Economic Growth Analysis

Are the world’s biggest economies slowing down on purpose? That’s the question many are asking, especially when it comes to Japan and the U.S. In 2025, Japan’s economy is expected to grow by just 0.8% to 1.1%. This is very slow, especially for the third-largest economy in the world. But here’s the bigger picture: → Japan’s population is shrinking → Fewer young people means less spending → And global trade tensions (especially with the U.S.) are putting pressure on exports Rather than chasing big growth, Japan is now focusing on long-term stability, improving productivity, managing taxes better and ensuring wealth passes smoothly from one generation to the next. And the U.S. economy is doing better, with projected growth of 2% to 2.5% in 2025. But even here, cracks are visible as there are → Rising government debt → Uncertain policies due to elections → Ongoing global trade risks So, these countries are not really slowing down their economies. But they are clearly shifting priorities from “grow fast” to “grow smart.” Because the question today isn’t just how fast a country is growing. It’s how prepared it is for the next 10 years. #GDP #population #economy #growth

We live at a time when extreme voices get the most attention and so it is tempting, following a string of weak economic numbers, to yell the word “recession”. However, a balanced assessment of demand and supply suggests that we are, thus far, merely transitioning to slower growth. A slower growth path is a more vulnerable one, particularly because excessive monetary ease is more likely to weaken than strengthen the economy in the short run. Nevertheless, barring some outside shock, the baseline scenario should be a slowdown scenario, even as volatile markets remind investors of the importance of diversifying and paying attention to valuations.   The mood on the economy has changed quite quickly. The economic headline from just 12 days ago was that real GDP growth had, yet again, surprised to the upside, coming in at a robust 2.8% for second quarter, well above the 2.1% consensus expectation. Since then, however, we have seen higher-than-expected weekly unemployment claims and weak readings on construction, durable goods orders, home sales and manufacturing activity. This was topped off, on Friday, by a softer-than-expected employment report, both in terms of payroll job gains and the unemployment rate.  #economy #markets #investing

In modern #defensetechnology—from F‑35 fighter jets and Arleigh Burke destroyers to Virginia‑class submarines—rare earth elements like #neodymium (Nd), #praseodymium (Pr), #samarium (Sm), #dysprosium (Dy), #terbium (Tb), #lanthanum (La), #gadolinium (Gd), and #yttrium (Y) are absolutely critical. These elements enable high-performance magnets, precision guidance systems, radar arrays, lasers, and more—components at the heart of U.S. military superiority. Yet today, China remains the dominant global producer, accounting for around 270,000 metric tons—nearly six times the U.S. output (~45,000 metric tons). Worse still, #China controls ~90% of processing and refining capacity—and continues to exert strategic leverage through export restrictions. Here’s what the U.S. is doing to change that: • Moutain Pass Mine (California) – Operated by MP Materials it’s the only rare earth mine in the U.S., supplying elements like neodymium, praseodymium, lanthanum, and cerium. • Brook Mine (Wyoming) – Developed by Ramaco Resources, Inc., this site holds a vast deposit—including Nd, Pr, Sm, Dy, Tb—and represents the first new rare earth mine in the U.S. in 70 years. • Round Top Project (Texas) – A heavy rare earth element (HREE) deposit with unprecedented scale—housing 16 of the 17 rare earths—including all of our spotlights. Though not yet operational, it’s a critical candidate for future supply. While the U.S. works to develop these domestic sources, China still leads the world in the mining, refining, and magnet manufacturing supply chain . That dominance poses a direct strategic vulnerability. What’s changing? • The Pentagon has invested hundreds of millions into MP Materials—including a $400M stake and support for a 10,000‑ton magnet manufacturing facility—to build domestic capacity and break China’s stranglehold. • The Brook Mine is primed to deliver a fresh U.S. source of critical rare earths, injecting resilience into our defense supply chain. ⸻ ** Why This Matters:** 1. National Security – Rare earths are foundational to modern defense systems. Without secure, reliable access, U.S. military readiness is at risk. 2. Supply Chain Resilience – Reducing reliance on a single foreign source—especially one that can weaponize its market dominance—is non-negotiable. 3. Strategic Sovereignty – Investment in Mountain Pass, Brook Mine, and Round Top empowers the U.S. to produce and refine what it needs, here at home. ⸻ #RareEarth #CriticalMinerals #DefenseIndustry #SupplyChainResilience #USMining #MPMaterials #BrookMine #RoundTop #NationalSecurity #Neodymium #Praseodymium #Samarium #Dysprosium #Terbium #Lanthanum #Gadolinium #Yttrium

