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Trump vs. Goldman: The Economic Fallout of Rising Tariff Inflation

Economists Warn of Rising Tariff-Driven Inflation as Trump Criticizes Goldman Sachs

Tariffs and inflation now drive many talks. Economists on Wall Street agree that tariffs will raise consumer prices soon. Recent consumer price data look upbeat. Tariffs, however, will push prices up. Goldman Sachs said prices affected by tariffs will increase. This view upset many, including former President Donald Trump. Many experts share this warning.

Goldman Sachs Faces Backlash Amid Broad Consensus

Goldman Sachs sparked conflict when its economists showed that tariffs will hit consumers harder in the second half of 2025. Trump shared his anger on Truth Social. He told CEO David Solomon to fire the economist behind the study or to leave the job himself.

Goldman Sachs economist David Mericle spoke on CNBC. He said, "If we fired every economist who shares this view, Wall Street would soon have many empty seats." His words keep market views close and simple.

Wall Street Economists See Inflation Creeping Upward

Many economists see a steady rise in prices. Companies use up cheaper stocks and then pass on the high cost of tariffs. Tariff rates climbed from 3% to almost 18% this year. Soon, consumers will see higher bills.

• Michael Feroli of JPMorgan Chase says tariffs may take 1% off the economy and add 1% to 1.5% to inflation.
• Brian Rose, a senior economist at UBS, sees core inflation stop falling as tariffs push store prices higher; he notes that slowing shelter costs and a consumer check might limit the jump.
• Pantheon Macroeconomics watches core inflation climb 1 percentage point, reaching 3.5% by year-end.
• PNC chief economist Gus Faucher sees core PCE inflation rising above the Fed’s target soon.

Most experts see no wild inflation. They expect a slow rise of 0.3% to 0.5% each month. This rise may place core inflation in the low- to mid-3% range.

Impact on Federal Reserve Policy and Consumer Spending

The rise in inflation will affect the Fed’s plans. With price pressures growing, many economists think:

• The Fed may wait to cut rates, starting later as the job market drops and if inflation seems brief.
• Higher prices may slow down how much people spend. This change could also slow economic growth for the rest of the year.
• JPMorgan projects that tariffs might lower GDP growth by nearly 1%, while the Blue Chip Economic Indicators report shows about 0.85% growth in the second half of 2025. —

Near-Term Concerns and Inflation Stickiness

Some risks may push inflation higher. On August 29, the tariff break for goods under $800 ends. This rule change may raise retail prices.

Other worries are that some prices move slowly. Rent, insurance, and home items change over longer periods. The Cleveland Fed measured sticky-price CPI inflation at a 3.8% yearly rise. This level is the highest since May 2024. It shows that price increases persist in some areas, even when food and energy do not change as much.

BNP Paribas notes that inflation may spread. Service prices also show upward moves. The key worry for the Fed is if high prices will stay for a long time.

Summary of Expert Views on Tariff Inflation Effects

• Tariffs may drive inflation up by 1 to 1.5% and reduce GDP by about 1%.
• Core inflation may rise slowly, reaching about 3.5% by year-end.
• The Fed may hold off on rate cuts until it sees that price rises are short-lived.
• Ending tariff breaks might push store prices higher.
• Slow shifts in some prices could lead to lasting cost increases.

Conclusion

Experts share one clear message. Tariffs seem set to push inflation higher soon. This shift will challenge both buyers and policy makers. Trump’s anger at Goldman Sachs shows the tight politics around this trend. Yet, the firm’s forecast fits many Wall Street views. In the coming months, buyers should get ready for modest price hikes, especially for items hit by tariffs. Investors and policy makers now watch as these changes shape economic growth and Fed moves.

For continual updates on inflation, tariffs, and market reactions, stay tuned to CNBC.

