WASHINGTON — The outlooks for the U.S. and global economies have significantly worsened in the wake of President Donald Trump’s tariffs and the uncertainty they have created, the International Monetary Fund said Tuesday.

The IMF said that the global economy will grow just 2.8% this year, down from its forecast in January of 3.3%, according to its latest World Economic Outlook. And in 2026, global growth will be 3%, the fund predicts, also below its previous 3.3% estimate.

U.S. economic growth will come in at just 1.8% this year, down sharply from its previous forecast of 2.7% and a full percentage point below its 2024 expansion. The IMF doesn’t expect a U.S. recession, though it has raised its odds of one this year from 25% to 37%.

The forecasts are largely in line with many private-sector economists’ expectations, though some do fear a recession is increasingly likely. Economists at JPMorgan say the chances of a U.S. recession are now 60%. The Federal Reserve has also forecast that growth will weaken this year, to 1.7%.

“We are entering a new era,” Pierre-Olivier Gourinchas, chief economist at the IMF, said. “This global economic system that has operated for the last eighty years is being reset.”

The IMF is a 191-nation lending organization that works to promote economic growth and financial stability and to reduce global poverty.

Gourinchas said that the heightened uncertainty around the import taxes led the IMF to take the unusual step of preparing several different scenarios for future growth. Its forecasts were finalized April 4, after the Trump administration announced sweeping tariffs on nearly 60 countries along with nearly-universal 10% duties.

Those duties were paused April 9 for 90 days. Gourinchas said the pause didn’t substantially change the IMF’s forecasts because the U.S. and China have imposed such steep tariffs on each other since then.

The uncertainty surrounding the Trump administration’s next moves will also likely weigh heavily on the U.S. and global economies, the IMF said. Companies may pull back on investment and expansion as they wait to see how the trade policies play out, which can slow growth.

China is also forecast to grow more slowly because of U.S. tariffs. The IMF now expects it will expand 4% this year and next, down roughly half a point from its previous forecasts.

While the U.S. economy will likely suffer a “supply shock,” similar to what hampered during the pandemic and which pushed up inflation in 2021 and 2022, Gourinchas said, China is expected to experience reduced demand as U.S. purchases of its exports fall.

Inflation will likely worsen in the United States, rising to about 3% by the end of this year, while it will be little changed in China, the IMF forecast.

The European Union is forecast to grow more slowly, but the hit from tariffs is not as large, in part because it is facing lower U.S. duties than China. In addition, some of the hit from tariffs will be offset by stronger government spending by Germany.

The economies of the 27 countries that use the euro are forecast to expand 0.8% this year and 1.2% next year, down just 0.2% in both years from the IMF’s January forecast.

Japan’s growth forecast has been marked down to 0.6% this year and next, 0.5% and 0.2% lower than in January, respectively.

CHARLY TRIBALLEAU via Getty Images

US shoppers stepped up their spending a just bit in February after a sharp pullback the previous month, signaling that Americans are shopping more cautiously as concerns about the direction of the economy mount

WASHINGTON — US shoppers stepped up their spending a just bit in February after a sharp pullback the previous month, signaling that Americans are spending more cautiously as concerns about the direction of the economy mount.

Retail sales rose just 0.2% in February, a small rebound after a sharp drop of 1.2% in January, the Commerce Department said Monday. Sales rose at grocery stores, home and garden stores, and online retailers. Sales fell at auto dealers, restaurants, and electronics stores.

The small increase suggests Americans may be growing more wary about spending as the stock market has plunged and President Donald Trump’s tariff threats and government spending cuts have led to widespread uncertainty among consumers and businesses.

On Friday, a measure of consumer sentiment fell sharply for the third straight month and is now down more than 20% since December. Respondents to the University of Michigan’s survey cited policy uncertainty as a leading reason for the gloomier outlook. While the respondents were divided sharply by party — sentiment about the current economy fell among Republican by much less than for Democrats — Republicans’ confidence in the economy’s future dropped 10%.

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D’Innocenzio reported from New York.

WASHINGTON — Federal Reserve Chair Jerome Powell said Wednesday that President Donald Trump’s calls for lower interest rates won’t lead the central bank to change its rate decisions.

“People can be confident that we’ll continue to keep our heads down, do our work, and make our decisions based on what’s happening in the economy,” Powell said, under questioning from members of the House Financial Services Committee. Powell spoke on the second day of his semiannual testimony to Congress.