We have revised our outlook for global growth downwards as trade policy uncertainty weakens growth. Today, Chief Economist Álvaro Santos Pereira and I launched the OECD #EconomicOutlook. Global GDP growth is projected to slow from 3.3% in 2024 to 2.9% in 2025 and 2.9% in 2026. The slowdown is pervasive to most countries, especially those more affected by rising trade barriers. Countries should engage with each other to find a way to ease trade tensions and improve policy certainty. Governments should also focus on reforms to revive business investment, innovation and labour productivity, particularly ones that have a limited near-term fiscal cost. 🔗 https://oe.cd/64a

More data that is not in sync with Govt’s Q1FY26 7.8% GDP growth claim 📛📛 - Personal Loans: Growth has slowed to 11.9% from 14% a year ago. People are borrowing less for their needs - Credit Card Spending: Growth has collapsed to just 5.6% from a strong 22% last year. This is a massive drop in discretionary urban spending - Vehicle Loans: Growth has nearly halved, slowing to 8.9% from 14.6%. Fewer people are buying new cars and bikes - Housing Loans: Even the dream of owning a home is seeing caution. Growth here has moderated to 9.6% from 12.8% These numbers were published by ET on 29 August, with one caveat, that these are for Q1 + July. .. This isn't just about big-ticket items. The slowdown is visible everywhere. Credit growth to our vital agriculture sector has plummeted to 7.3% from 18.1% a year ago. This signals deep stress in the rural economy, a massive driver of national consumption. .. The industrial and services sectors are not immune. - Credit to industry has slowed to 6% from 10.2% - The services sector saw its credit growth slow to 10.6% from 14.5% When businesses borrow less, it means they are producing less and investing less, likely because they see weaker demand ahead. .. So, what is growing? There is one alarming indicator. Gold loans are surging, with an outstanding growth of 122% year-on-year. People are pledging their family gold for loans. This is often a sign of household distress, taken when other credit lines dry up and money is needed for urgent, non-negotiable expenses. A staggering rise in distress borrowing alongside a sharp fall in aspirational borrowing paints a picture of an economy under strain. .. While the headline GDP figure presents a rosy image, the credit data from the ground level shows an economy grappling with a real consumption slowdown. The story isn't in the headline number alone. It's in the details. And the details are asking some very tough questions. .. PS: I share several biz/economy deepdives daily, with 33k+ people on WhatsApp. Check out here: https://lnkd.in/dfWQgxKd Best, Jayant

A month ago I was with IMD #EMBAs in Japan on program about resilience, where conversations about #population_decline seem to be everywhere. The country's fertility rate has plummeted to just 1.15 (2024) children per woman, one of the lowest in the world. It’s been declining since the 1970s. But here's what's fascinating: #fertility rates had decreased in Japan much more than Sweden for the same period. Why? New research (May 2025) by Nobel laureate economist Claudia Goldin reveals something counterintuitive: the #speed of #economic_development matters more than the level of #wealth. Japan experienced explosive economic growth from the 1960-80s. Per capita income quadrupled in just two decades. But here's the catch, #social_norms couldn't keep pace with economic reality. The result? A #generational and #gender_conflict: • Women gained education and career opportunities rapidly • Men largely maintained traditional expectations about household roles • Today, Japanese women do 3+ hours more unpaid household work daily than men • In contrast, Swedish women do less than 1 hour more than men This isn't just about childcare policies or economic incentives. It's also about what happens in #private, when societies transform faster than cultural norms can adapt. Countries that developed more gradually (like those in Northern Europe) gave men and women time to #renegotiate #household_responsibilities. The result? Higher fertility rates even with high female employment. The lesson is clear: #economic_transformation without #social_transformation creates demographic challenges that are incredibly hard to reverse. These findings are especially meaningful in the #current_context when gender equity becomes a political fault line, workplace norms continue to reward availability over care, and traditional gender roles make a come back. Walking through Tokyo's quiet neighborhoods, you can feel this tension a modern economy built on traditional family structures that no longer work for the #families (and #women) themselves. Goldin reframes the #fertility_crisis as a #macroeconomic and #cultural challenge. It’s not about persuading women to have more babies, it’s about redesigning the world so they can. Worth reading the full paper in comments #Demographics #Japan #GenderEquality #EconomicDevelopment #SocialChange

