Global Economic Outlook, Week 37, 2025,

USA

The U.S. economy enters the second half of 2025 under increasing strain, with the labor market softening and activity indicators sending mixed signals. While outright collapse is not evident, rising unemployment, tariff-driven cost pressures, and weakening momentum in key sectors suggest a more fragile outlook that strengthens the case for further monetary easing.

U.S. Economic Review

The U.S. labor market slowed sharply in August, with nonfarm payrolls rising by only 22,000 and earlier months revised lower to reveal layoffs in June. Over the past three months, job growth has averaged just 29,000, heavily concentrated in healthcare, social assistance, and leisure & hospitality, leaving the broader labor base vulnerable. The unemployment rate (U-3) rose to 4.3%, its highest in nearly four years, while the broader underemployment rate (U-6) climbed to levels not seen on a sustained basis since 2018. For the first time since 2021, job openings have fallen below the number of unemployed workers, signaling a clear weakening in labor demand.

Even so, layoffs remain contained. The July layoff rate was unchanged, and initial jobless claims were steady through August, highlighting firms’ reluctance to reduce staff amid lingering skill shortages. This suggests a labor market that is precarious rather than collapsing—fragile enough to raise risks, but stable enough to give the Federal Reserve room to adjust policy more flexibly.

Looking ahead, consensus forecasts call for two additional 25-basis-point rate cuts before year-end, which would bring the federal funds rate to 3.50–3.75%. Even at that level, policy would remain modestly restrictive, given ongoing inflationary pressures tied to tariffs. Purchasing managers in both manufacturing and services continue to cite tariffs as a major challenge. The “prices-paid” components of recent surveys eased slightly but still point to broad upward pressure, suggesting consumer prices could remain elevated.

Activity data remains uneven. Manufacturing contracted for the sixth consecutive month, underscoring persistent structural weakness, while services activity reached a six-month high. However, much of the services rebound appears to have been driven by demand pulled forward ahead of tariff increases, casting doubt on its sustainability.

The Federal Reserve’s Beige Book echoed these dynamics, reporting little overall change in activity, weaker consumer spending in some regions, and companies relying on promotions, supply chain shifts, and even AI adoption to contain costs. Taken together, the data illustrate a U.S. economy characterized by a fragile labor market, sticky tariff-driven inflation, and uneven growth. This backdrop provides the Fed with justification for gradual easing, though policymakers are likely to remain cautious about moving too aggressively.

US Economy — The Week Ahead (Sept 7–12)

NFIB Small Business Optimism — Monday

The NFIB index improved in July, but the eight-point jump in the Uncertainty Index underscores how a volatile policy backdrop is inhibiting decision-making. Capital-expenditure intentions remain subdued by historical standards. For August, we expect sentiment to stay restrained: hiring plans should remain broadly unchanged amid elevated uncertainty and tight labor supply, while rising tariff-related input costs are set to compress margins and complicate pricing in the coming months.

BLS Benchmark & Employment/Wages — Tuesday, Sept 9 (10:00 a.m. ET | 17:00 TRT)

The Bureau of Labor Statistics will release county employment & wages alongside the preliminary payroll benchmark revision. This annual re-anchoring can materially alter historical payroll levels and, in turn, shift interpretations of recent labor-market momentum.

Producer Price Index (PPI) — Wednesday, Sept 10 (8:30 a.m. ET | 15:30 TRT)

August PPI is expected to remain firm. A stronger-than-usual month-over-month print would reinforce upstream price pressure and serve as an early signal for consumer inflation in the pipeline.

Consumer Price Index (CPI) — Thursday, Sept 11 (8:30 a.m. ET | 15:30 TRT)

Core inflation accelerated in July across both goods and services, indicating that forces beyond tariffs are keeping inflation sticky. We look for core CPI +0.3% m/m (3.1% y/y) in August and headline CPI +0.3% m/m (2.9% y/y), with food and energy contributing to the headline gain.