Goldman Sachs Defends Tariff Impact Prediction Amid Trump’s Criticism: Consumers to Feel the Pinch

Goldman Sachs Stands Firm on Forecast: Consumers to Bear Most Tariff Costs Despite President Trump’s Criticism

Goldman Sachs now backs its view. The bank expects that US buyers will cover most tariff costs. This idea comes amid sharp talk from President Trump. He questioned the bank’s study and its team of economists.

Tariff Impact on Consumers: Goldman’s Projection

In a CNBC interview on Squawk on the Street, economist David Mericle stuck to the bank’s view. He said the data shows tariffs will come hard by fall. Mericle explained that US buyers will pay about two-thirds of the extra cost.

“If the April tariffs act like the ones from February, our plan shows buyers face about two-thirds of the cost by fall,” said Mericle.

The President’s Response

On his social media site, Truth Social, President Trump spoke out on Tuesday. He told CEO David Solomon to “get a new economist” or quit. Trump called the bank’s view off track.

Still, Mericle ignored these claims. He stood by the bank’s models. A report by economist Elsie Peng, which sparked the president’s anger, noted that exporters and businesses have so far picked up most tariff costs. This balance will soon shift more to US buyers.

Economic Insights and Inflation Projections

The bank’s numbers show that tariff-driven price hikes could push the PCE price index to about 3.2% by the end of 2025. This index is the inflation tool favored by the Fed. At one time, the core PCE rate was 2.8% in June, while the Fed still aims for 2%.

Mericle added, “A US company shielded from global rivals can raise its prices and see gains.” His estimates sit well with those from other top economists.

Future Policy and Market Implications

Mericle said that even with rising prices, the president may see some relief in the form of Fed rate cuts. He described the rise as a one-time price jump. This change will not force the Fed to shift from its focus on jobs.

Recent data points—small gains in the consumer price index and a soft July nonfarm payroll report—make markets think that rate cuts may come at later Fed meetings in 2025. ### Summary of Key Points:

  • Goldman Sachs sees US buyers covering about two-thirds of tariff costs by fall 2025.
  • President Trump openly rejected Goldman’s forecast and called for a change in leadership.
  • Tariffs may lift the key Fed inflation measure to near 3.2% by year-end.
  • Even if prices grow, Goldman expects some rate cuts because of job market needs.
  • The debate shows a clear divide between economic views and political opinions.

For updates on market moves, inflation, and Fed plans, stay tuned to CNBC.

Crude Oil’s Supply Surge: A 3 Million Barrel Inventory Increase Pressures WTI Prices

Crude Inventories Rise by 3 Million Barrels; WTI Oil Prices Stay Under Pressure

August 13, 2025 – By Vladimir Zernov

The EIA report shows more oil on hand. The report tells us that stocks grew by about 3 million barrels from last week. Analysts expected a drop of 0.8 million barrels. Total stocks now sit about 6% below the five-year average. This fact tells us that supply remains tight by past measures.

Key Inventory and Production Highlights

  • Strategic Petroleum Reserve: The reserve moved from 403.0 million barrels to 403.2 million barrels. This small change fits the pattern we see in recent weeks.
  • Domestic Oil Production: U.S. output went from 13.284 million barrels per day to 13.327 million barrels per day. Analysts point out that if production crosses 13.4 million barrels per day, more growth may follow as oil prices hold.
  • Crude Oil Imports: Imports jumped by 958,000 barrels per day to about 6.9 million barrels daily. The strong rise in imports is the main cause of the overall stock gain.
  • Gasoline and Distillate Stocks: Motor gasoline stocks dropped by 0.8 million barrels, which is a bit less than the one million barrel drop some had forecast. Distillate fuel stocks went up by 0.7 million barrels.

Market Reaction and Oil Price Movement

After the report came out, WTI crude oil prices dropped. WTI now fights to stay above $62.50 per barrel. Investors feel unease with the jump in oil stocks. At the same time, Brent crude fell toward $65.50 per barrel after the report.

The report shows a strong link between more imports and slow domestic production growth. Traders keep a close watch on the supply of and demand for oil. They track seasonal fuel use and any global events.

