Economy

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe euro is on track for its best week against the dollar since the global financial crisis, as investors bet that Germany’s historic fiscal stimulus will help power an economic recovery in the Eurozone. The single currency has climbed more than 4.5 per cent against the dollar this week, its biggest rise since 2009, on the prospects for a rebound in Europe just as Donald Trump’s aggressive trade policy raises concern over the health of the American economy. The lightning rally in the euro comes after Germany’s Chancellor-in-waiting Friedrich Merz announced a deal to fund investment in defence and infrastructure, as European leaders prepare to shoulder more of the burden for the region’s security and support Ukraine.The European Central Bank reduced interest rates to 2.5 per cent on Thursday, but signalled a possible slowdown in future cuts. Following the ECB move and Germany’s stimulus plan, traders are now fully pricing just one cut this year, down from two a week ago. “Trump has effectively pushed towards European co-operation which none of us had on our bingo cards,” said Adam Pickett, head of global macro strategy at Citigroup. “It’s a game-changer for interest rates going forward . . . the ECB might need to cut less.”Some content could not load. Check your internet connection or browser settings.The prospect of faster Eurozone expansion is supporting the single currency just as a string of disappointing US economic data and growing fears over the impact of Trump’s erratic tariff policies have hit the dollar.According to levels in swaps markets, traders now expect the Federal Reserve to make three quarter-point interest rate reductions this year compared with expectations at the start of the year for less than two.“There was the view that the US would almost be immune from tariffs . . . but instead there is now much more uncertainty,” said Pickett.The euro strengthened further after the monthly US jobs report, released on Friday, showed the economy added 151,000 positions in February, short of the 160,000 expected by economists, before giving up some of the gains. The single currency was up 0.7 per cent at $1.086 by late afternoon trading, its strongest level since early November.  Its resurgence marks a dramatic reversal from its weakness following Trump’s election victory in November, when the dollar rallied on hopes the US president’s programme for tax cuts and deregulation would boost the American economy. A number of investment banks have now ripped up previous predictions that the euro could fall to parity with the dollar.Until this week, economists had expected the German economy, the eurozone’s largest, to stagnate this year, weighing on the euro. Analysts at Goldman Sachs said the economy could expand by as much as 2 per cent next year if the fiscal package was swiftly implemented, up from a previous forecast of 0.8 per cent.In a sign of the broad weakness in the dollar, the US currency is close to giving up all the gains against other major currencies it had made since Trump’s election victory.“The street is turning quite bullish on the euro now . . . [it is] hard not to jump on the bandwagon,” said Brad Bechtel, an analyst at Jefferies. More

Health care saw another strong month, leading the pack in employment growth among different groups across the economy.
Government posted gains as well overall, though positions at the federal level saw a reduction in the period.

Getty Images | CNBC | Getty Images

February marked another strong month for health care despite job growth overall coming in weaker than expected but stable.
Last month, health care and social assistance led the way for job creation, adding 63,100 jobs, according to the latest data from the Bureau of Labor Statistics. That marked the fifth straight month that the category saw the largest gains.

When including private education in the group, like some economists do, that figure grows to 73,000 jobs.

Although this is another strong performance for health care, Julia Pollak of ZipRecruiter noted that this level of gains has basically been happening over the last couple of years.
“Part of it is catch-up growth during the pandemic, when many hospitals’ profit margins were negative because of the cancellation of elective procedures,” the firm’s chief economist said in an interview with CNBC. “They didn’t do the hiring that they would’ve otherwise done, and now they’re back to normal and hiring pretty rapidly.”
Evolving demographic trends are another factor at play, Pollak said. She pointed out that the so-called Peak 65 zone – a multiyear period when more Americans are set to turn 65 than ever before – is underway.
“Some of it is catch-up, and some of it’s just the sort of huge demographic shifts that we’re undergoing,” Pollak continued.

