Datatrack - Blog

2026-01-23

U.S. Q3 GDP Revised Up to 4.4%, Marking a Two-Year High

The U.S. Bureau of Economic Analysis (BEA) released the final estimate of real GDP for 3Q25 on January 22, 2026. The Seasonally Adjusted Annual Rate (SAAR) of GDP Growth was revised slightly upward to 4.4% from the initial estimate of 4.3%, accelerating from 3.8% in the second quarter and marking the fastest pace in nearly two years. The figure also exceeded market expectations of 4.3%. The upward revision primarily reflected stronger-than-expected exports and fixed investment. Although consumer spending was revised slightly lower, overall economic momentum strengthened, with the year-over-year growth rate rising from 2.1% to 2.3%, indicating that U.S. economic resilience has surpassed earlier “soft landing” expectations. Key components and contributing factors: Consumer spending grew at a SAAR of 3.5%, accelerating from 2.5% in 2Q25 and contributing 2.39 percentage points to GDP growth, led by solid performance in services such as healthcare and recreation; goods consumption increased by 3.1%. Exports surged 8.8%, rebounding from contraction in the prior quarter and contributing 1.6 percentage points via net exports. Fixed investment was revised slightly higher, partially offsetting a 4.7% decline in imports. Corporate profits increased by USD 175.6 billion quarter-over-quarter, with an annualized growth rate of 18%, further revised upward from the previous estimate, reflecting improved profitability following inventory adjustments and capital consumption. The core PCE price index rose a SAAR of 2.9%, up 0.3 percentage points from the second quarter, suggesting a modest pickup in inflationary pressure that remains manageable. Real private domestic final sales increased a SAAR of 3.0%. Residential investment declined by 5.1%, while government spending rose 2.2% (federal +2.9%, state and local +1.8%). Overall, the GDP revision reflects a recovery in consumer spending, a rebound in export orders, and improving business investment sentiment, while weaker imports and a soft housing market continued to weigh partially on growth. In addition, the earlier government shutdown delayed data releases, drawing heightened market attention to the underlying strength of the economy. In the near term, if labor market indicators remain solid (e.g., initial jobless claims staying below 200,000), equity markets may continue their upward momentum. However, the rebound in core inflation could constrain the likelihood of a Federal Reserve rate cut in March, supporting a relatively strong U.S. dollar. Over the medium term, should trade tariff policies be gradually implemented, inflationary pressures may re-emerge and dampen consumption, potentially slowing GDP growth to 2.5–3.0%. A relatively hawkish Federal Reserve stance is expected to remain a key driver of bond market volatility. Read More at Datatrack

By ariachiang

2026-01-22

Japan's December 2025 Trade Balance: Surplus Narrows to 105.7 Billion Yen

According to the latest trade statistics released by Japan’s Ministry of Finance, Japan recorded a trade surplus of JPY 105.69 billion in December 2025, narrowing significantly from JPY 316.7 billion in the previous month and down about 12% from JPY 120.3 billion a year earlier. The figure also fell well short of the market consensus forecast of JPY 357.0 billion. While exports continued to hit a record high for December, growth momentum slowed, and a faster recovery in import demand compressed the surplus, marking a relatively rare import-driven trade structure in recent years. Detailed Breakdown: The contraction in the trade surplus was mainly due to import growth slightly outpacing exports, with key structural factors as follows: Exports rose 5.1% YoY, easing from 6.1% in the previous month. Automobiles and electronics remained the main contributors, but weakening demand from the U.S. and China pointed to softer external momentum. Imports increased 5.3% YoY, reaching an 11-month high, supported by a rebound in domestic consumption and investment driven by Tokyo’s large-scale stimulus program. The impact of the largest fiscal measures since the pandemic has begun to materialize. Energy imports, including natural gas and crude oil, accounted for a larger share, with values rising more than 10% YoY, reflecting global oil price volatility and a weak yen (around JPY 155 per USD), which lifted overall import costs. Export growth to the U.S. slowed, while shipments to China posted only marginal gains, underscoring the impact of rising U.S.–China trade tensions and ongoing global supply chain restructuring. Taken together, while yen depreciation continues to support export competitiveness, it has simultaneously driven up import costs, placing structural pressure on Japan’s trade balance. Overall, Japan’s trade surplus in December 2025 remained positive but narrowed significantly, reflecting the combined effects of moderating export growth momentum and strengthening import demand. Supported by stimulus measures under the current administration of Prime Minister Sanae Takaichi, domestic demand resilience has improved, although external uncertainties remain elevated. In the short term (1–2 months), the trade surplus is expected to stabilize within the range of JPY 80–120 billion, with exports continuing to grow while import momentum remains firm. Continued yen depreciation could further amplify import-side pressure. Over the medium term (within six months), the trade balance is likely to narrow below JPY 400 billion, with the risk of slipping into deficit increasing. The outlook will depend on U.S. tariff policy developments and the pace of demand recovery in China. An escalation of U.S.–China trade tensions could pose additional challenges to Japan’s export sector. Read More at Datatrack