Earlier Wednesday, Trump said on social media that “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!”

Yet Powell indicated during a press conference last month that the Fed, after cutting its key rate three times late last year, would hold off on further cuts as it waited for evidence that inflation is moving closer to its 2% target.

And many Fed officials want to wait and see how Trump’s policies, including the tariffs he has proposed and those he has put in place, affect the economy. Most economists worry that tariffs will at least temporarily push up inflation.

On Wednesday, the government reported that inflation picked up last month, with consumer prices rising 3% in January from a year earlier, up from a 3 1/2 year low of 2.4% in September. The uptick makes it even less likely the Fed will cut its key rate anytime soon. The Fed’s rate influences borrowing costs throughout the economy, including mortgages, auto loans, and credit cards.

The Fed cut its key rate three times last year, to about 4.3% from 5.3%, but said in January that it would keep its rate unchanged until inflation declined further. Fed officials in December had forecast that they would implement two cuts this year, but some economists now think the Fed may be on hold all year.

WASHINGTON — The U.S. labor market probably started 2025 the way it spent most of last year: Generating decent, but unspectacular, job growth.

When the Labor Department releases January employment numbers Friday, they’re likely to show that companies, government agencies and nonprofits added 170,000 jobs last month, according to a survey of economists by the data firm FactSet. That would be a respectable performance but also a downshift from 2024 which averaged 186,000 new jobs a month, including a surge of 256,000 in December. The unemployment rate is expected to remain low at 4.1%.

The first monthly jobs report of Donald Trump’s second presidency is likely to confirm that he inherited a solid economy, one in which consumers enjoy job security and rising wages that give them the confidence and financial wherewithal to spend freely.

“The economy is kicking off 2025 in good shape,’’ said Bill Adams, chief economist at Comerica Bank.

The future is cloudier.

A federal judge on Thursday temporarily blocked President Donald Trump’s plan to push out federal workers by offering them financial incentives, yet a federal hiring freeze that Trump imposed Jan. 20 is a “negative for employment growth,’’ Bradley Saunders, an economist at Capital Economics, wrote in a commentary last week. The freeze came after the Labor Department collected the January jobs numbers, so any impact would be revealed in upcoming employment data.

Likewise, a cold snap that probably increased seasonal layoffs in the Midwest and Northeast occurred late in January and won’t register in government jobs data until the February numbers come out, Saunders wrote.

Economists are also worried about Trump’s threat to wage a trade war against other countries. He’s already imposed a 10% tax on imports from China.

Canada and Mexico – America’s two largest trading partners — remain in his crosshairs though he gave them a 30-day reprieve from the 25% tariffs he was planning to sock them with on Tuesday, allowing time for negotiations. Trump says that America’s two neighbors and allies haven’t done enough to stem the flow of undocumented immigrants and fentanyl into the United States. Trump is also itching to slap tariffs on the European Union; pointing to America’s deficit in the trade of goods with the EU, which came to $236 billion last year, he says that Europe treats U.S. exporters unfairly.

The tariffs, which are paid by U.S. importers who generally try to pass along the cost to customers, could rekindle inflation – which has fallen from the four-decade high it reached in mid-2022 but is still stuck above the Fed’s 2% target. If the tariffs push prices higher, the Fed may cancel or postpone the two interest-rate cuts it had forecast for this year. And that would be bad for economic growth and job creation.

The job market has already cooled from the red-hot days of 2021-2023. American payrolls increased by 2.2 million last year, down from 3 million in 2023, 4.5 million in 2022 and a record 7.2 million in 2021 as the economy roared back from COVID-19 lockdowns. The Labor Department also reports that employers are posting fewer jobs. Monthly job openings have tumbled from a record 12.2 million in March 2022, to 7.6 million in December – still a decent number by historical standards.

As the labor market cools, American workers are losing confidence in their ability to find better pay or working conditions by changing jobs. The number of people quitting has fallen from a record 4.5 million near the height of the hiring boom in April 2022, to December’s 3.2 million, which is below pre-pandemic levels.

Still, layoffs remain below pre-pandemic levels, creating an unusual situation: If you are employed, you probably enjoy job security. If you’re looking for one, things have gotten tougher.

The Labor Department is also expected to report annually released revisions Friday that will show job creation from April 2023 through March 2024 wasn’t as strong as originally reported.

A preliminary version of the revisions, released in August, showed that 818,000 fewer jobs were created over those 12 months – lowering average monthly hiring during that span from 242,000 to 174,000. Because they are not final, the August estimates have not yet been added to the official government payroll numbers. The revisions out Friday will become official and part of the historic data.

WASHINGTON — Two months ago, in his first network television interview after the election, Donald Trump said he owed his victory to Americans’ anger over immigration and inflation, specifically the rising cost of groceries.

“When you buy apples, when you buy bacon, when you buy eggs, they would double and triple the price over a short period of time,” he told NBC’s “Meet the Press. “And I won an election based on that. We’re going to bring those prices way down.”

But in Trump’s first week back in the White House, there was little in his initial blitz of executive orders that directly tackled those prices, besides directing federal agencies to start “pursuing appropriate actions.” He is taking steps to lower energy costs, something that Trump hopes will have ripple effects throughout the economy. Otherwise, his focus has been clamping down on immigration, which he described as his “No. 1 issue” shortly after taking the oath of office.

“They all said inflation was the No. 1 issue. I said, ‘I disagree,’” Trump said. “I talked about inflation too, but how many times can you say that an apple has doubled in cost?”

Trump is banking on voters giving him a pass and continuing to blame former President Joe Biden for high prices. The Republican’s comments reflect the reality that presidents have almost no levers to reduce inflation quickly without causing collateral damage to other parts of the economy.

There is more that Trump can do on energy. He is pushing to reduce regulations and increase the amount of land available for drilling. He is trying to persuade domestic and foreign oil producers to potentially sacrifice their own profits by pumping more.

During a rally Saturday in Las Vegas, Trump went after his Democratic predecessor for allowing prices to rise under his watch, and promised to take care of the problem quickly.

“When I think of Biden, I think of incompetence and inflation,” Trump said.

Inflation peaked at a 9.1% annual rate in June 2022 during worldwide supply chain problems after the economic shock of the coronavirus pandemic. Overall consumer prices have fallen since then, but have ticked up in recent months, from 2.4% in September to 2.9% in December, the latest figures available. Economists have warned that Trump’s plans for tariffs and tax cuts could create new inflationary pressures and keep interest rates elevated.

Vice President JD Vance, in an interview with CBS’ “Face the Nation” airing Sunday, defended the White House’s work so far.

“Prices are going to come down, but it’s going to take a little bit of time, right?” he said. He added, “Rome wasn’t built in a day.”

Trump’s relative shift away from addressing costs could create an opening for Democrats to say he is not helping working-class voters, hoping that argument could offer the party a path back to power in Washington.

Sen. Chris Murphy, D-Conn., said Trump preferred to distract people from inflation with talk of adding Greenland to the United States or seizing the Panama Canal.

“It’s catnip and it causes everybody to stop paying attention to their actual economic agenda, which has nothing to do with lowering costs and everything to do with rigging the economy to help the Mar-a-Lago crowd,” he said.

During an interview on Fox News this past week, host Sean Hannity struggled to get Trump to focus on the economy.

“Let me get to the economy,” Hannity said at one point. “I’m running out of time.”

“The economy is going to do great,” Trump insisted.

When Trump did talk about inflation in the interview, he noted how low it was during his first term and insisted prices would not have jumped up if he had president after the 2020 election, even though higher inflation was a global trend coming out of the pandemic.

It is not clear how Trump would persuade oil companies and foreign countries to quickly increase production, possibly costing them profits.

The Energy Information Administration reported that domestic oil production has grown at an annual rate of roughly 8.4% over the past two years to an average of nearly 13.5 million barrels a day in October. Some Trump aides suggest that could increase by an additional 3 million barrels a day.

It would be difficult to achieve that much additional production in a single year without serious changes to the global market. The International Energy Agency estimates that the oil supplied to the entire world will increase by 1.8 million barrels per day to 104.7 million barrels a day. He also has expressed opposition to climate-friendlier wind and solar energy, putting more pressure on the U.S. economy to rely on fossil fuels.

EJ Antoni, a research fellow at the Heritage Foundation, a conservative think tank in Washington, said the potential increase in energy production under Trump would ultimately flow through the economy in the form of lower prices.

