#dieWIRTSCHAFTSPRAXIS-VW.THINKTANK I STATUS.QUO Q2/2025

US Data Dump “Animal spirits” have engulfed the markets since the election of Trump and the Republican sweep in US Congress, fueled by the prospect of business-friendly deregulation and low taxes.

But an onslaught of data last week ahead of the Thanksgiving holiday in the US provided a clear-eyed look at where the economy actually stands right now. Here are some takeaways:

1) Consumer spending remains solid but recent trends in real disposable income point to a slowdown after what Stephen Stanley at Santander US Capital Markets called “the extraordinary run in 2023 and so far in 2024.” 2) The outlook does look good for high-income households, however: the surge in equities and the likelihood that temporary tax cuts enacted under Trump will be extended means high earners will probably continue to splurge — and keep driving economic growth. 3) The equities rally in the run-up to the presidential election (aka Trump trade) added 0.24 percentage points to the year-over-year growth of the Federal Reserve’s preferred gauge of inflation last month. The culprit is a financial services category in the core personal consumption expenditures price index that mirrors markets moves and contributed in large part to the October acceleration in the index. 4) A spike in homes sales at the end of the summer and early in the fall was probably short-lived. A leading indicator of pending purchases rose in October to the highest since March, boding well for November. But with borrowing costs trending higher again and weak mortgage applications, “we think that home sales will drop back to rock-bottom levels around the turn of the year,” Pantheon Macro economists wrote in a note. 5) Early reports from Black Friday suggested that crowds were smaller than expected at some at some high-profile retail stores such as Macy’s flagship in New York City. But online sales were strong, underscoring a fundamental lesson of US economics: Never underestimate the American consumer.

What’s more likely is a redirection of focus away from consumers. Moscow will “aim to accelerate a transfer of scarce labor and capital from sectors deemed non-essential, such as services, residential construction and finance, to those that are considered critical to giving Putin a military advantage,” Isakov says. A true war economy, in other words.

This reality is starting to sink in: even Russia’s official public policy approval index shows a decline this year. It’s now around the lowest reading since the start of the war. —Chris Anstey

China’s property slowdown is now in its third year and there’s still no clear sign of stabilization, meaning the drag on sentiment and consumption continues. Against that backdrop, economists at Goldman Sachs including Chelsea Song and Andrew Tilton have taken a look at the sector. They find:

“Top-tier cities are more likely to reach a price bottom sooner, driven by stronger migration inflows, lower inventory levels and the recent easing of housing purchase restrictions, while the house price recovery in lower-tier cities is likely to be prolonged.”