Financial activities and construction were next in line in terms of job growth. Those two categories saw 21,000 and 19,000 positions added, respectively.
Government also saw growth of 11,000 positions during the month. That said, the BLS revealed that within the sector, federal jobs declined by 10,000. That comes amid efforts by President Donald Trump and the so-called Department of Government Efficiency, or DOGE, to axe spending and workforce levels in the federal government.
“The job gains will be much smaller [and] the job losses will be much bigger in the coming reports,” Pollak said, adding that the reduction of 10,000 probably reflects some fraction of the probationary employees who were laid off. “This was still early days.”
In terms of weak spots, retail trade as well as leisure and hospitality were the two groups to see job losses in February. Retail trade lost 6,300 jobs, while leisure and hospitality lost 16,000.

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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump is confident that Chinese President Xi Jinping will not attack Taiwan during his time in the White House, according to US Treasury secretary Scott Bessent.Speaking on CNBC, Bessent said Trump was “confident that President Xi will not make that move during his presidency”. Bessent was responding to a question about whether he thought China would attack Taiwan. US intelligence officials said Xi had told the People’s Liberation Army to develop the capabilities to invade Taiwan by 2027, but they had also stressed this does not mean 2027 is a deadline for war.The White House did not respond to a question about whether Bessent’s assertion was based on any new intelligence.Tensions over Taiwan have risen significantly over the past few years, and particularly since Nancy Pelosi in 2022 became the first US House Speaker to visit Taiwan in 25 years.The PLA has rapidly expanded operations around Taiwan. Speaking at the Honolulu Defense Forum last month, Admiral Samuel Paparo, head of US Indo-Pacific command, said the exercises were no longer just training.“Their aggressive manoeuvres around Taiwan right now are not ‘exercises’, as they call them, they are rehearsals . . . for the forced unification of Taiwan to the mainland,” Paparo said in response to a question from the Financial Times.Bessent’s comments on China and Taiwan come as Taipei has become nervous that Trump’s stance on Ukraine could herald a weakening of the US’s decades-long support for the Asian country.US-China tensions spiked during the Biden administration because the countries were at loggerheads over a range of security-related issues. Since Trump took office, tensions have centred on trade. The US president has imposed a 20 per cent tariff on imports from China.The White House said the tariffs were designed to pressure Beijing to crack down on the export of ingredients for the deadly opioid fentanyl.It added that they were also intended to end subsidies for groups that make the dual-use chemicals sold to cartels in Mexico and used to produce fentanyl that is smuggled into the US.Chinese foreign minister Wang Yi on Friday described Trump as “two-faced” and said Beijing would take “countermeasures in response to arbitrary pressure” from Washington.“No country should fantasise that it can suppress China and maintain good relations with China at the same time,” Wang said at a press conference. “Such two-faced acts are not good for the stability of bilateral relations, or for building mutual trust.”Earlier this week, the Chinese embassy in Washington said it was ready to respond to any fight with the US, including war. “If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” the embassy wrote on the social media platform X. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldIreland’s Taoiseach Micheál Martin heads to the White House next week to mark St Patrick’s Day, hoping to escape with only “a couple of kicks” from Donald Trump over his country’s huge trade surplus with the US.Martin is set to become the first head of state or government to visit the Oval Office since Trump’s bust-up with Ukrainian President Volodymyr Zelenskyy.His visit on March 12, five days before St Patrick’s Day itself, comes as the EU scrambles to boost defence spending to protect Ukraine after Trump cut off defence co-operation to the nation and as the bloc, which the president said last month was “formed to screw the United States”, braces for the prospect of trade tariffs.Ireland has deep cultural and business links with the US dating back to mass emigration during its 19th century famine. Trump on Thursday signed a proclamation declaring March Irish-American Heritage Month.He praised Irish-Americans as “great people — and they voted for me in heavy numbers, so I like them even more”.The proclamation referenced Trump’s plans to “correct trade imbalances with the European Union” saying “our historic relationship with Ireland presents an opportunity to advance fairer trade policies”.On that front, Ireland is hugely exposed. Exports of goods to the US rose 34 per cent to €72.6bn last year, compared with 2023, while imports of goods were €22.5bn, a 2 per cent fall on the previous year. US commerce secretary Howard Lutnick has blasted Ireland for running “a trade surplus at our expense”. Earlier this week, the US readout of a call between secretary of state Marco Rubio and Irish foreign minister Simon Harris said the pair discussed “the US priority to address the US-Ireland trade imbalance” — something Harris said was not mentioned directly.The US, however, exports €163bn in services to Ireland, meaning Dublin has an overall trade deficit of €93bn with the US. Martin will stress that Ireland is the sixth largest investor in the US, with the top 10 Irish companies in America employing 115,000 people.But “a couple of kicks” on trade in front of the cameras in the Oval Office were “inevitable,” said one senior government official.