Goods vs. Services Dynamics

The Q1 inventory front-running allowed firms to hold selling prices temporarily, but those stockpiles have thinned while merchandise imports and customs bills have surged—pointing to renewed goods-price pressure ahead. We expect only limited spillovers to services: physical inputs are a small share of total costs, and a softening labor market is restraining compensation growth. Even so, ongoing real-income gains should prevent a sharp demand retrenchment, making services disinflation gradual.

Initial Jobless Claims — Thursday, Sept 11 (8:30 a.m. ET | 15:30 TRT)

Consensus centers near ~230k. The latest reported week rose to 237k, consistent with a modest easing in labor-market tightness. This release will help confirm whether August’s weak payrolls were an outlier or part of a trend.

Real Earnings — Thu/Fri, Sept 11–12

The BLS real earnings report (August) will marry wage growth with inflation, offering a timely read on household purchasing power heading into Q4.

Market Implications

A hotter-than-expected PPI/CPI would temper near-term Fed-cut expectations and push yields higher; softer prints or a rise in jobless claims would bolster the case for imminent easing. The Sept 9 benchmark revision remains a key technical wildcard that could recast the narrative around trend job growth.

Wall Street and USD — Review and Outlook

Wall Street ended the week mixed following a weak August payrolls report (nonfarm payrolls +22k; unemployment rate 4.3%). The S&P 500 edged up about 0.3% for the week, the Nasdaq gained roughly 1.1%, while the Dow slipped around 0.3%. Treasuries rallied on softer growth signals, pushing the dollar lower; the DXY fell toward five-week lows as markets increased bets on Fed rate cuts. Gold set fresh records as yields declined.

The greenback weakened broadly into—and after—the jobs miss as rate-cut odds rose (with markets briefly entertaining the prospect of more than 25 bps in September). The USD fell roughly 0.7% on the day of the report, with notable declines versus JPY and CHF, and the DXY hovered in the high-97s to low-98s into the weekend. The labor data reinforced a “slower growth, easier Fed” narrative: equities briefly notched intraday records before fading, banks underperformed, long-end yields hit multi-week lows, and rate futures leaned harder toward a September cut.

Looking ahead, the data calendar is busy. After July’s hot +0.9% m/m print, attention turns to whether producer prices remain firm, particularly in tariff-sensitive categories; a stronger PPI would support the “sticky inflation” view. For CPI, consensus trackers point to headline inflation near 2.7%–2.9% y/y and core around 3.0%–3.1% y/y (roughly +0.2%–0.3% m/m). A softer-than-expected inflation set would likely extend USD downside and support duration; a hotter print risks a dollar rebound and an equity wobble. With equities near highs (S&P up ~10% YTD; 12-month forward P/E ~22x), valuations are sensitive to upside inflation surprises, while a benign CPI could prolong the “cuts coming” bid in risk assets and keep the USD heavy into the September 16–17 FOMC.

On the technical front, Wall Street’s tone remains broadly constructive. On the daily chart, however, while the US500 is printing higher highs, OBV is mostly flat to lower, and RSI is moving sideways under 60—signals consistent with a possible corrective phase before a new trend (bullish or bearish) asserts itself. Initial support sits near $6,380; a decisive break would open the door to $6,135. The broader uptrend remains intact as long as the US500 trades above the $6,000 key pivot.

In the currency market, the DXY—despite Friday’s selloff—continues to trade above the key pivot around 97. Holding this level would support the USD in the medium term; a sustained move below it would increase the risk of a deeper slide toward levels below 96.

Global Economic Review

In China, August PMIs offered only modest improvements despite the U.S. extending a tariff pause into November. The official manufacturing PMI remained below the 50 threshold at 49.4, while non-manufacturing ticked up to 50.3. Private survey data showed firmer gains, with the RatingDog manufacturing PMI at 50.5 and services at 53.0, but overall sentiment still points to a slowdown in activity later this year.

In Brazil, Q2 GDP grew 0.4% quarter-over-quarter, modestly above expectations, with gains in services and industry. Still, growth slowed sharply from Q1, and with high rates, tariffs, and political uncertainty, momentum is likely to remain subdued.

Australia delivered a stronger-than-expected Q2 GDP report, up 0.6% q/q and 1.8% y/y, driven mainly by household consumption and rebounding exports. Rising disposable incomes and stronger July spending point to firmer momentum, though weak investment was a drag. The results reinforce expectations that the RBA will hold rates in September but maintain a gradual easing path, likely cutting again in November and February.

In contrast, Canada’s labor market weakened sharply, with employment falling by 65,500 and unemployment rising to 7.1%. Combined with soft GDP, the data strengthen the case for a Bank of Canada rate cut, possibly as soon as September, depending on the upcoming CPI release.

Meanwhile in Japan, wage growth surprised on the upside, with total cash earnings up 4.1% y/y. The strength in labor income and inflation pressures supports expectations for a Bank of Japan rate hike in October.

Overall, global momentum looks patchy: China and Brazil face tariff and policy headwinds, Canada is weakening, while Australia, Japan, and parts of Europe show pockets of resilience.

Eurozone Economic Review and Expectations.

Across Europe, inflation data showed a gradual disinflationary trend. Eurozone headline CPI edged to 2.1% while core inflation held at 2.3%. Switzerland’s CPI was muted at 0.2%, and Sweden’s ex-energy inflation fell to 2.9%, likely paving the way for a September rate cut.

European data pointed to a gradual disinflationary backdrop, but with important regional variation and little scope for policy loosening yet. In the eurozone, headline CPI edged to 2.1% year-on-year while core inflation held at 2.3%, and services inflation eased marginally to 3.1% — a pattern consistent with only a slow decline in underlying price pressures and one that is unlikely to trigger an ECB rate cut in the immediate meeting.

Switzerland’s CPI remained very muted at 0.2% year-on-year, with core and services measures easing slightly as well; given those weak but stable price trends, the Swiss National Bank is expected to keep its policy rate on hold at 0%. By contrast, Sweden showed signs of moderating inflation dynamics: CPIF rose to 3.3% y/y (a touch above forecasts) but CPIF ex-energy slowed more than expected to 2.9%, a move that increases the odds the Riksbank will cut by 25 basis points to 1.75% at its September meeting.

Taken together, the region’s releases signal a slow march toward lower inflation rather than a sudden disinflation rate. Central banks remain cautious, weighing mixed signals from headline prints, core measures, and services inflation before changing policy.

ECB Meeting Preview & EUR View

The ECB’s Governing Council meets on Sept 10–11, with the policy decision and press conference on Thursday, Sept 11. Markets widely expect a hold, keeping the Deposit Facility Rate at 2.00%, in line with the current setting.

The macro backdrop is mixed. Q2 GDP rose just 0.1% q/q (1.5% y/y), with growth skewed toward inventories and public/household consumption, while investment weakened—consistent with tariff-related uncertainty and subdued PMIs. The August HICP flash ticked up to 2.1% y/y and core remained firm, implying only gradual disinflation. Recent PMIs show a fragile improvement: manufacturing edged back into expansion (≈50.7) as services cooled, leaving the composite near 51.0.

On the labor side, wage pressures appear to be easing at the margin. The ECB’s wage tracker points to negotiated pay growth moderating toward ~3% in 2025, a development the Governing Council will weigh alongside updated staff projections. With inflation close to target but growth soft, guidance is likely to preserve flexibility for late-year easing (base case: pause in September; risk of a 25 bp cut by December if the outlook deteriorates).

