Economy Spotlight: The Most Important Events and What's Coming 3-9/03/2025

Introduction:

Last week was headlined by "Inflation and Technology", as everyone was anticipating both the results of major technology companies and one of the Federal Reserve's favorite inflation indicators.

In turn, the European continent witnessed some economic events, the most prominent of which was the arrival of Trump's tariff ship to its shores at a higher rate than expected, days before the European Central Bank's meeting to make its decision on interest rates.

In this week's "Economy Spotlight" report, we will discuss these matters, along with many events in the most prominent major economies, specifically the surprise that the Chinese side reviewed at the beginning of this week, which may pose a threat to the financial markets, like what happened on January 25 of this year. We will also review what awaits the economy this week.

Economy Spotlight. Major Economies:

First. The US Economy:

The US economy started last week with a shock, as consumer confidence fell to its lowest levels in three and a half years, joining the shock of the decline in US production and manufacturing indicators for January, which were read the week before last. 

However, most observers and analysts had focused their attention on two things: the first was monitoring the results of the giant technology company Nvidia for the fourth quarter of 2025. While the second was monitoring economic data, most notably the Personal Consumption Price Index (the preferred inflation indicator for the US Federal Reserve), in addition to monitoring the newly revised GDP reading for the fourth quarter of last year.

Nvidia, which exceeded expectations by achieving revenues exceeding $39 billion, and whose CEO Jensen Huang confirmed that the company is still able to provide more and achieve future revenues that are higher than expected as well, has not removed doubts about the future of spending on smart chips. Which is the basis of the artificial intelligence revolution, due to the ongoing impact of what the Chinese application DeepSeek created at the end of January when it provided the technology community with evidence that it is possible to spend a little to join the artificial intelligence revolution that shook the idea of ​​​​the necessity of spending billions in this field. 

As for economic indicators, the GDP data for the fourth quarter of 2024 was issued, which confirmed the slowdown in US economic growth, when the output declined from 3.1% in the third quarter to 2.3% in the last quarter of last year. 

Regarding the inflation reading, the personal consumer price index reading showed a decline from 2.8% to 2.6%, the lowest level since August 2024.

Along with the inflation index, very important economic indicators were issued, which resulted in surprises and shocking numbers, especially regarding the trade deficit in goods and the spending and income indicators, which may strengthen both the Federal Reserve’s position in adhering to interest rates at their current high levels, and fears that tariffs will slow down US economic growth.

In terms of important economic data, markets are awaiting labor market data, including the unemployment rate, the non-farm payrolls report, and the average wages report, all of which will be released on Friday, a day that will coincide with an important speech by the Chairman of the Federal Reserve Bank. 

As for last week's data, it came as follows:

• The consumer confidence index fell to its lowest levels and significantly from 105.3 to 98.3, which was higher than expectations of a decline to 102.7.

• US crude oil inventories moved into a deficit of 2.322 million barrels compared to a previous surplus estimated at about 4.633 million barrels.

• New home sales declined from 734 million units to 657 million units, which reflects the great pressures that the US mortgage market is beginning to face.

• GDP for Q4 2024 held steady at 2.3% as expected.

• Unemployment claims rose more than expected from 220K to 242K.

• Personal consumer price index fell y/y from 2.8% to 2.6%, and rose 0.2% to 0.3% m/m.

• Personal income rose 0.4% to 0.9%.

• Spending fell 0.8% to -0.2%.

• The trade deficit in goods widened sharply from $122B to $153.26B.

Second. European Economy:

This week's ECB meeting will be the first meeting of major central banks for March, a meeting in which they will decide on which interest rates to continue to cut, as many officials have said in February.

However, the most prominent issue that occupied the European bloc last week was Trump's threat to impose tariffs, due to the United States' importance to the European economy, as it represents the first place in terms of European exports and the second place in terms of its imports. 

The American threat even referred specifically to cars, which raises concerns for this industry that is exposed to many pressures, especially with Chinese competition.

As for European moves to regulate technology companies, European officials have refused to back down from regulating their businesses despite Trump's threats in this regard.

As for the good economic indicators, they were represented by the growth of lending in the eurozone; Business lending last month rose to its highest level since July 2023, recording 2% compared to 1.7% in December 2024, while household lending grew by 1.3%, higher than 1.1% the previous month, indicating that a series of interest rate cuts are beginning to be transmitted to the real economy. 

The European continent also recorded stability in the core inflation index at 2.7% year-on-year, and a slight increase as expected on an annual basis from 2.4% to 2.5% but recorded a significant decline in the monthly inflation index from 0.4% to 0.3%, which supports the European Central Bank’s continued interest rate cuts at its next meeting next week.

Third. Japanese Economy:

The Japanese economy witnessed a few economic indicators last week, the most important of which were the inflation index (the Bank of Japan's core consumer price index, which rose from 1.9% to 2.2%) and (the Tokyo Consumer Price Index (YoY), which fell from 2.5% to 2.2%), in addition to the industrial production index, which also declined. However, the Deputy Governor of the Bank of Japan, Shinichi Uchida, confirmed that the Japanese economy is still witnessing a moderate recovery, despite the weaknesses that still exist in some sectors. The pace of expectations is increasing that the Japanese central bank will raise interest rates during its next meeting in March, which is also reinforced by the rise in yield rates on Japanese bonds to their highest levels ever, whether with maturities of two years or ten years.

Fourth. Chinese Economy:

Analysts are constantly studying the impact of the tariffs that the US president has pledged to impose and increase periodically (he promised 10% on goods on February 4, then promised an additional 10% that will be imposed on March 4).

These tariffs have increased concerns that they will affect China’s struggling steel sector, which could reach about $7 billion.

As for economic indicators, an official survey of factories showed that manufacturing activity in China expanded at the fastest pace in three months in February, thanks to new orders and higher purchasing volumes that supported increased production, which is one of the economic indicators that could reassure that the new stimulus measures that were launched since September last year may help support the Chinese economic recovery.

China will hold its annual parliamentary meeting this week, specifically on March 5, which will be closely watched, whether to identify the possibility of pumping new stimulus packages, or to identify the Chinese response to the tariffs imposed by the US side, in addition to those who will be watching for any possible signals from the Chinese government to support the struggling real estate sector or developers.

As for the upcoming economic indicators, the most important will be China's foreign exchange reserves for February, the trade balance, and the inflation rate, which recovered last month from 0.1 to 0.5%.

The Chinese economy started this week with very serious news disclosed by DeepSeek, which said that the cost-to-profit ratio reached 545%, which could destabilize artificial intelligence stocks outside China, which were hit by a violent shock on January 25 of last month, wiping out $1 trillion in market value in one day.

Economy Spotlight. Economic Calendar and What to Expect in the Markets Next Week:

Global markets will be awaiting the following economic data: