Charting the Global Economy: Rocky Start to Year for US Growth

US consumer spending weakened and the merchandise trade deficit widened markedly at the start of the year, pointing to a downshift in the world's largest economy.

In India, the fastest-expanding major economy, economic growth quickened to close out 2024 on a pickup in government spending and strong rural-area consumption.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:

US

US consumers unexpectedly pulled back on spending on goods like cars in January amid extreme winter weather, and a slowdown in services, if sustained, may raise concerns about the resilience of the economy.

The US merchandise trade deficit widened dramatically in January to a record as imports surged ahead of President Donald Trump's promised tariffs. The shortfall ballooned 25.6% to $153.3 billion. Between the trade and consumer spending data, gross domestic product is seen declining an annualized 1.5% in the current quarter, down from the 2.3% projected pace of growth expected just days ago, according to the Federal Reserve Bank of Atlanta's latest GDPNow forecast.

The chief executive officer of Walmart Inc. said American consumers are showing signs of stress as food prices remain stubbornly high. Some shoppers are running out of money before the end of the month and turning to smaller pack sizes for consumer goods, Chief Executive Officer Doug McMillon told executives at the Economic Club of Chicago.

Europe

Donald Trump has made it clear that Europe needs to defend itself, and the continent's response to the US threats of withdrawal is starting to take shape. In the region's biggest security initiative since the Cold War, the European Union is looking to unleash hundreds of billions of euros in additional financing for defense, according to people familiar with the discussions.

Britain will be hit by rising prices and severe bottlenecks as a result of the Labour government's plans for an historic increase in building projects, analysis shows. As much as £900 billion ($1.1 trillion) will be spent on public and private infrastructure by the end of 2029, according to a Boston Consulting Group report — almost three times the level of the previous five years.

German households are still paying 31% more for energy than they did prior to the 2022 crisis, according to a study, highlighting an urgent challenge facing the new government. Taxes and grid fees that make up the majority of the price paid by consumers have also risen.

Asia

India's economy rebounded last quarter, offering some relief to Prime Minister Narendra Modi whose ambitious growth plans have come under pressure due to recent slowdown. A pickup in government spending after national polls and strong rural consumption helped bolster growth in the last quarter.

The number of births in Japan fell to another record low, underscoring the growing challenge of how to shoulder ballooning social security costs for an aging society with what's already become an ever shrinking pool of tax-paying workers. The number of newborns in 2024 fell 5% from the previous year to 720,988 — the lowest tally since such records began in 1899.

Emerging Markets

Houston-based Chevron Corp., which has a US waiver to operate in Venezuela despite sanctions against Nicolás Maduro's authoritarian regime, has helped lift the Andean nation's crude production back above 1 million barrels per day, stoking an economy that lives and breathes oil. Now Donald Trump is poised to leverage Chevron's presence in Venezuela to get what he wants from Maduro.

World

Israel kept interest rates on hold for a ninth straight meeting, with the central bank waiting for war-induced inflation to slow before starting an easing cycle. Hungary and Gambia also held. South Korea and Thailand lowered rates.