“I can’t see how we’d escape that. It’s the way Trump does business — flattery, kick, flattery, kick,” the official said.Ireland is home to major US tech and pharma companies, whose record corporation taxes have fuelled eye-popping surpluses — expected to hit some €24bn this year, boosted by back taxes from Apple that the European Court of Justice ordered Ireland to accept.Trump wants US companies to relocate home and has not ruled out tax incentives to encourage them — a policy that would hit Ireland hard. But Glenn Boehnlein, vice-president and CFO at US medical devices manufacturer Stryker, which has plants in Ireland, said that was not so simple.“You can’t turn anything on a dime — you really aren’t going to pick up manufacturing and move it instantaneously,” he told an EY CFO summit in Dublin this week held in partnership with the Financial Times.“The best-case scenario [for the St Patrick’s Day event] is all shamrocks and leprechauns,” said Ben Tonra, professor of international relations at University College Dublin. He hoped Martin would then “get to say the things he needs to say about Ukraine and Palestine” in private “and get out of that room as fast as possible”.Militarily-neutral Ireland has pledged its unwavering support for Ukraine and says it will “not be found wanting” on future peacekeeping. But Ireland has upset US ally Israel by recognising Palestine’s statehood. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Brazil is to slash import duties on foodstuffs ranging from sugar to sardines in a bid to control rapidly rising prices, running counter to Donald Trump’s protectionist onslaught and the spectre of trade wars it has invoked.Latin America’s largest economy said it would eliminate border levies on nine “essential” items as increasing supermarket bills eat into the popularity of leftwing president Luiz Inácio Lula da Silva.Vice-president Geraldo Alckmin, also minister for industry and trade, said the changes would take effect within days. “The government is waiving taxes in favour of price reductions,” he added on Thursday evening. “It won’t harm the producer but it will benefit consumers.”Duties will be reduced to zero for meat, which is currently subject to a 10.8 per cent border tax; coffee, currently at 9 per cent; sugar, now at 14 per cent; corn, now at 7.2 per cent; sunflower oil, from 9 per cent; olive oil, from 9 per cent; sardines, from 32 per cent; biscuits, from 16.2 per cent and pasta, from 14.4 per cent. An import quota for palm oil will more than double.Economists were sceptical about the impact because of Brazil’s position as a top global producer and exporter of agricultural commodities such as coffee, beef and sugar, but also because extreme weather events had affected some domestic production.“Most of these items are produced and supplied nationally, save a few exceptions like olive and palm oil,” said Felipe Camargo, economist at Oxford Economics, who calculated the total import value of the targeted foodstuffs at $15bn. “[It is] a political ruse to convince the electorate the government is trying to address rising grocery prices.”William Jackson, chief emerging markets economist at Capital Economics, said an import surge was unlikely.“We might see a bit of a decline [in] food inflation as a result. But there are more fundamental drivers of this spike in prices, particularly in beef and coffee, [such as] drought and fires,” he added.The move forms part of a wider package by Brasília aiming to make food cheaper for the population of 213mn. It underlines pressure on Lula, a former trade unionist who previously governed between 2003 and 2011, halfway through his four-year term. Despite robust GDP growth and low unemployment, pollsters say the 79-year-old’s ratings have suffered from stubborn inflation, which at an estimated annual 4.96 per cent in February was above an official target ceiling of 4.5 per cent. Food and drink prices rose an estimated 7.12 per cent in the year to February.Jackson said there were signs that grocery trips may become even more expensive in Brazil: “If you look at agricultural commodity prices and take account of usual lags, they point to food inflation of as much as 15 per cent in the next six months or so.”The loosening of certain import barriers by Brazil, a traditionally closed and protectionist economy, comes as US President Trump’s border duties on imports from China and threats of widespread tariffs on goods from Mexico and Canada — and the retaliatory tariffs that China and Canada have imposed — raise fears of a full-blown trade war. Trump specifically mentioned Brazil as a country charging tariffs on US goods this week, so Brasília’s levy reductions may help future negotiations with the Trump administration, some analysts argued. “The food inflation problem is global, and in our opinion it will become more relevant in some emerging markets and in the US due to Trump’s trade policy and tariffs in the coming months,” said Cristiano Oliveira, chief economist at Banco Pine.Additional reporting by Beatriz Langella More

