The Briefing, a daily publication renowned for its seasoned analysis and insights, has been a staple in economic reporting for over 25 years. As the global economy grapples with uncertainties, its latest insights focus on the shifting landscape marked by "tariff fatigue" turning into "terror" ahead of the critical March 4 deadline. This looming deadline poses significant challenges to Canada and Mexico, as failing to meet it could result in severe economic repercussions. Employees of bankrupt companies like Red Lobster and Joann's are also feeling the strain of these economic shifts.
Amidst this backdrop, the strength of the US dollar against major currencies is both ironic and temporary. This is due to Congress's recent passage of a budget that implements both cost-cutting and tax-cutting measures. Meanwhile, Bloomberg reports that the last five regional Federal Reserve surveys have shown positive outcomes, hinting at a resilient economic environment despite broader concerns.
The US labor market has demonstrated notable resilience. According to Trading Economics:
“The US unemployment rate dipped by 0.1 percentage point to 4.0% in January 2025, marking its lowest level since May and coming in just below market expectations of 4.1%.”
Additionally, the labor force saw improvements:
“The number of unemployed individuals declined by 37,000 to 6.85 million, while employment edged up by 2,234 to 163.9 million.” – Trading Economics
“The labor force participation rate rose to 62.6%, and the employment-population ratio increased to 60.1%.” – Trading Economics
Despite these gains, the broader measure of unemployment, known as the U-6 rate, remained unchanged:
“The U-6 unemployment rate, which accounts for the officially unemployed along with marginally attached workers and those involuntarily working part-time for economic reasons, held steady at 7.5%.” – Trading Economics
While the unemployment figures present a stable picture, the US bond market—the largest in the world—faces its own set of challenges. The Trump administration's trade policies continue to stir uncertainty, inadvertently supporting the USD even as US Treasury bond yields recover. This recovery aids the dollar but underscores the volatility stemming from policy-driven market interventions.
In currency markets, the GBP/USD pair struggled to capitalize on Tuesday's gains but managed to stabilize around 1.2650 on Wednesday. The discussions surrounding a hypothetical Mar-a-Lago Accord—a strategic agreement similar to the historical Plaza Accord—within high-level circles suggest potential foreign exchange market interventions could be on the horizon.
The Federal Reserve's mandate notably excludes US GDP as a primary concern, meaning it cannot use faltering GDP growth as justification for immediate action. This limitation adds another layer of complexity to the economic management landscape.
Amid these developments, political analysts like James Carville offer insights into the broader political implications:
“At this rate, the Trump honeymoon will be over best case by Memorial Day but more likely in the next 30 days. And in November 2025, we start turning the tide with what will be remembered as one of the most important elections in recent years: The Virginia governor’s race.” – James Carville