By ariachiang

2026-01-21

US-EU Trade War Reignites: Tariff Threats Rock Global Markets

U.S. President Donald Trump has recently threatened to impose a 10% tariff starting February 1 on goods exported to the United States from eight European countries—Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland—should they fail to reach an agreement on the purchase of Greenland. The tariff rate would be further raised to 25% on June 1, triggering sharp volatility across global financial markets. In response, U.S. equities sold off heavily on January 20, with the Dow Jones Industrial Average plunging 871 points in a single session, while the S&P 500 and Nasdaq Composite fell more than 2% and 2.39%, respectively, marking the largest one-day decline in recent months. European equity markets also opened broadly lower by over 1.5%, led by sharp losses in automotive, technology, and luxury goods stocks. Meanwhile, the VIX volatility index surged above 20, signaling a rapid escalation in risk aversion. The latest trade tensions stem from Washington’s attempt to strengthen its influence over Greenland, an autonomous territory of Denmark. After European countries firmly rejected the proposal, the U.S. resorted to tariffs as a pressure tactic, consistent with its long-standing protectionist trade stance. In response, the European Parliament announced on January 20 that it would freeze the approval process of the trade agreement reached with the U.S. in July last year, while also considering retaliatory tariffs on up to EUR 93 billion worth of U.S. goods, underscoring a hardened countermeasure posture. On the macro front, eurozone headline HICP inflation slowed to 1.9% year-over-year in December, marking the first reading below the European Central Bank’s 2% target since May last year. Core inflation also eased, although escalating trade frictions could push up import costs and undermine the recent disinflation trend. Looking ahead, EU leaders are expected to convene an emergency summit this week to assess whether to activate the “Anti-Coercion Instrument,” which could restrict U.S. companies’ access to the EU market. In the near term, financial market volatility is likely to remain elevated, with U.S. and European equities facing continued correction pressure, while capital may rotate toward gold and other safe-haven currencies. Over the medium term, should the tariffs be implemented as planned, the EU’s 2026 economic growth forecast could be revised down by 0.5 percentage points, while U.S. producer price inflation may rise from 2.8% to 3.0%, reigniting inflationary pressures. This would likely constrain the Federal Reserve’s rate-cut trajectory and accelerate the restructuring of global supply chains. Overall, although negotiations may eventually help de-escalate tensions and avert a full-scale trade war, geopolitical uncertainty is expected to continue to dominate investor sentiment ahead of the midterm elections.