Nonfarm payrolls increased by a seasonally adjusted 151,000 on the month, better than the downwardly revised 125,000 in January but less than the 170,000 consensus forecast.
Federal government employment declined by 10,000 in February though government payrolls overall rose by 11,000.
Average hourly earnings climbed 0.3%, as expected, though the annual increase of 4% was a bit softer than the 4.2% forecast.

Job growth was weaker than expected in February though still stable despite President Donald Trump’s efforts to slash the federal workforce.
Nonfarm payrolls increased by a seasonally adjusted 151,000 on the month, better than the downwardly revised 125,000 in January, but less than the 170,000 consensus forecast from Dow Jones, the Labor Department’s Bureau of Labor Statistics reported Friday. The unemployment rate edged higher to 4.1%.

The report comes amid efforts from Elon Musk’s Department of Government Efficiency to pare down the federal government, starting with buyout incentives and including mass firings that have impacted multiple departments.
Though the reductions likely won’t be felt fully until coming months, the efforts are beginning to show. Federal government employment declined by 10,000 in February though government payrolls overall increased by 11,000, the BLS said.
Many of the DOGE-related layoffs happened after the BLS survey reporting period, meaning they won’t be included until the March report. Outplacement firm Challenger, Gray & Christmas reported earlier this week that announced layoffs under Musk’s efforts totaled more than 62,000.

Health care led the way in job creation, adding 52,000 jobs, about in line with its 12-month average. Other sectors posting gains included financial activities (21,000), transportation and warehousing (18,000), and social assistance (11,000). Retail posted a decline of 6,000 workers.
On wages, average hourly earnings climbed 0.3%, as expected, though the annual increase of 4% was a bit softer than the 4.2% forecast.

Stock market futures moved higher following the report while Treasury yields were lower.
“We are not putting much stock in the jobs report at the moment,” said Byron Anderson, head of fixed income at Laffer Tengler Investments. “Today’s data was mixed at best, but we still have no clarity on the economy moving forward with the Trump turmoil. The longer we have chaos and turmoil from Trump, the higher the probability that we will eventually have data trend negative.”
Though the report indicated continued job growth, some of the details were a little less positive.
The labor force participation rate slumped to 62.4%, its lowest level since January 2023, as the labor force declined by 385,000. A broader measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons jumped half a percentage point to 8%, its highest level since October 2021.
Also, the household survey, which the BLS uses to calculate the unemployment rate, told a different story, showing a plunge of 588,000 workers. Those holding part-time jobs but wanting full-time positions swelled to 4.9 million, an increase of 460,000.
The BLS report tracks a tumultuous month for markets and the economy.
Stocks have gyrated on a daily basis since Trump has taken office, with movements depending largely on tariff news that has changed rapidly. At the same time, Musk’s efforts through DOGE have been reflected in surveys showing high levels of worker angst.
The February numbers, though, show that the labor market is stable. The December jobs count was revised up to 323,000, an increase of 16,000, while the new January figure represents a decline of 18,000 from the previous estimate.

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U.S. Treasury Secretary Scott Bessent attends at an Economic Club of New York event in New York City, U.S., March 6, 2025. 
Jeenah Moon | Reuters

Treasury Secretary Scott Bessent on Friday acknowledged some signs of weakness in the U.S. economy.
“Could we be seeing that this economy that we inherited starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent said on CNBC’s “Squawk Box.”

