a bit spooky. So why the unruffled market response? There are a few possibilities:The Fed delivered a message the market had already received. The market knew the policy worries have increased the risks to growth and inflation.There was relief that the Fed didn’t really show its teeth on the inflation risk posed by tariffs. Powell took a measured tone, emphasising that it might be appropriate to look through tariff-induced price increases so long as long-term inflation expectations stay under control. This is not a central bank looking to pick a fight with the executive branch.The market, desperate for good news after a bruising month, has decided to anchor its attention on the unchanged interest projections, to the exclusion of all else.We leave it to readers to decide their own weighting among those three. The end of QTThe Fed surprised the market yesterday by announcing a dramatic slowdown to the pace of quantitative tightening: a change from allowing $25bn of securities to roll off the balance sheet each month to just $5bn. It is not surprising that QT is coming to an end; by most measures, we are close to the Fed’s goal of “ample”, but not abundant, bank reserves.Most forecasts from the end of last year suggested that QT would end sometime in the first half of the year, likely in June. The picture has changed since then — the minutes from the January FOMC meeting showed that the Fed governors were considering ending QT earlier than planned if there were “swings in reserves over coming months related to debt ceiling dynamics”. Even so, analysts we spoke with before the meeting suggested sunsetting QT would start in May, not March. Yesterday, chair Powell said the slowdown was just part of the normal course of QT and did not reflect concern over the debt ceiling. That’s a different message from the notes of the January meeting. And such concern would be justified: the debt ceiling, or the limit to what the US can borrow to fund ongoing deficits, was reinstated at the start of this year, after a two-year suspension. Until the debt limit is raised or suspended again, the Treasury cannot issue net new debt. Instead, it is spending down its $414bn account at the Fed.The clock is ticking. Even with new tax revenue, the Treasury is set to run out of money “sometime this summer, potentially August”, according to Brij Khurana at Wellington Management. After that, the Treasury will need to take “extraordinary measures” to keep the US government from defaulting.Congress will most likely raise the debt ceiling before that happens — though there will almost certainly be political theatrics around doing so. After that the Treasury will need to issue new debt to rebuild its coffers. If that were to coincide with QT, there would be a double strain on financial system liquidity that the Fed would want to avoid, says Guneet Dhingra, chief US rates strategist at BNP Paribas:When the Treasury is running down its cash balance, that adds liquidity to the [banking] system. But when the Treasury rebuilds its cash balance [by issuing more Treasuries], that money goes from the banking system back to the Treasury’s Fed account. That draws liquidity from the banking system. QT is also taking liquidity from the system.The Treasury did issue new debt in 2022 when QT was in full swing. But at that time there was more liquidity and more sources of liquidity (such as funds in the reverse repurchase programme). If QT and a burst of new Treasury issuance had occurred simultaneously, a liquidity crunch may have threatened.The slowdown of QT is welcome news for the market. Equities appreciate the added liquidity. And, though the effect of QT and QE on Treasury yields is likely small, all else equal the end of QT should slightly reduce Treasury yields too.We are happy to take Powell at his word. But it just so happens that slowing QT will take some pressure off during what might be a tense summer on Capitol Hill and in the financial system. Some Republicans are focused on the national debt, while most Democrats are looking for ways to push back against Trump. That raises the risk of fiscal brinkmanship as Congress decides what to do about the debt ceiling. Best to take risks off the table where you can.(Reiter)One good readBros.FT Unhedged podcastCan’t get enough of Unhedged? Listen to our new podcast, for a 15-minute dive into the latest markets news and financial headlines, twice a week. Catch up on past editions of the newsletter here.Recommended newsletters for youDue Diligence — Top stories from the world of corporate finance. 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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is chief market strategist for Europe, Middle East and Africa at JPMorgan Asset ManagementIs this the beginning of a period of European exceptionalism in markets? Six months ago, most investors would have thought the idea absurd, even more so once Donald Trump was re-elected to the White House and on a mission to Make America Great Again. But in euro terms, the MSCI Europe index is up 9 per cent in the year to date compared with the S&P 500’s decline of 9 per cent. Investors are questioning whether the tide is turning. It may well be. Europe’s decade of equity market underperformance was caused by relative macroeconomic weakness, and the “wrong” sectoral composition. Let’s take these in turn. Naysayers will argue Europe’s economic problems are structural. Demographics aren’t conducive to strong growth and Mario Draghi, in his paper on Europe’s competitiveness, did a super job of highlighting the problems that come from the continent’s fragmentation.However, there is another part of the region’s underperformance that is often overlooked. That is, for the past decade, Europe has been kept on a very tight rein in all aspects of policy — fiscal, monetary and regulatory.Here are some statistics to demonstrate this point. In the past decade, the US government has been showering its economy with cash: subsidies and tax cuts for companies and, quite literally, cheques in the post for households. As a result, government debt as a per cent of GDP has risen by 17 percentage points. By contrast, in the Eurozone, government debt as a per cent of GDP has fallen by 5 points.Monetary policy also played a critical part in the relatively weak period post-pandemic. Though the Federal Reserve also raised interest rates to combat inflation, the impact on US households and businesses was limited by the fact that the vast majority of mortgage borrowers were protected by long-term contracts, locked in at low interest rates. By contrast, Europe’s borrowers still largely rely on floating rate interest rate loans provided by their local bank. Statistical measures that capture these financial conditions show barely any restrictiveness in the US, but in the Eurozone and UK, financial conditions have been tighter in the past two years than at any point in the past 15 years.Some content could not load. Check your internet connection or browser settings.Finally, one also has to consider regulatory policy. Regulations to combat climate change have soared in recent years to drive companies towards broader net zero targets. Adding to these macroeconomic woes, Europe’s stock markets were short of the tech stocks that were much in favour, as artificial intelligence excitement grew, and overweight in the financial stocks.Viewed through this lens, one can see how the tide is turning. The adversarial stance of Trump has galvanised the region into action. Fiscal policy is being loosened, and not only in the area of defence. Germany’s €500bn infrastructure package alone is a boost of 1 per cent of the country’s GDP annually over the next decade. Monetary policy is also easing. It looks likely that real interest rates will soon be back close to zero in the Eurozone and the UK. This is already spurring loan growth. And, finally, regulatory stipulations are easing in areas such as climate change policy.Some content could not load. Check your internet connection or browser settings.While all this should boost confidence and fuel the recovery, it could be offset by a wave of US tariffs and a worsening situation in Ukraine. But one also has to overlay this macro view with an assessment of the outlook for key equity sectors, particularly US technology. The last significant period of European equity outperformance, relative to the US, was 2000-09, coinciding with the long and painful bursting of the US tech bubble in the 2000s.It is not obvious that US tech stocks are destined for the same fate this time around. The companies that have driven US returns in recent years have been producing fantastic earnings, and most have considerable cash on their balance sheets. But these companies are at that tricky stage of having to live up to the AI hype and deliver a high return on the massive amounts of investment they have been deploying.Despite recent relative performance, most European stocks still trade at a heavy discount to their US counterparts. The points I’ve made above therefore do not, to me, appear to be in the price yet. Investors that have focused on passive investing should be particularly wary, given the weight of the US in the global MSCI ACWI benchmark has increased from 42 per cent in 2009 to 66 per cent today. This recent European outperformance might not be over, and investors should continue to think about whether such a large overweight to US equities is the right set-up for the decade ahead. More