By ariachiang

2026-01-20

IMF's Latest World Economic Outlook: 2026 Global Growth Raised to 3.3%

The International Monetary Fund (IMF) released its 《World Economic Outlook Update》 on January 19, 2026, revising the forecast for 2026 global economic growth upward to 3.3%, an increase of 0.2 percentage points compared to the October 2025 report. Specifically, advanced economies are projected to grow by 1.8%, while emerging market and developing economies are expected to reach 4.2%. Within this context, the economic growth rate for the United States was raised by 0.3 percentage points to 2.4%, and the forecast for mainland China was also lifted by 0.3 percentage points to 4.5%. Although global inflation is projected to fall to 3.8%, the pace at which the US returns to its target remains slower. Overall data reflects greater-than-expected economic resilience and a relatively stable inflation environment. This upward revision to the growth forecast is primarily attributed to the strong adaptability of businesses and the private sector to changes in trade policy, as well as infrastructure spending, such as data centers, driven by the artificial intelligence (AI) investment boom. Furthermore, the effective US tariff rate dropped to 18.5% (lower than the roughly 25% seen last April), thanks to supply chain diversification, the signing of trade agreements, and China's export shift toward non-US markets like Southeast Asia and Europe. Positive factors such as fiscal and monetary policy support and accommodative financial conditions collectively offset the headwinds resulting from trade uncertainty. Although short-term growth is stable, policymakers must remain vigilant regarding medium-term downside risks, including a potential AI investment bubble, escalating geopolitical tensions, and increased trade conflicts, all of which could disrupt supply chains and impact household wealth. The IMF recommends that policymakers rebuild fiscal buffers, maintain price and financial stability, and advance structural reforms to address uncertainty. Overall, the outlook is cautiously optimistic, but authorities must continuously monitor the realization of technological expectations and shifts in trade dynamics to ensure the medium-to-long-term growth trajectory remains on track.

By ariachiang

2026-01-16

Fed Latest Beige Book: Economy Grows Modestly, Inflation Pressures Rise

The U.S. Federal Reserve released its latest Beige Book on January 14, 2026, covering economic conditions across the 12 Federal Reserve Districts up to January 5. The report showed that economic activity exhibited slight to moderate growth in 8 of the 12 Districts, marking the first time in the last three cycles that growth turned positive in the majority of regions (in the previous three cycles, changes in most regions were slight). The labor market remained stable, with employment trends showing almost no change in 8 Districts; price levels rose at a moderate pace in most Districts, with only two reporting slight growth, and the year-over-year growth rate edged up from 2.9% in the third quarter of last year to 3.0%. Overall, the data reflects an improvement in the momentum of the U.S. economy, though it has not yet fully emerged from the shadow of weakness. The main factor influencing this data performance was cost pressures resulting from tariff policies. After businesses depleted their inventories, they began to pass some of these costs on to consumers, leading to a noticeable escalation of inflationary pressure, especially toward the end of 2025. Although manufacturing activity appeared slightly weak, consumer spending driven by the holiday season remained robust, and both service sector demand and banking conditions were better than in the previous report. Furthermore, while the labor market is stable, it still faces the risk of further weakening, and tariff-induced price increases may be masking actual inflation progress. Interviews with Fed contacts across the 12 Districts showed that businesses are becoming more optimistic about the future outlook, but the cautious approach to tariff cost pass-through remains the dominant factor in current economic dynamics. In the short term, the market anticipates that the Federal Reserve will maintain interest rates unchanged at the January 27-28 meeting. Goldman Sachs has lowered its probability forecast for a U.S. recession in 2026 to 20%, projecting that the federal funds rate might drop to 3%-3.25% by year-end. The medium-term outlook leans toward moderate growth, but requires close attention to the persistent impact of tariffs on supply chains and inflation; the Fed may view such temporary price volatility as something it can "look through." Overall, the Beige Book reinforces expectations of an economic soft landing, yet the actions of businesses passing on costs will test consumer endurance and the flexibility of the Fed's policies.

By ariachiang

2026-01-15

US Retail Sales Rose 0.6% MoM in November, Beating Expectations and Rebounding Strongly