Outlook and Economic Context

The report shows that stocks grew more than many expected. Yet, stocks still stay below normal levels. This fact tells us that market tightness has not faded. The steady rise in domestic production shows that U.S. producers adjust to current oil prices. Ongoing gains will come only if prices stay above key levels.

For more updates on energy data and oil price trends, readers can check the FXEmpire economic calendar and the commodity news sections.

About the Author:
Vladimir Zernov is an independent trader with more than 18 years in financial markets. He studies stocks, futures, forex, indices, and commodities to track both long- and short-term trends.

Disclaimer: This article is for information only and is not investment advice. Readers should do their own research and speak with a financial expert before taking any trading actions.

Fed Nominees Dispute Tariffs as Inflation Cause, Align with Trump’s Economic Strategy

Fed Board Contenders Miran and Bullard Say Trump’s Tariffs Do Not Drive Inflation

In recent talks, two top economists and leading Fed candidates, Stephen Miran and James Bullard, argued that Trump’s tariffs do not add to inflation. They link their view with Trump’s own claim that tariffs do not push prices higher. This claim has stirred debate among economists and decision makers.

Tariffs and Inflation: Diverging Perspectives

Miran, who serves on the White House Council of Economic Advisers and is picked to finish a short term as a Fed governor, told CNBC that there is “no proof that any tariff raised prices.” He noted that forecasts of harm from tariffs did not come true when the years passed.

Bullard, a former head of the St. Louis Federal Reserve and a likely candidate to take over as Fed Chair, voiced a similar idea. He said that data shows “Trump’s aggressive tariffs have not driven inflation.” Bullard explained that price jumps lately seem to be one-time changes rather than a slow and steady rise.

Fed Policy and Interest Rate Outlook

Each economist skipped a direct vote on future rate moves. Bullard hinted that the FOMC might cut rates again as soon as September 2025. He said the Fed could lower its key rate by one full point within one year. This plan would bring rates near a “neutral” level.

Bullard mentioned that the Fed stopped cutting rates because of uncertain tariff effects. Now, with half a year of new data, he sees the taxes as having small and short-term effects on price levels instead of causing a lasting rise.

Inflation Data and Market Reactions

The discussion followed a report from the Bureau of Labor Statistics. The report noted that the Consumer Price Index (CPI) increased by 2.7% for July 2025. Although this is above the Fed’s goal of 2%, it is lower than what Wall Street expected. This news has sparked new debates on the tariff’s role in price movements.

Federal Reserve Independence Amid Political Pressure

Both Miran and Bullard stressed the need for the Fed to work without outside influence. Their remarks came while tensions grew between Trump and Fed Chair Powell. Trump has often taken aim at the Fed and pressed for strong rate cuts. After the recent CPI report, Trump posted on his social media and demanded a 3 percentage point rate cut. He blamed slow policy moves for the current issues.

Bullard replied in a measured tone, noting, “He has his view. Many have their view.” His words remind us that the Fed needs to consider many points of view.

Context: Fed Leadership Changes on the Horizon

Miran is set to serve out the rest of former Governor Adriana Kugler’s term after her exit. Meanwhile, Bullard is considered among several names to fill the gap when Jerome Powell’s chairmanship ends in May 2026. —

Key Takeaways:

  • Miran and Bullard dismiss the idea that tariffs cause ongoing inflation.
  • July 2025 data shows a CPI rise of 2.7%, which cools some earlier fears.
  • Bullard sees a chance for Fed rate cuts to start by September, to ease borrowing.
  • Both stress that the Fed must work free from political pressure.
  • A shift in Fed leadership may change the future path of U.S. monetary policy.

As the Fed moves through these changes, the views of candidates like Miran and Bullard will be closely watched for clues to the future direction of U.S. money policy.

