04.09.20252 min
September update: what you need to know about the economy in the US and Europe
At the start of the economic autumn, we take a moment to reflect on the key developments of the past summer and look ahead to what's coming up in the weeks ahead.
From conflict to compromise
The trade tariff conflict initiated by Donald Trump earlier this year has recently led to several agreements. A basic deal was reached with the European Union, setting a standard import tariff at 15%. While this agreement reduces some uncertainty, the finer details still need to be clarified. The direct economic impact has been moderate so far, but the risk of price inflation in the US remains if importers decide to pass on the increased costs to consumers.
Trump vs. the Fed
On July 4th, the US Congress passed the budget known as the Big Beautiful Bill, which includes tax cuts for corporations and the ultra-wealthy. Trump aims to offset the resulting drop in revenue with income from import tariffs. He continues to pressure the Federal Reserve to lower interest rates. By mid-September, we'll see how the Fed assesses inflation and the labor market, and whether it will indeed proceed with a rate cut.
Meanwhile, the president is trying to increase his influence over the Fed. He has already appointed a new board member and is now targeting Lisa Cook, the first Black woman ever to serve on the Board of Governors. Trump wants her removed, but she refuses to resign and has taken legal action to challenge the president's decision.
Europe seeks growth
In Europe, the challenge remains to stimulate economic activity and boost productivity. Germany, meanwhile, is focusing on public investment to counter the weak economic cycle. The labor market is holding up for now, and inflation is under control. The European Central Bank will meet on September 11th. A rate cut is not expected, but attention will be on its analysis of the European economy.
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