“If you’re going to bring down the cost of energy, you’re going to bring down the cost of all kinds of goods and services,” he said.

But there is a risk that some of Trump’s plans taken as a whole could raise — not reduce — prices. Deporting migrants who are in the United States illegally could deprive companies of lower wage workers. The cost of tariffs, which are taxes placed on foreign imports, could be passed on to consumers.

Trump said that his strategy also might ultimately involve publicly pressuring the Federal Reserve to cut interest rates, saying in Davos that he would “demand” lower rates from central banks. The Fed sees its political independence as key for making tough choices to stabilize prices. Biden saw the independence as worth protecting, whereas Trump sees it as problematic.

The Fed raised its benchmark rates starting in 2022 to make it more expensive to borrow and succeeded enough in reducing inflationary pressures that it could trim rates late last year. Trump believes that greater oil production will put him in a position to tell the Fed what to do.

Asked in the Oval Office if he expects the Fed to listen to him, Trump simply said, “Yeah.”

Internet censors have taken down a speech by a top Chinese economist that went viral after he warned that a widespread lack of opportunities for young people was dragging down growth, which he said had been overstated by several percentage points in recent years.

Instead of embarking on promising careers and pouring their disposable income into the economy, young people in today’s China are tightening their belts and “turning off the lights and eating noodles,” Gao Shanwen, chief economist at SDIC Securities, told an investor conference in Shenzhen on Tuesday.

“Turning off the lights and eating noodles” is a catchphrase typically used to describe someone who is down on their luck after failed investments in the stock market, according to Baidupedia.

Gao’s warning, which had been widely shared on social media, was apparently considered sensitive enough to be removed from the “Economist Book Club” public account on WeChat, on which had posted the speech in full.

The WeChat link on Wednesday returned the notice: “This content is no longer available due to complaints of violations.”

Gao’s speech was a direct contradiction of claims by the ruling Chinese Communist Party under Xi Jinping that consumption, particularly by young people, would be the driving force behind post-lockdown economic growth.

Yet, formerly prosperous workers in China, both white-collar and blue, have told Radio Free Asia that they are struggling, despite the upbeat tone of state media which is under pressure to deliver positive economic news.

Meanwhile, rampant youth unemployment in China has left millions of young people floundering, living at home, relying on delivery jobs or, in a growing trend, “pretending to go to work.”

Younger populations

Gao made his argument in detail, pointing out that areas with younger populations had seen worse economic performance since the ending of the zero-COVID policy in December 2022 than areas with older populations.

“The younger the population of a province, the slower the consumption growth; the older the population of a province, the faster the consumption growth,” Gao cited recent economic statistics as saying.

“This conclusion is somewhat counterintuitive and is summarized … in three sentences: vibrant older people, lifeless young people and middle-aged people in despair,” he said.

Gao also warned that government economic growth figures were unlikely to be a true reflection of what has unfolded in China since the collapse of the real estate bubble three years ago.

He said that if models from other country’s with burst property bubbles were applied to China, the country’s economy should have contracted by at least 2%, more likely by 3-4% in each of the last three years, though official figures have only reported a slowdown of 0.2 percentage points.

“The GDP growth rate has been overestimated by 3 percentage points each year, and by 10 percentage points cumulatively, which corresponds to the loss of 47 million employed people in urban areas,” Gao told the conference in the speech, a copy of which was posted by the U.S.-based China Digital Times website.

No impact on the elderly

While many older people in China have pensions to fall back on, young people are barely contributing to the economy at all, he warned.

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“For the elderly, … there will be no impact on their income, and they can continue to enjoy their twilight years and dance in public places,” Gao said.

“For young people, income expectations have been significantly revised downward, the certainty of income growth has been significantly revised downward,” he said. “They can’t find jobs, or the jobs they find are significantly different from their expectations.”

Gao said other economies had taken an average of nine years to recover following a burst property bubble, in the absence of government support, and around 3-4 years with sufficient support.

Because of this, he called for further interest rate cuts, as well as a general lowering of expectations for future growth rates.

Gao’s warnings came as China’s leaders announced they would hold their two-day Central Economic Work Conference behind closed doors from Dec. 11 to map out economic development targets and stimulus plans for 2025, Bloomberg quoted sources as saying on Tuesday.

Translated by Luisetta Mudie. Edited by Roseanne Gerin.