US CPI Steady Amid Falling Energy Prices: Insights on Inflation Dynamics and Market Impacts

US Consumer Price Index Holds Steady in July as Energy Prices Ease

By James Hyerczyk
Published: August 12, 2025, 12:39 GMT+00:00

The US Consumer Price Index (CPI) shows steady inflation in July. The index slows as energy prices drop. A fall in energy costs helps balance slow rises in service prices. The Bureau of Labor Statistics (BLS) releases this report. Headline inflation rises 0.2% from last month. It holds an annual pace of 2.7%, a rate just below market views.

Headline Inflation Slightly Below Forecast

In July, prices move up by 0.2%. The yearly CPI growth stays at 2.7%. This rise is close to Dow Jones estimates. The core CPI, which leaves out food and energy, climbs 0.3% over the month. Over the past year, core inflation shows a 3.1% rise. The core rate is a bit higher than the predicted 3.0%. This points to steady price pressures in key areas.

Shelter and Services Remain Main Pushers

The report flags shelter costs as a main driver of price gains. Shelter prices go up 0.2%. Both rent and owners’ rent also grow 0.3%. Medical care prices jump 0.8% as dental and hospital costs rise. Airline fares climb sharply by 4.0% after a drop in June. Prices for recreation and household items also move higher. These shifts show that the service price rise holds firm.

Energy Prices Ease Inflation Pressure

Energy prices fall by 1.1% in July. Gasoline prices drop 2.2% this month, which adds up to a 9.5% fall over the year. Natural gas prices slip by 0.9%. Electricity falls slightly by 0.1% for the month, yet sits 5.5% above last year’s price. The dip in energy costs helps offset the pressure from other areas.

Food Prices Stay Near Flat

Food prices do not change much in July. Costs for food consumed at home drop by 0.1%. Low prices for eggs (down 3.9%) and nonalcoholic drinks (down 0.5%) help balance a 1.5% rise in beef prices. Prices for food eaten away from home go up 0.3%. Full-service restaurant meals rise by 0.5%, hinting at mild price growth for dining out.

Market and Federal Reserve Issues

A softer headline CPI and lower energy prices may ease some stress on the Federal Reserve. Yet, core inflation stays above 3%, a sign that the Fed may hold a careful view. Bond traders see a calm market in US Treasury bonds as they adjust to the slower inflation pace. The US dollar is likely to remain steady. Stock prices may get small boosts, especially in consumer and transport areas that feel the drop in energy costs. Trade issues and tariff risks may still limit gains.

About the Author:
James Hyerczyk is a seasoned US-based technical analyst and educator with over 40 years of experience in market analysis and trading. He studies chart patterns and price moves. He wrote two books on technical analysis. His work spans both futures and stock markets.

For further details and daily updates, visit our Economic Calendar and stay informed on market trends that affect commodities, currencies, cryptocurrencies, and global indices.

July 2025 Inflation Report: CPI Rises 2.7% as Tariff Effects Remain Modest, Fed Rate Cuts Likely Ahead

Consumer Price Index Inflation Report for July 2025 Shows Moderate Rise Amid Tariff Concerns

Published August 12, 2025 – Updated 3 Minutes Ago

The U.S. Bureau of Labor Statistics released the July 2025 Consumer Price Index report. The report shows prices rose by 0.2% over the month on a seasonally adjusted basis and by 2.7% over the past 12 months. The report gives a lower annual figure than market predictions of a 2.8% increase. Tariff worries came up, but the numbers stayed near expectations.

Core Inflation Trends

When experts remove food and energy from the count, the core CPI rose by 0.3% in July. This increase matches predicted numbers. Year-on-year, the core index reached 3.1%. That annual rise is the highest since February 2025, and the monthly jump is the largest since January. Fed officials study the core numbers to check ongoing price pressure and future trends.

The report shows that shelter costs moved up by 0.2%. Food prices held steady. Energy prices fell by 1.1%. In transportation, the price for new vehicles did not move, while used vehicles rose by 0.5%. Prices for transportation services and medical care both grew by 0.8%.

Market Reaction and Federal Reserve Outlook

After the report came out, stock market futures climbed and Treasury yields dropped. Traders put more money on a Fed rate cut as soon as September. This shift suggests that the market views the price rise as acceptable. The CME Group’s FedWatch tool shows that the odds for a rate cut in September have grown. It has also raised the chance for another cut in October. The odds now stand at about 67%, compared to 55% the day before.