EUR expectations. A steady, data-dependent hold would likely keep EUR range-bound into the decision, with direction driven by U.S. inflation prints and rate-differential moves. A dovish hold—via softer projections or a clearer easing bias—would tilt EUR lower; a hawkish hold—emphasizing upside risks from tariffs/energy or sticky services prices—could support EUR, especially if U.S. data undershoot. Recent policymaker communication suggests no urgency to cut, reinforcing a near-term hold.

Technical view (EURUSD). Considering USD weakness, the euro is pushing higher against the dollar, with strong resistance near 1.1825 on the daily chart. A sustained break/close above 1.1825 could open further upside; initial support sits near 1.1570.

Energy: Oil Market Conditions & Week-Ahead Outlook

Into mid-September, crude appears range-bound with a slight downside bias as inventories rebuild and OPEC+ weighs supply tweaks. The balance of risks turns on U.S. inflation prints and any fresh supply-disruption headlines.

Crude entered September on a cautious footing as macro signals and supply headlines pulled prices in opposite directions. Early in the week, a softer dollar and worries about potential Russian disruptions pushed Brent higher (settling near $68.15 on Sept 1). Momentum faded after U.S. data showed a 2.4 million-barrel crude build for the week ended Aug 29—typical of the autumn refinery-maintenance “shoulder” and a sign that near-term balances are loosening. By Sept 4, Brent settled at $66.95 and WTI at $63.48, the lowest Brent close since Aug 20.

OPEC+ headlines skewed mildly bearish, with reports the group could consider another output increase—reinforcing the notion that core producers are comfortable easing voluntary restraint as inventories rebuild.

Fundamentally, the U.S. backdrop has shifted from summer draws to shoulder-season stock rebuilding. The EIA Weekly Petroleum Status Report for the week ended Sept 5 is due Wednesday, Sept 10 (a day later than usual due to Labor Day). Traders will watch whether crude builds persist and whether gasoline/diesel inventories rise as runs throttle back—both outcomes would cap rallies absent a fresh supply shock.

Beyond the week-to-week noise, medium-term balances in the IEA’s 2025 outlook still depict a finely poised market, with normalized demand growth offset by flexible OPEC+ supply. At current inventory cover, any demand wobble—especially from Europe or China—can have outsized price effects.

Macro cross-currents matter as much as barrels this week. The weak U.S. August payrolls report pushed the dollar and yields lower, lending cyclical support to commodities. However, the upcoming U.S. PPI/CPI (Sept 10–11) could re-steepen real yields if inflation surprises to the upside, offsetting part of the dollar tailwind. In short: dollar down = supportive; real yields up = headwind. On the geopolitical side, any escalation that tangibly threatens exports (e.g., Black Sea or Middle East shipping) would quickly tighten time spreads and overpower inventory/macro drags.

In the week ahead, don’t forget to watch the API and EIA weekly inventory reports. Another crude build alongside rising product stocks would validate shoulder-season softness and keep Brent anchored in the mid-$60s unless the dollar slides further. A surprise draw—especially if tied to exports or storm activity—could lift prices back toward the high-$60s.

Key Monthly Reports in the Week Ahead

This month’s calendar features three market-moving publications: the EIA Short-Term Energy Outlook (STEO), the IEA Oil Market Report (OMR), and OPEC’s Monthly Oil Market Report (MOMR).

EIA STEO — Tue, Sept 9

The EIA’s STEO arrives Tuesday with updated 2025–26 projections for U.S. crude output, global liquids supply–demand balances, and Brent/WTI price paths. Given the recent dollar softness and a cooler U.S. macro pulse, key watch-points are: (i) whether the EIA trims 2H25 global demand on slower OECD growth; (ii) any moderation in the U.S. crude growth profile if well productivity is cooling; and (iii) refreshed assumptions for refining and product demand, especially diesel and jet. Downward demand revisions or higher non-OPEC supply would imply looser balances and flatter timespreads into Q4.