Let's delve into economic growth once more!📈 One intriguing new paper (👉https://lnkd.in/eqUPcMzj) suggests that Artificial Intelligence (AI) isn't the limitless font of growth some envision. From their abstract: "𝚃𝚑𝚎𝚘𝚛𝚢 𝚙𝚛𝚎𝚍𝚒𝚌𝚝𝚜 𝚝𝚑𝚊𝚝 𝚐𝚕𝚘𝚋𝚊𝚕 𝚎𝚌𝚘𝚗𝚘𝚖𝚒𝚌 𝚐𝚛𝚘𝚠𝚝𝚑 𝚠𝚒𝚕𝚕 𝚜𝚝𝚊𝚐𝚗𝚊𝚝𝚎 𝚊𝚗𝚍 𝚎𝚟𝚎𝚗 𝚌𝚘𝚖𝚎 𝚝𝚘 𝚊𝚗 𝚎𝚗𝚍 𝚍𝚞𝚎 𝚝𝚘 𝚜𝚕𝚘𝚠𝚎𝚛 𝚊𝚗𝚍 𝚎𝚟𝚎𝚗𝚝𝚞𝚊𝚕𝚕𝚢 𝚗𝚎𝚐𝚊𝚝𝚒𝚟𝚎 𝚐𝚛𝚘𝚠𝚝𝚑 𝚒𝚗 𝚙𝚘𝚙𝚞𝚕𝚊𝚝𝚒𝚘𝚗. 𝙸𝚝 𝚑𝚊𝚜 𝚋𝚎𝚎𝚗 𝚌𝚕𝚊𝚒𝚖𝚎𝚍, 𝚑𝚘𝚠𝚎𝚟𝚎𝚛, 𝚝𝚑𝚊𝚝 𝙰𝚛𝚝𝚒𝚏𝚒𝚌𝚒𝚊𝚕 𝙸𝚗𝚝𝚎𝚕𝚕𝚒𝚐𝚎𝚗𝚌𝚎 (𝙰𝙸) 𝚖𝚊𝚢 𝚌𝚘𝚞𝚗𝚝𝚎𝚛 𝚝𝚑𝚒𝚜 𝚊𝚗𝚍 𝚎𝚟𝚎𝚗 𝚌𝚊𝚞𝚜𝚎 𝚊𝚗 𝚎𝚌𝚘𝚗𝚘𝚖𝚒𝚌 𝚐𝚛𝚘𝚠𝚝𝚑 𝚎𝚡𝚙𝚕𝚘𝚜𝚒𝚘𝚗. [...] 𝙾𝚟𝚎𝚛𝚊𝚕𝚕, 𝚘𝚞𝚛 𝚜𝚒𝚖𝚞𝚕𝚊𝚝𝚒𝚘𝚗𝚜 𝚜𝚞𝚐𝚐𝚎𝚜𝚝𝚜 𝚝𝚑𝚊𝚝 𝚊𝚗 𝚎𝚌𝚘𝚗𝚘𝚖𝚒𝚌 𝚐𝚛𝚘𝚠𝚝𝚑 𝚎𝚡𝚙𝚕𝚘𝚜𝚒𝚘𝚗 𝚠𝚘𝚞𝚕𝚍 𝚘𝚗𝚕𝚢 𝚋𝚎 𝚙𝚘𝚜𝚜𝚒𝚋𝚕𝚎 𝚞𝚗𝚍𝚎𝚛 𝚟𝚎𝚛𝚢 𝚜𝚙𝚎𝚌𝚒𝚏𝚒𝚌 𝚊𝚗𝚍 𝚙𝚎𝚛𝚑𝚊𝚙𝚜 𝚞𝚗𝚕𝚒𝚔𝚎𝚕𝚢 𝚌𝚘𝚖𝚋𝚒𝚗𝚊𝚝𝚒𝚘𝚗𝚜 𝚘𝚏 𝚙𝚊𝚛𝚊𝚖𝚎𝚝𝚎𝚛 𝚟𝚊𝚕𝚞𝚎𝚜. 𝙷𝚎𝚗𝚌𝚎 𝚠𝚎 𝚌𝚘𝚗𝚌𝚕𝚞𝚍𝚎 𝚝𝚑𝚊𝚝 𝚒𝚝 𝚒𝚜 𝚗𝚘𝚝 𝚒𝚖𝚖𝚒𝚗𝚎𝚗𝚝" While this research doesn't directly consider ecological constraints on economic growth, it highlights the inherent challenges in sustaining perpetual economic growth. Even AI may not be the game-changer we hope for. 🌱 Therefore, another recent paper by Christine Corlet Walker, Angela Druckman and Tim Jackson ( 👉 https://lnkd.in/eS6ajEuU) gains significance. We must confront growth dependencies in our economies for three key reasons: 1️⃣ Ecological limitations 🌍 2️⃣ Institutional structures where a sudden GDP decline could negatively impact health and wellbeing 🏥 3️⃣ The inevitable decline in economic growth rates in advanced economies, forcing us to prepare for a post-growth transition 🔄 Growth dependency refers to: 𝗧𝗵𝗼𝘀𝗲 𝗰𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀 𝘁𝗵𝗮𝘁 𝗿𝗲𝗾𝘂𝗶𝗿𝗲 𝘁𝗵𝗲 𝗰𝗼𝗻𝘁𝗶𝗻𝘂𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗴𝗿𝗼𝘄𝘁𝗵 𝗶𝗻 𝗼𝗿𝗱𝗲𝗿 𝘁𝗼 𝗮𝘃𝗼𝗶𝗱 𝘀𝗶𝗴𝗻𝗶𝗳𝗶𝗰𝗮𝗻𝘁 𝗽𝗵𝘆𝘀𝗶𝗰𝗮𝗹, 𝗽𝘀𝘆𝗰𝗵𝗼𝗹𝗼𝗴𝗶𝗰𝗮𝗹, 𝘀𝗼𝗰𝗶𝗮𝗹, 𝗮𝗻𝗱/𝗼𝗿 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗵𝗮𝗿𝗺𝘀. They identify three sources of growth dependencies: 💠 Increasing needs 💠 Rising labour productivity 💠 Pursuit of economic rents However, they argue that growth dependencies, even in market economies, can be mitigated. These dependencies aren't inherent to our economies but are shaped by underlying structures that can be altered. 🔄 This should inform economic policy. Rather than ideological debates about #degrowth versus #greengrowth, we should pragmatically address these structures to foster more resilient and less growth-dependent economies. 🏗️🌱