Impact of Tariffs on Inflation Data

Tariffs on many imported goods have raised concerns among economists about their impact on price stability. The report shows that tariff effects can be seen but are not very strong. For instance:
• Prices for household furnishings went up by 0.7% after a 1.0% increase in June.
• Apparel prices increased by only 0.1%.
• Core commodity prices moved up by 0.2%.
• Canned fruits and vegetables, a group sensitive to tariffs, did not show any increase.

A former White House economist, Jared Bernstein, who worked under President Joe Biden, noted in a CNBC interview that the tariff figures show in the data but do not push prices to extreme levels now.

Challenges Affecting CPI Data Reliability

The BLS now faces problems with budget cuts and fewer staff. These cuts have stopped data collection in several cities. The bureau now uses estimates for many price groups. Critics say these changes lower the trust in the CPI readings. The debate has grown after President Trump criticized the bureau and made changes to its leadership. Trump fired the last commissioner following a weak July job report and nominated E.J. Antoni, a known critic of the BLS. This move has made the discussion about the data more heated.

Broader Economic Context and Future Outlook

Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management, said, "Inflation is on the rise, but it did not grow as much as some feared. In the short term, markets may welcome these data because they keep a September rate cut possible while the labor market shows weakness." She warned that price pressures from tariffs might still grow over time.

A key issue is whether tariffs cause a one-time change in price levels or start a steady rise over time. Most experts expect a one-time shift. Still, the spread of tariffs keeps concerns alive.

The Fed pays attention to the Commerce Department’s personal consumption expenditures price index, as well as the CPI and the upcoming producer price index reports, to guide policy moves.

Additional Inflation and Wage Data

In similar figures, inflation-adjusted hourly earnings grew by just 0.1% in July, which means a 1.2% gain over the year. This small wage growth might affect how much consumers spend and slow down overall growth.

Summary of Key Figures:

  • CPI Monthly Increase (July): +0.2%
  • CPI Annual Increase: +2.7% (forecast was 2.8%)
  • Core CPI Monthly Increase: +0.3%
  • Core CPI Annual Increase: +3.1%
  • Shelter Costs Monthly Increase: +0.2%
  • Energy Prices Monthly Change: -1.1%
  • Used Vehicles Monthly Increase: +0.5%
  • Average Hourly Earnings Monthly Change: +0.1%
  • Average Hourly Earnings Annual Change: +1.2%

The July CPI report comes at a key point as the Federal Reserve weighs a possible interest rate cut while inflation risks and changes in the labor market persist. Market players and policymakers will watch the next data releases to see how tariffs and other factors shape the inflation picture.

RBA Governor Bullock’s Insightful Press Conference: Interest Rate Cuts & AUD/USD Reaction Explained

RBA Governor Bullock Emphasizes Data-Dependent Policy Outlook as AUD/USD Slides

By Bob Mason | Published August 12, 2025, 06:23 GMT

The RBA cut its cash rate by 25 basis points to 3.6%. The board made this move after checking the numbers. Governor Bullock spoke after the decision. She pointed out that the data now guides each choice we make. The report uses figures on inflation and job numbers to shape each step.

Key Insights from Governor Bullock’s Press Conference

Bullock said that every board member agreed on the rate cut. There was no talk of a larger fall. She noted that the RBA sees Australia’s neutral cash rate as a number between 3.1% and 3.4%. Bullock asked us not to fix our view on that range. She made clear that we focus on current trends in prices and work, not on a fixed target.

The governor said, "We don’t have a point estimate of where we might end up. The board has to take things meeting by meeting and absorb the data."

She shared the hard choices in moving rates. She warned that if rates stay the same, inflation could drop more but jobs might be at risk. Yet the present plan, which holds room for more cuts, builds a path for inflation to come back near the 2–3% target while work stays strong.