“The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period,” he added.
Describing the economy as inherited is a reference to the administration under then-President Joe Biden. Current President Donald Trump took office on Jan. 20.
Under Biden, the U.S. saw generally strong economic growth. However, there were signs of a slowdown in late 2024, and inflation remained above the Federal Reserve’s 2% target.
In its first few months, the Trump administration has taken steps to reshape global trade policies and to reduce the federal workforce. There has not been much hard economic data reflecting Trump’s term, though consumer surveys have shown a decline in confidence.

One area where Trump’s policies could be felt quickly are tariffs. The president has hit Canada, Mexico and China with tariffs in his first two months in office, though the Canada and Mexico efforts now have a lengthy list of exemptions. The administration plans to implement broader tariffs in April.

“Tariffs are a one-time price adjustment,” Bessent said, pushing back against the idea that tariffs would fuel continued inflation.
Bessent also said the administration was “not getting much credit” for areas where costs have fallen since Trump’s inauguration, such as oil prices and mortgage rates. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe threat of a trade war and rising security tensions alongside the US withdrawal from the Paris climate accord will “drain” resources away from efforts to curb global warming, leading to “civilisation doom”, Brazil’s environment minister warned. “It is clear that the withdrawal of the Paris agreement of the world’s second-largest emitter, the world’s largest economic and technological power, is a loss. We cannot be deniers — it is a loss,” Marina Silva said.The confluence of the US withdrawal, new trade tariffs and the resurgence of geopolitical conflicts would have a “triple negative effect” on climate action.“They may drain resources and they also may hamper the environment of confidence and trust among parties. We have a triple negative effect because the less action we see, the less money we see, resulting in less co-operation across countries,” she said.This increased the responsibility of countries like Brazil, South Africa, India, China, the EU and the UK, said Silva, who was born in the Amazon. “We will all have to continue climate action.” Brazil will host the UN COP 30, the world’s most important climate talks in November this year in the Amazon port of Belém. Countries are now expected to submit updated climate plans for 2035 by the time of the Belém summit, after only a handful met the February deadline set under the Paris agreement, including the UK, Japan and Brazil.On his first day in office US President Donald Trump pulled the US out of what he described as an “unfair, one-sided Paris climate accord rip-off”. The US also withdrew during his first term as president in 2017, a move reversed by Joe Biden in 2021. Silva noted that the US also did not ratify the groundbreaking 1997 UN climate conference in Japan, the Kyoto protocol. However, she warned that while the situation may be “similar, it is a very different context, because in the Kyoto protocol the problems were still in the realm of projections, in most cases while now we are already living the reality of the Earth’s temperature changing by 1.5C compared to pre-industrial levels”. Some scientists already calculate that the world will not meet the ideal Paris accord goal of limiting the global average temperature rise to no more than 1.5C from pre-industrial times. The UN has forecast the rise will reach 2.9C this century unless action is taken to cut greenhouse gas emissions.Silva said the almost 200 countries that were signatories would need to either “implement” their climate pledges or “will face an unthinkable, civilisational doom”.She was speaking on the sidelines of the World Sustainable Development Summit in New Delhi, where India’s environment minister Bhupender Yadav reiterated the goal of the world’s third-largest polluter for net zero emissions by 2070.India is among those countries that have not upgraded their targets, as required by the Paris agreement process. Developing countries such as India and Brazil face a daunting task in finding ways to plug what is estimated by an independent group of economists to be a $1tn gap in international climate change fundingAt the UN COP29 in Baku in November, almost 200 countries agreed that wealthy nations would take the lead in providing at least $300bn in climate finance by 2035 to help developing countries shift to green energy and cope with climate change. But Silva said that may now be in jeopardy. “This is very serious, because we need $1.3tn to be able to make the necessary efforts for this transition. We are starting from $300bn, but even that is not guaranteed,” she said.Climate CapitalWhere climate change meets business, markets and politics. Explore the FT’s coverage here.Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here More