IEA Oil Market Report — Thu, Sept 11

The IEA’s OMR is the global benchmark. In August, the IEA penciled ~680 kb/d of 2025 demand growth and highlighted non-OECD outperformance. The September issue will test whether weaker OECD data and tariff uncertainty prompt further demand downgrades. Focus areas: (i) the call on OPEC crude for 4Q25–1Q26; (ii) revisions to China/India demand and petrochemical NGLs; (iii) product cracks—especially middle distillates; and (iv) spare capacity as OPEC+ gradually restores barrels. A reaffirmation of subdued 2025 demand with resilient non-OPEC supply would be marginally bearish.

OPEC Monthly Oil Market Report — Thu, Sept 11

OPEC’s MOMR often contrasts with the IEA on demand. Watch whether OPEC maintains a relatively firmer 2025 demand view and only modestly reduces the implied call on OPEC, versus the IEA’s cautious tone. Inside, key items are: (i) OPEC crude production vs. secondary sources; (ii) the non-OPEC supply path (U.S., Brazil, Guyana); (iii) OECD/China inventories and floating storage; and (iv) guidance—explicit or implicit—on voluntary cuts compliance. A firm demand stance plus improving compliance supports a tighter 4Q narrative; looser compliance alongside solid non-OPEC growth skews bearish. The next MOMR is slated for Sept 11.

Price Implications

Base case: Range-bound with a slight downside bias unless we see a bullish surprise—e.g., larger-than-expected stock draws or a stronger call on OPEC heading into winter.

Bearish setup: A three-part hit—(a) IEA demand downtick, (b) EIA lifting non-OPEC supply, and (c) OPEC reporting higher realized output—would soften front-month timespreads and cap rallies.

Bullish setup: Any mix of tighter balances (firmer call on OPEC, lower OECD stocks, stronger middle-distillate cracks) combined with a softer U.S. CPI would support prices by pulling real yields lower and the dollar weaker.

From a technical standpoint, WTI has turned decisively bearish, with $60.00 as the key pivot. A break below $60 would likely accelerate downside toward the $55 area. An RSI near 40 and a declining OBV both reinforce the case for lower prices.

Gold: Market Conditions & Week-Ahead Outlook

Gold’s primary driver remains real interest rates, and the coming U.S. inflation prints will set that trajectory. Absent a decisively hawkish data surprise or guidance shift, the balance of probabilities still favors buy-the-dip behavior rather than a full trend reversal.

Bullion enters the week with momentum after setting fresh record highs above $3,570–3,600/oz in early September, propelled by a softer dollar, declining Treasury yields, and rising odds of Fed easing. Profit-taking ahead of the U.S. jobs report briefly knocked prices lower on Sept 4, but the subsequent payrolls miss reignited the move as the DXY slid toward 97.5 and yields fell—classic tailwinds for a non-yielding asset.

Macro-wise, the growth impulse is cooling, inflation is sticky but gradually easing, and the policy bias has tilted toward cuts—conditions that compress real yields and support strategic allocations to gold. Markets now price a near-certain September rate cut (with only a modest tail risk of a larger-than-25 bp move). Even if a bigger cut is unlikely, the current setup has materially increased the probability of another 25 bp reduction at the October meeting—from sub-50% to north of 70% in many trackers—supporting incremental demand for the metal.

Positioning has broadened beyond tactical traders to long-term allocators, hedging policy, and geopolitical risk. As a result, pullbacks have been shallow and quickly met with demand, especially around round-number zones. The CFTC shows speculative (non-commercial) net longs on COMEX up to 249.5k contracts from 214.3k—a weekly increase of 35.2k contracts, or roughly 3.52 million ounces (~110 tonnes) of additional net exposure. In total, 249.5k contracts equate to about 24.95 million ounces (~776 tonnes) of net bullish bets. Rising net longs typically travel with price strength and help cushion dips as momentum traders re-enter. The trade-off is higher sensitivity to adverse macro surprises: a hotter CPI/PPI print, a jump in real yields, or a USD rebound could trigger faster long liquidation.