US retail sales rose 0.6% MoM in November to USD 735.9 billion, clearly beating market expectations of 0.4%, and rebounding sharply from a revised 0.1% MoM decline in October. On a year-over-year basis, sales grew by around 3.3%, marking the largest monthly increase since July 2025. Total sales hit a record high, indicating that consumer momentum at the start of the holiday shopping season remained resilient. Breakdown and key drivers: Motor vehicle and parts dealers: +1.0% MoM, reversing an October decline of 1.6%, reflecting demand normalization following the expiration of EV tax incentives and the impact of promotional activities. Building materials and garden equipment: +1.3% MoM, rebounding from a 1.3% MoM drop in October, suggesting early signs of stabilization in housing-related activity. Clothing and accessories: +0.9% MoM, extending October’s 1.2% gain, supported by tariff-related front-loading of purchases and earlier-than-usual holiday demand. Food services and drinking places: +0.6% MoM, a notable improvement from October’s 0.1% decline, indicating a gradual recovery in discretionary spending. Overall performance was supported by an early start to holiday shopping, auto promotions, and solid spending from higher-income households. However, lower-income consumers continue to face pressure from higher prices for necessities such as food due to import tariffs. In addition, the October government shutdown delayed the release of some data, which likely amplified the rebound seen in November. Control group sales (excluding autos, gasoline, building materials, and food services) appeared relatively soft, but still provided support for Q4 GDP growth. In the short term (next 1–2 months), retail sales in December and January are expected to maintain around 2–3% growth, supported by promotions and year-end bonuses. That said, persistent inflationary pressures and a cooling labor market may gradually weigh on consumption. Over the medium term (next six months), if tariff impacts spread further along the supply chain, retail growth could slow to 2.5–3.5%, limiting the Federal Reserve’s room for rate cuts and potentially increasing market volatility. Read More at Datatrack

By ariachiang

2026-01-14

US December Overall CPI Holds Steady at 2.7%, Deflation Process Remains Slow

On January 13, 2026, the U.S. Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI) data for December 2025. On a seasonally adjusted basis, the year-over-year (YoY) increase remained stable at 2.7% (flat compared to November), while the month-over-month (MoM) CPI increased by 0.3%. Both figures met market expectations. This increase was primarily driven by shelter and food prices, indicating that the disinflationary process is slow and remains significantly above the Federal Reserve’s 2% target. Core CPI (excluding food and energy) posted a 2.6% YoY increase, lower than the market expectation of 2.7%, marking a new low since March 2021. The MoM increase for core CPI was 0.2%. Following the data release, the market anticipates that these figures will support the Federal Reserve’s stance of maintaining a persistently cautious policy. Detailed Data Performance: Food:** The Food Index rose 0.7% MoM and 3.1% YoY. Specifically, food away from home increased 4.1% YoY, while food at home rose 2.4% YoY. Although meats, poultry, fish, and eggs saw a 3.9% YoY increase, egg prices fell sharply by 8.2% MoM. Energy:** The Energy Index rose 0.3% MoM and 2.3% YoY. Natural gas surged 4.4% MoM and 10.8% YoY, while gasoline fell 0.5% MoM (down 3.4% YoY). Electricity costs saw a slight decrease of 0.1% MoM. Core Services:** Shelter remained the primary driving force in core services, increasing 0.4% MoM and 3.2% YoY. Both Owners’ Equivalent Rent (OER) and Rent of Primary Residence rose 0.3% MoM. Other services, such as medical care (up 3.2% YoY) and personal care (up 3.7% YoY), also contributed to the pressure. Durable Goods:** Prices for durable goods generally fell. Used cars and trucks decreased 1.1% MoM, communications costs fell 1.9% MoM, and household furnishings dropped 0.5% MoM. Other Services:** Service prices, conversely, continued to rise. Airline fares jumped 5.2% MoM, and recreation rose 1.2% MoM, hitting a new monthly historical high. Overall, December inflation remained stable at a lower level, with both the headline (2.7%) and core (2.6%) YoY rates meeting expectations. Inflationary pressure primarily stemmed from persistently high shelter prices and food items, while energy prices were influenced by oil price fluctuations. Conversely, the effects of tariffs and a softening labor market suppressed prices for certain goods, and the decline in core goods prices provided a buffer against overall inflation. In the short term (1-2 months), the MoM CPI rate is expected to stabilize further in the 0.2%–0.3% range. The Federal Reserve will continue to closely monitor labor market data before determining the timing of interest rate cuts. In the medium term (the next six months), attention must be paid to the potential impact of Trump’s proposed tariff policies, which could lead to increased supply chain costs and push inflation back above 3%. In this scenario, the Fed’s room for rate cuts will be limited, and the market will need to closely monitor changes in trade friction and the employment market. Read More at Datatrack

By ariachiang

2026-01-13

Latest US-Taiwan Tariff Negotiations: Rate Cut to 15% in Exchange for TSMC US Factory Expansion