Bullock added, "Our inflation comes down slowly to the target, and the job numbers stay strong by historical standards. That is the good news. So far, it does not show that our rates were too high."

Updated Forecasts and Policy Expectations

Staff forecasts for August show a careful yet hopeful picture. The bank expects core inflation to fall toward the target. Unemployment numbers may keep to low marks seen in the past. The fast approach for policy means that any change will come as we watch new evidence from the economy.

Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, said, "RBA forecasts see growth a bit lower than in May, with unemployment at 4.3% and inflation at target. The view is that more small cuts will bring rates to 2.9% next year. Without these cuts, inflation would drop more and jobs would suffer a rise. We see 0.25% cuts planned in November, February, and May."

Market Reaction: AUD/USD Experiences Volatility

After the RBA update and Bullock’s words, the Australian dollar moved quickly against the US dollar. At first, the AUD/USD rose to $0.65167 when hopes for more easing lifted the market. Soon after, it slipped below $0.65, as people grew wary of rate gaps that helped the US dollar.

During the press talk, the AUD/USD moved up a bit from $0.64987 to $0.65049. It then fell again to a low near $0.64937. As of trading on August 12, the AUD/USD was down about 0.19% at $0.64999. ### Looking Ahead

Bullock’s push for a data-focused plan tells us that market players have more uncertainty ahead. The meeting-by-meeting look means every new piece of economic data—from prices to job counts—will play a strong role in the future course of policy.

For those watching the AUD/USD and other Australian figures, the next months hold important changes as the market reads new signs from the RBA and the world.

About the Author:

Bob Mason brings over 28 years of work in finance. He covers currencies, raw materials, alternative investments, and global stocks with a focus on European and Asian markets. He has worked with top rating services and major banks.

For full reports on AUD/USD trends and deep trade data, visit our dedicated forex insights section.

Navigating the US-China Trade Truce: Trump’s 90-Day Extension and Its Impact on Global Markets

Trump Extends 90-Day US-China Trade Truce as Both Sides Seek Path to Deal

August 12, 2025, 02:14 GMT — US President Donald Trump extends the truce between the United States and China for 90 more days. This move holds off a 145% tariff on Chinese goods while both sides work to reach a deal. The words in each sentence connect closely, so the meaning comes through fast and clear.

Trade Truce Extension Details

On August 11, President Trump signed an order that keeps the trade ceasefire alive until November. This decision stops tariffs from rising sharply, a threat that hovered over China and US importers. China replies in kind by keeping its pause on a 24% tax on US goods, while a 10% rate stays in place.

The pause helps tech firms like Nvidia (NVDA) and Advanced Micro Devices (AMD) to ship semiconductor chips to China without facing new disruptions. These companies now pay a 15% tax on money earned from Chinese sales. The new rule may touch more firms if Chinese demand holds steady. Nvidia fell 0.35% in stock value and AMD lost 0.28% on news of the change.

China also continues to give out permits for the export of rare earth minerals. These minerals build many high-tech items and play a part in trade talks.

Broader Trade Dynamics and Market Impact

Even as Trump pushes tariffs to cut reliance on Chinese goods, new trade numbers cast doubt on the plan. China posted a $1.2 trillion trade surplus in the last year. This number has doubled in five years, even with a strong recovery in exports outside the US. China’s manufacturing surplus now sits higher than levels seen before in Germany or Japan.

Many experts note China is spreading its export routes and seeking new trade links to reduce the hit from US tariffs. Observers from the China Beige Book and other economists watch closely. Factories in Southeast Asia now face a new tax rule on goods sent there. Alicia Garcia Herrero, Natixis Asia Pacific’s chief economist, warned that companies might need to look beyond a “China+1” method. Some may try to move parts of their operations to Mexico, although using that option has limits.

Trump’s Agricultural Urgency

Before lengthening the ceasefire, President Trump urged China to buy more US soybeans. He stressed that soybeans help ease China’s local shortages and narrow the trade gap. No clear tie links this request to the truce extension yet.

