Good morning. Andrew here. Sometimes a good chart can tell you more than words. This morning, we take a look back at the year through a series of charts that will hopefully make you think a bit about the past and the future. Our colleague Christine Zhang has examined a treasure trove of data about everything from tariffs to box-office numbers below. (Was this newsletter forwarded to you? Sign up here.)
The year in chartsIn recent years, macroeconomic tides have ebbed and flowed, but one thing has remained unchanged: Americans’ dim views of the economy. In 2023, pundits warned of the “vibecession.” In 2024, concerns about the economy and inflation were top of mind for voters in the presidential race. This year, economic pessimism has persisted, as President Trump’s sweeping economic proposals, from his wide-ranging tariffs to his plan to remake the Federal Reserve, have raised uncertainty to new highs. And the economic data is sending mixed, and muddled, signals. Here are 14 charts that illustrate how uncertainty has unfolded in the economy and markets over the last year, and how it might affect the next. Tariffs and tax cutsPresident Trump’s trade war has been one of the biggest sources of economic uncertainty this year. During his campaign, Trump repeatedly cited tariffs as a way to spur American manufacturing, create new jobs and lower U.S. trade deficits.
Nearly every country has seen import duties rise. The tariffs have made progress toward the administration’s stated goals: They have brought the trade deficit down, as exports grew more than imports. And they have made money: Tariff revenues are now at record highs.
But there is another kind of deficit on investors’ minds: the federal budget deficit. Tariff revenues remain a small share of total government revenues.. A blurry picture in the economic dataHere’s another way in which the effects of tariffs are showing up: higher prices for goods. Consumer prices started to accelerate in June, and the prices of products most exposed to tariffs notched some of the highest gains. And in recent months, prices for goods continued to rise, contributing more to inflation. Inflation unexpectedly slowed to 2.7 percent in November, according to data released by the Bureau of Labor Statistics this week. But economists have advised taking this data with a grain of salt, because of disruptions in the bureau’s data collection efforts during the 43-day federal government shutdown.
It’s still unclear whether tariffs will cause just a temporary increase in prices or if they will feed into more persistent inflation. At this month’s DealBook Summit, Treasury Secretary Scott Bessent pushed back against the notion that tariffs had contributed to inflation, saying that they had caused a “one-time price adjustment,” not a “generalized price increase.” The chair of the Federal Reserve, Jerome H. Powell, has also said that the Fed expected tariffs to cause a “one-time shift in the price level.” But he has stressed that the increase could be drawn out over several quarters. And at a news conference after last week’s Fed meeting he acknowledged the risk of tariff inflation becoming “more and more persistent.” In the first full jobs report since the federal shutdown, the B.L.S. reported that the unemployment rate rose to 4.6 percent last month, a four-year high. Wage growth slowed to its lowest level since 2021. As with inflation, the shutdown affected the data collection for these measures, and the agency said ahead of the release that its estimates of the unemployment rate and other measures would be subject to more uncertainty than usual.
There was a silver lining: Employers added 64,000 jobs in November, driven largely by gains in the health care sector. But that only partly offset a decline in October. The federal government shed 168,000 jobs in October and November, as workers who accepted the Trump administration’s “deferred resignation” offer came off the payroll. And the jobs numbers do not reflect a big downward revision that is expected early next year. (Revisions to jobs figures are commonplace, but they dominated headlines earlier this year when downward adjustments led Trump to fire the commissioner of the B.L.S., Erika McEntarfer, claiming, without evidence, that the data was “rigged.”) The lowest-paid workers have felt the strain of the cooling labor market the most. As the economy started to recover from the pandemic, demand for labor far outstripped supply in the lowest-paid industries, such as leisure and hospitality. Today, that is no longer the case, and hourly wages are rising most slowly for the lowest earners.
Pressure on Trump and the FedLast year, voters consistently told pollsters that they trusted Donald Trump over Joe Biden and later, Kamala Harris, to do a better job on the economy. Now, Trump is the one feeling the pressure, as views of his handling of the economy have soured since the summer.
The risks posed by inflation and a softening labor market have also put the Fed in a tough position. Last week, the central bank decided to cut interest rates by a quarter of a percentage point for a third meeting in a row. But the decision was highly contentious, with three of 12 policymakers voting against it.
Powell said he could have made the case either way for the Fed to cut interest rates or pause reductions, given the competing risks to unemployment and inflation. “You’ve got one tool,” he said. “You can’t do two things at once.” Trump, for his part, has made no secret of his desire for lower rates. Next year, he will select a new Fed chair. A.I. boom, or A.I. bubble?After a dip earlier this year, most notably amid the chaotic “Liberation Day” tariff rollout, the stock market has, on the whole, kept on going up. The S&P 500 reached a record high just last week, for the 37th time this year. Arguably, the most important factor driving the market movements are company earnings, and their expectations for earnings.
In fact, earnings expectations have moved in tandem with the S&P 500 price index over the course of this year (again, with the exception of the early months of the year). Of course, the S&P 500 is driven in large part by big tech companies, which are intertwined with the A.I. boom. By one measure, investments in computer equipment and software accounted for more than 90 percent of G.D.P. growth in the first half of the year.
That has been cause for concern for some investors, who see a parallel between this moment and the dot-com bubble of the late 1990s and early 2000s. But unlike companies leading the stock rally during the dot-com bubble, the public companies with the steepest valuation gains today are earning more as the market goes up. The outlook for earnings continues to be bullish in 2026, though there could be weak links in the A.I. chain. Another crypto winter?The crypto boom that Trump’s re-election ushered in is on pause for now. After surging for most of the year, the price of Bitcoin and Ether, along with dozens of other coins, started to plummet on Oct. 10, following Trump’s announcement that he would impose a new tariff on China. (The stock market on that day also saw the biggest one-day plunge since April, though it has since rebounded and hit a record high.)
For some, the crypto sell-off has underscored the fact that crypto remains a volatile investment, even as it has entered a new level of mainstream acceptance. Amid a high-stakes lobbying campaign by the crypto industry, Trump ended a regulatory crackdown on crypto and signed legislation outlining the first federal rules for stablecoins, digital tokens tied to assets like the U.S. dollar. Others worry that a crypto crash could bleed over to the wider market. Cinematic comfortAmid all this uncertainty, people might be looking to pop culture as a form of escape. They haven’t necessarily been finding it at the movies, if ticket sales are any indication.
Summer is a crucial season for Hollywood, accounting for the lion’s share of annual box office revenue. This year, fantasies, science-fiction sequels and superhero flicks were on offer. But moviegoers, for the most part, didn’t bite: It was the worst summer for domestic ticket sales since 1981, after adjusting for inflation and excluding the pandemic years. The fall was filled with star-studded flicks, but none of them constituted box office hits. Can the holiday season help Hollywood make a comeback? “Zootopia 2” and “Wicked: For Good” have gotten it off to a good start. But broader concerns abound. Warner Bros. Discovery has struck a deal with Netflix for the Warner Bros. studio and its sibling streaming service, HBO Max, while it has fended off, for the time being, a hostile takeover offer from Paramount. Regardless of how it all ends, it feels like a moment of loss for cinephiles. Corporate consolidation, after all, is not likely to bode well for the future of the Silver Screen. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times. Thanks for reading! We’ll see you Monday. We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com. |