Wages Are Rising. But Cash in Hand? Not Quite. Negotiated wage hikes are at multi-decade highs in Japan. Yet workers still feel short-changed. Main Insight: The latest Rengo round shows wage hikes settling around 5.37%—above last year’s 5.1%. It’s a strong signal of labor market tightness and corporate willingness to meet worker demands. However, cash earnings are not rising at the same pace. Real purchasing power is being squeezed by inflation, especially in energy and essentials. This divergence risks slowing consumption just as policymakers are counting on it to drive growth. What I’m watching: Retail sales trends into early summer Any shift in BoJ tone around wage inflation 2H fiscal support packages Wages are rising on paper. But until cash in hand tells the same story, the consumer recovery remains fragile. #CIOperspective https://lnkd.in/eE72jwdj Tathagata Bhar Anuragh Balajee Dhrumil Talati

While most of the headlines during my trip to Tokyo focused on Japan’s political volatility and its trade negotiations with the Trump Administration, what struck me was the structural momentum beneath the surface. Wages are rising, capex is shifting to software, and productivity—not policy—is becoming the true driver of growth and a strategic focus of the country.   Hiro Hirano, Jerry Guo, Richard Bullock, CFA, #ChangchunHua, #AllenLiu and I spent time with executives across industries, policymakers, and government officials and the message was consistent: leveraging productivity to drive growth and profits is imperative in an environment of aging demographics and rising wage growth. Japan’s corporate sector is responding with urgency. Capex into software has surged, AI adoption is accelerating, and the narrative has moved beyond deflation.   Despite political churn in Tokyo following the weak performance by the long-ruling LDP in upper house elections, corporate reform is not derailing. If anything, we at KKR believe momentum is gaining speed. From tourism to retirement security, we learned more about several major investment themes. However, the most compelling theme we heard about is rooted in Japan’s demographic truths that the country needs to drive more worker productivity, including greater use of AI and software, to soften the blow of aging demographics. Meanwhile, we also take comfort that our discussions with currency watchers led us to believe that 145 JPY/USD (with a band of 130 to 150) is an acceptable range—cheap enough to attract tourists and trade, stable enough to avoid political fallout.   From a macro standpoint, Japan maintains negative real rates, despite the central bank’s intentions to increase rates further. This backdrop supports valuations and deal activity. For private investors, in particular, we favor corporate carve-outs in Japan, Infrastructure linked to surging intra-Asia trade, and Private Credit and Structured Equity linked to more complex transactions. Read more at https://go.kkr.com/46Ke21W   #Japan #MacroInsights #Productivity #CorporateReform #DigitalTransformation #AI #Capex #PrivateEquity #TFTR #RetirementSecurity

From our new Labor Matters: After a sharp bout of anxiety in April and May—driven by political uncertainty and fears of an economic downturn—the worst now appears to be behind us. While the economy is clearly slowing, it remains resilient, supported by a historic surge in AI-related capital spending, a positive wealth effect and steady growth in the healthcare sector. However, the combination of slower economic growth and strong underlying productivity growth, means businesses can meet demand with very little new hiring. Job growth is likely to remain subdued, but that should not be mistaken for economic weakness. The sharp decline in immigration is reshaping both demand and supply. Slower population growth is weighing modestly on consumption, but the larger impact is on labor supply, especially in blue-collar and manual service roles, where undocumented workers once played a critical part. At the same time, AI is reducing demand for office and white-collar workers, particularly in entry-level positions. The result is a divided labor market: looser conditions in some segments, persistent scarcity and wage pressure in others. This isn’t a cyclical pause, it’s a structural transformation. #labormarkets #economy #AI #futureofwork #recruitment