Market Reaction and Outlook

Investors saw the trade pause good news. Mainland Chinese markets reacted gently: the CSI 300 grew 0.03% while the Shanghai Composite nudged up by 0.01%. Shanghai has risen 8.89% so far this year. Hong Kong’s Hang Seng Index climbed nearly 24% in 2025, outpacing US and Mainland markets like the Nasdaq Composite.

Market watchers now meet many signals. A steady move in trade talks and hints of more measures from Beijing could boost market moods in Hong Kong and Mainland China. On the other hand, renewed trade strain or a lack of news might slow risk-taking. Key data from China on August 15, such as job numbers and shopping sales, count a lot. A rise in job losses or a weak shopping report would make people worry about China’s own market strength. But a stronger job scene and better retail spending might calm these fears.

Conclusion

The US-China trade war stays unresolved, yet this 90-day pause gives both sides needed time for talks. Each side sticks to a plan that keeps trade moving while they search for a deal. The close bonds between paired words and short sentences let readers follow the news easily, making it clear how this pause may shape global trade in the coming months.

Austria’s Economic Struggles: Navigating Fiscal Pressures and Growth Challenges Amid Crisis Risks

Austria Faces Persistent Fiscal Pressures Amid Weak Economic Growth, Challenging Future Crisis Resilience

By Eiko Sievert | Published: August 11, 2025, 16:55 GMT

Austria faces fiscal pressures and slow economic growth. These issues may harm its chance to manage future economic shocks. Scope Ratings shows that current plans keep public debt at risk. Fiscal stress grows as spending needs rise alongside a weak economy.

Economic Growth Outlook Remains Weak

Austria suffered the COVID-19 crisis and faced many shocks after that. Russia’s war in Ukraine and slowdowns among key trade partners weakened growth further. Scope Ratings expects the economy to stall in 2025. The economy sits only 1.7 percentage points above its pre-pandemic level in the second quarter of 2025. By contrast, the euro area grew by 6.5 percentage points. Austria stays near the bottom among its peers, with Finland only 0.7 percentage points above its pre-COVID level.

Export sectors such as automotive and steel feel the strain. They face shifting energy prices, rising tariffs, and trade frictions among the US, Europe, and China. Over the next five years, growth is likely to average about 1% each year, which is below the near-2% seen before the pandemic.

Growing Structural Fiscal Pressures Challenge Public Finances

Austria’s public budgets suffer from slow growth and higher spending needs. In 2024, the fiscal deficit reached 4.7% of GDP. This rate is the third-highest since 2006, with only the 2009 crisis and the pandemic showing higher numbers.

Rising living costs and an aging population push spending higher. Austria now faces repeating primary deficits. Two decades before the pandemic brought moderate deficits and steady surpluses. Increased spending on welfare, public wages, and pensions adds to the pressure.

Debt Trajectory Raises Concerns

Scope Ratings warns that without new actions, General Government debt will rise to around 88% of GDP by 2030. The debt was 82% in 2024 and stands far above the average near 60% seen among peers.

In its Medium-Term Structural Fiscal Plan submitted in May 2025, the government said it needed €14.6 billion in consolidation by the end of 2029. But current actions point to only €10.6 billion in savings. This gap puts the EU’s 3% deficit target at risk by 2028. The EU began an Excessive Deficit Procedure (EDP) in early July 2025 and asked for a cut in spending growth.

Austria’s issues differ from those of countries like Finland, which escaped an EDP partly because EU rules allowed a rise in defense spending. Even so, Finland has seen its credit outlook weaken amid rising fiscal pressures.

Structural Spending and Inflation Complicate Budget Control

In 2024, spending grew by 8.7% while revenue grew by only 4.9%. Higher spending on welfare programs and public-sector wages drove this gap, even as help from the cost-of-living crisis ended for households and businesses.

This strain hits more than just the federal government. Regional and local bodies also bear high costs. Many planned steps up to 2026 focus on cutting state, local, and social security budgets. The central government’s deficit is expected to stay stable, but high staffing costs continue to challenge sub-national bodies.