What matters this week (Sept 7–12) is the August PPI (Sept 10) and CPI (Sept 11). A benign set—especially core readings near 0.2% m/m—would likely extend gold’s bid as rate-cut expectations firm and the dollar remains soft. Conversely, a hotter surprise would lift real yields and invite consolidation from elevated levels. Either way, the bar for a durable top remains high as long as the Fed’s reaction function skews toward “insurance” easing and growth stays wobbly.

From a flow perspective, gold remains highly sensitive to USD swings—the post-payrolls dollar drop showed how quickly FX can translate into bullion strength at new highs. Near-term risks include profit-taking into CPI and the chance that a strong headline (e.g., energy-driven) unnerves bonds and sparks a USD bounce. Still, dips are likely to find sponsorship from macro hedgers until the policy path turns decisively less dovish.

Technical view. Spot is holding well above its 20-day moving average (near $3,450). RSI sits around 77, and OBV is trending with higher signals consistent with a continuing bull run. The 20-DMA is nearly $3,450 is key first support. Overbought RSI may invite a corrective pause, but—barring a real-rate shock—does not imply a trend change.

Crypto: BTC Conditions, Analysis & Week-Ahead Outlook

Bitcoin’s near-term path is macro-anchored. If this week’s inflation data reinforces an easier policy stance and a softer dollar, crypto should hold firm or grind higher. A hawkish surprise would likely spark a volatility spike and a reset of crowded longs before trend followers re-enter.

BTC begins the week near $111k after setting new all-time highs over the summer, buoyed by a macro regime increasingly pricing Fed easing. July saw a record close to $112k, and mid-August strength on “easier-Fed” bets put $125k–$150k on technicians’ radar—levels that remain conditional on liquidity, positioning, and broader risk appetite.

Drivers. Three forces dominate: (1) a weaker dollar and softer real yields post-payrolls, improving cross-asset liquidity; (2) continued institutional participation and deepening derivatives markets that can amplify moves; and (3) firmer crypto-specific sentiment as regulatory visibility improves versus prior cycles. The post-jobs USD slide tracked BTC’s push higher, underscoring how macro now drives crypto beta.

Microstructure & technicals. With spot near highs, leverage discipline matters. Elevated open interest and positive funding can turbo-charge upside or accelerate long liquidations on negative catalysts (e.g., a hot CPI). Price action respects breakout/pullback dynamics around round numbers: probes above $110k–$112k have invited profit-taking, while shallow dips are quickly bought—evidence of strong trend following. Medium-term targets like $125k (stretch $150k) are scenarios, not guarantees—dependent on momentum and macro cooperation.

Week ahead. U.S. inflation (PPI/CPI) is the biggest driver. Softer prints should reinforce the “cuts coming” narrative, easing financial conditions and favoring crypto risk. A hotter set likely flips the script—higher real yields, a firmer USD, and pressure on high-beta assets such as BTC. Markets still price a September cut as baseline, with some tail risk of 50 bps; any guidance that pares those odds would tighten conditions for crypto.

Positioning/flows to watch

• Funding rates and futures basis for signs of overheating or stress
• Large ETF/exchange inflows or outflows (where visible) that can sway spot-derivatives dynamics

Scenarios

• Base case: Range trade around $105k–$115k as traders mark time into CPI/PPI; dips remain buyable while macro stays supportive and the dollar soft.
• Bull case: Softer inflation + constructive risk tone → sustained break above prior records, opening measured extensions toward $125k.
• Bear case: Hot inflation or hawkish repricing → pullback toward prior breakout zones; deleveraging could be sharp but likely meets medium-term demand unless macro turns decisively restrictive.

Technical view. On the daily chart, the recent bearish attempt stalled near $109k, but the price remains below the 20-DMA. A sustained close above $113k would meaningfully tilt the bias back to bullish; failing that, it’s hard to argue for a durable push to higher levels.