Thursday Economic Brief for 11-6-2025

Tim Gamble with Grok (xAI)

Sources listed at bottom. 

This week featured a mix of monetary policy adjustments, escalating trade policy debates, labor market strains amid political disruptions, and corporate earnings highlights. The U.S. economy showed resilience in some indicators (like GDP nowcasts) but faced headwinds from a prolonged government shutdown and tariff uncertainties. Below is a curated rundown of the top stories, grouped by theme.

Monetary Policy and Markets

•  Fed Cuts Rates but Signals Caution: The Federal Reserve lowered its benchmark interest rate by 25 basis points to 3.75-4%—the lowest since November 2022—in its second cut of the year. Chair Jerome Powell emphasized that further reductions are "far from certain," citing a split vote (one for a larger cut, one against any). The central bank also halted quantitative tightening, stabilizing its $6.6 trillion bond portfolio. Markets reacted positively, with U.S. equities surging and bond yields ticking up slightly. This move aims to support a softening job market amid shutdown-obscured data.
• Stock Rebound Amid Tech Volatility: Major indexes closed higher on November 5 after a mid-week tech rout. AMD jumped on strong Q3 results, while Palantir slipped further on valuation concerns. Broader earnings pointed to a "K-shaped" economy: robust growth in tech and consumer services but weakness in manufacturing and retail. The Shiller PE Ratio hit its highest since 1999, echoing dot-com bubble risks.

Trade and Fiscal Policy

• Supreme Court Hears Tariff Case: On November 5, the U.S. Supreme Court scrutinized President Trump's use of emergency powers for sweeping global tariffs under the International Emergency Economic Powers Act (IEEPA). Critics argue it oversteps authority, potentially costing consumers billions while frustrating businesses. Trump touted tariffs as a negotiation tool, but justices expressed skepticism. A ruling could reshape trade policy, with IMF chief Kristalina Georgieva warning of prolonged "uncertainty as the new normal" for global growth (forecast at 3% for 2025).
• Government Shutdown Drags on Economy: The ongoing federal shutdown—now over a month—furloughed half of government workers, shaving an estimated 0.1% off GDP weekly. It has delayed key data releases (e.g., BLS reports), forcing reliance on private indicators like ADP payrolls (showing a 32,000-job drop in September). Supply chain delays and import pricing volatility are hitting sectors reliant on federal oversight, though consumer tech demand remains resilient.

Labor and Sector-Specific Trends

• Overall Layoffs: U.S. job cuts rose 55% YTD to 946,426 in the first 9 months, per Challenger survey. DOGE (Department of Government Efficiency) accounted for ~1/3. Signals broader slowdown; private sector added jobs but small firms lagged.
• AI-Driven Cuts: 17,375 jobs eliminated due to AI implementation YTD; September alone saw 7,000. However, a Yale study counters that AI hasn't yet disrupted broader labor markets. Mixed: Short-term pain in tech/automation, but long-term adaptation expected.
• Construction & Immigration: Over 25% of workers are foreign-born; recent Hyundai raid highlights labor shortages. Electricity demand surges, pushing prices up. Strains housing and infrastructure; could worsen with policy shifts.
• College Grads: Unemployment rate for recent grads exceeds the national average—unusual and signaling a "not the worst but concerning" job market. Hits entry-level hiring; AI interviews emerging as a double-edged tool (less bias but "creepy").

Global and Corporate Highlights

• U.S.-China Trade Thaw: A tentative "truce" emerged, with China defending free trade at APEC while the U.S. pushes dollar adoption globally. Copper prices fell on China's slowing manufacturing (PMI at 50.6), but U.S. exports rose 3.4% YoY.

     $ Earnings Spotlights:

• Warner Bros. posted losses from linear TV woes but boosted by 'Superman' success; announced sequels for 'Matrix,' 'Practical Magic,' and 'Ocean's 11'.
• Ford and Hyundai saw sharp October EV sales drops; Pfizer sued rivals in obesity drug wars.
• Paramount faces a discrimination lawsuit from a fired exec claiming age/race bias. 

• Broader Data: Q2 GDP grew 3.8% annualized (revised up); current-account deficit narrowed 42.9% to $251.3B. Nonfarm productivity rose 3.3%, but unit labor costs ticked up 1%. Inflation (CPI) accelerated to 3% YoY, the only official glimpse amid shutdown data gaps. Mortgage rates held at 6.1-6.3%; Atlanta Fed GDPNow at ~4% for Q3.

Outlook: Markets eye December Fed moves and post-shutdown data for clarity. Political risks (tariffs, midterms) loom large, but private-sector resilience in AI and services offers a buffer. For investors, focus on diversified plays amid volatility—tech rebounds but tariff-exposed sectors lag.

Next Brief: Thursday, November 13 
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Sources

Federal Reserve announcements (FOMC statement, Powell press conference)

U.S. Supreme Court docket and live coverage (SCOTUS docket 24-589)

Challenger Gray & Christmas layoff report

ADP National Employment Report (private payrolls)

BLS data gaps confirmed via official notices

Atlanta Fed GDPNow model

Corporate earnings calls (AMD, Palantir, Warner Bros., etc.)

IMF World Economic Outlook update

APEC trade statements

Yale AI labor study (preprint via SSRN)

Shiller PE data via Multpl.com