Long-term fiscal health depends on reforms that improve health care and pensions. Pension costs are set to rise from €30.0 billion (6.2% of GDP) in 2024 to €38.2 billion (6.7% of GDP) by 2029. These changes come from shifting demographics and longer life spans.

Conclusion

Austria’s slow growth and rising spending needs call for bold policy shifts. Without new measures and reforms, debt will rise and the country will face more risks from economic shocks and tighter budgets in an uncertain global scene.

For ongoing coverage of Austria’s economic developments and other macro news, visit FXEmpire’s economic calendar.

About the Author
Eiko Sievert is an Executive Director in Sovereign & Public Sector Ratings at Scope Ratings, specializing in ratings and research on public-sector borrowers. Analyst Elena Klare contributed to this report.

Trump-Putin Talks: A Strategic Win for Moscow Amid Economic Struggles and Market Impacts

Trump-Putin Talks Mark Significant Victory for Moscow, Impacting Economy and Markets

Global interest grows. Putin and Trump meet in Alaska this Friday. This meeting wins for Moscow, its weak economy, and world markets. It seeks to end the war in Ukraine—a conflict that hurts both nation ties and money flows.

A Symbolic Win for Putin and Russia

The meeting shows a clear sign of power. Richard Portes, who leads the economics studies at London Business School, says the mark is strong. This time, since 2007, Putin meets on U.S. soil with no limits or other sides present.
Portes said, "This win is big for Putin… No limits and no Ukraine or any European side. This is a win."

Ukraine’s Exclusion Sparks Concern

Ukraine is not in this talk. Leaders in Kyiv, like President Volodymyr Zelenskyy, wait on an invite. They worry that their voice will be lost. Kyiv says no choice about its fate comes without it. In Europe, leaders ask hard to see Ukraine join. The U.S. seems to think about inviting Zelenskyy too.

Economic Context: Russia’s War Economy Under Strain

Russia wins some ground on the battlefield in southern and eastern Ukraine. Yet, its money matters are weak. Sanctions and high inflation—9.4% in June 2025—hurt its funds. The war makes a large budget gap. Oil and gas cash falls with low prices and the limits. Money work stays poor, even as field wins rise.
Portes said, "Putin begins with strong field actions but weak money power."

Potential Implications for Sanctions and Territorial Concessions

Russia, with a strong field, seeks fast relief from limits and some land in Ukraine. Kremlin voices also see new work and sales chances from a warmer U.S.-Russia tie, in Alaska and the Arctic. Yet, the U.S. may not back more limits. Washington talks of "secondary limits" against Russia’s trading friends like India. Trump has not started extra limits even as calls for more come in.

Market Reactions: A Mixed Picture

World markets react with hope to the talk news. Stocks in Europe and the U.S. rise on Friday. Yet, defense stocks drop as the idea of peace may bring less money for arms.

  • Defense Shares Falling: German firms Rheinmetall and Hensoldt lose nearly 4% and 1.5%. Similar drops hit Italy’s Leonardo and France’s Thales.
  • Gold Prices Decline: Gold, a safe spot, slips by about 1% as political tensions ease.

Christopher Granville, managing director at TS Lombard, sees a win on both sides for Europe’s defense names. He explains:
• If the talks break, the war goes on. New arms then will be needed.
• If a deal holds, Russia’s strong field still pushes Europe to buy arms.

Granville tells traders, "Buy on that drop," expecting long gains for defense groups no matter what happens with the talks.

Looking Ahead

The Trump-Putin meet in Alaska sits at a key turn. The talks serve as a sign for Russia. Yet, eyes stay fixed on real steps—especially for Ukraine and for what U.S. will do with Moscow’s limits. As events shift, global markets and politics stay alert and hopeful for a deal that keeps safety and money matters in careful balance.

For ongoing updates on the Trump-Putin talks and their global impact, stay tuned to CNBC and other trusted news sources.