Taiwan and the United States have achieved a major breakthrough in tariff negotiations. The U.S. will lower tariffs on Taiwanese exports from the original 20% to 15%, as of the latest update on January 13, 2026. This move grants Taiwan the same import treatment as Japan and South Korea, helping to reduce the cost of exports to the U.S., particularly benefiting the semiconductor and ICT sectors, which together account for nearly 90% of Taiwan’s trade surplus with the U.S. Following the announcement, the Taiwan stock market opened sharply higher on January 13, reaching an intraday high of 30,973 points, while TSMC’s stock surged to a record NT$1,720, with trading volume accounting for nearly 30% of the total market. The progress in negotiations is mainly driven by the U.S.’s trade reshaping strategy, using tariffs as leverage to secure increased investment from allies, thereby strengthening national security and supply chain resilience. The U.S. places high importance on advanced chip supply. Amid rising geopolitical risks, it has requested TSMC to expand capacity in Arizona, planning at least five new fabs with a total investment potentially exceeding US$165 billion. Taiwan, meanwhile, went through multiple rounds of talks, including the first phase from April to July 2025. The Executive Yuan’s Office for Trade Negotiations noted that both sides have reached consensus on tariff reductions and principles for supply chain cooperation, while also striving to avoid overlapping tariffs and ensuring benefits related to Section 232. In the short term, the agreement is expected to complete legal review and be officially announced by the end of January 2026, further boosting the Taiwan stock market and export confidence. In the medium term, it will help Taiwan’s semiconductor industry deepen cooperation with the U.S., though attention must be paid to rising investment costs for new fabs and potential production delays extending into the 2030s. For the U.S., the agreement is expected to drive substantial expansion of advanced semiconductor capacity, accelerate domestic chip manufacturing, strengthen supply chain security, and meet AI demand, creating tens of thousands of jobs and reducing reliance on overseas suppliers. Overall, the market outlook remains positive. Supported by continued AI demand, Taiwan’s economic growth could exceed the previously forecast 3.54%, although traditional industries still face low-cost competition from China, requiring the government to strengthen differentiated strategies. For the U.S., this can also serve as a showcase of trade policy achievements, reinforcing the Trump administration’s policy successes.

By ariachiang

2026-01-12

U.S. Preliminary January University of Michigan Consumer Sentiment Rises to 54, a Four-Month High

The University of Michigan released the preliminary January 2026 Consumer Sentiment Index on January 9, which came in at 54, a slight increase from 52.9 in December 2025. This marks the highest level since September 2025 and the second consecutive monthly rebound. The reading was marginally above the market expectation of 53.5, indicating early signs of stabilization in consumer sentiment from depressed levels. Looking at the subcomponents, one-year inflation expectations remained unchanged at 4.2%, while long-term inflation expectations rose from 3.2% to 3.4%, suggesting that cost-of-living pressures remain elevated. The Consumer Expectations Index increased to 55, a five-month high, reflecting improved views on both short-term and medium- to long-term economic prospects. Meanwhile, the Current Economic Conditions Index rebounded from its December low to a three-month high, indicating a modest improvement in assessments of current financial conditions, although overall sentiment remains cautious. These components continue to constrain a stronger recovery in consumer confidence. The main factors weighing on sentiment include: Persistently high living costs, limited job opportunities, and weak wage growth prospects, which continue to suppress consumer confidence. Gradually easing concerns over tariffs, leading to slight improvements in assessments of the business environment and labor market. However, the rebound in confidence has been driven mainly by lower-income households, while sentiment among higher-income households has weakened. Overall, while the January Consumer Sentiment Index slightly exceeded expectations, it remains at relatively low levels, suggesting that the U.S. economy retains a degree of resilience but continues to face unresolved structural pressures. In the short term, with the Federal Reserve maintaining a wait-and-see stance and labor market data becoming clearer, the index is likely to fluctuate around the 55 level. Over the medium term, if inflation continues to ease and tariff policies become more clearly defined, consumer sentiment could improve further. Conversely, a rise in the unemployment rate could lead to a renewed decline toward the 50 level. Read More at Datatrack

By ariachiang