Economic Growth Analysis

The more I cogitate on the May jobs report, released last Friday by the BLS, the more uncomfortable I get about the economy’s prospects. There are a bunch of reasons why (listen to this week’s #InsideEconomics podcast), but high on the list is the sharp drop-off in labor force growth. Given the new population controls, measuring labor force growth is tricky, but by my calculation, it’s at a standstill. Look to the severe restrictions on immigration. This time last year, the foreign-born labor force was growing 5%. It’s now declining. The native-born labor force remains moribund. The implications of a flagging labor force are disconcerting. It means serious disruptions to businesses that rely on immigrant labor, ranging from construction and agriculture to hospitality and retailing. It also means higher inflation, just when the higher tariffs are set to push up prices. It also means the economy’s real potential GDP growth – that pace of growth consistent with stable inflation – is much lower. It is currently closer to 1% than the 2% we have come to think of as typical. Think of what this means for everything from asset returns to our already dire fiscal outlook. #laborforce #laborgrowth

The Union Budget’s announcement to develop dedicated rare earth and #criticalmineral corridors across #TamilNadu, #Kerala, #Odisha, and #AndhraPradesh comes at a decisive moment for India and the global economy. This initiative is not merely about mining - it is about strategic autonomy, clean industrial growth, and long-term economic resilience. Today, China controls over 60% of global rare earth mining and nearly 85% of processing capacity, creating significant supply-chain vulnerabilities for clean energy, electric mobility, electronics, defence systems, and advanced manufacturing. In contrast, countries such as the United States, Australia, and the European Union are aggressively building domestic capabilities, strategic reserves, and recycling ecosystems to reduce dependence on concentrated supply sources. Rare earth elements are essential inputs for EV motors, wind turbines, solar technologies, semiconductors, batteries, defence electronics, and medical equipment. As India targets large-scale EV adoption, renewable energy expansion, and domestic semiconductor manufacturing, secure access to critical minerals becomes non-negotiable. The proposed corridors—spanning mining, processing, R&D, and manufacturing create an integrated ecosystem rather than fragmented interventions. Equally important is the opportunity to supplement primary mining with secondary sources. Estimates indicate that India’s e-waste alone could yield nearly 1,300 tonnes of rare earth elements, while mine tailings and industrial waste offer additional recovery potential. Last year’s ₹1,500 crore allocation for extracting critical minerals from waste streams was an important start, but scale, coordination, and regulatory clarity are now essential to unlock meaningful impact. The regulatory framework must evolve accordingly. E-waste Management Rules should clearly classify critical minerals as high-value strategic resources, not residual waste. Extended Producer Responsibility (EPR) frameworks must go beyond compliance and actively incentivise recovery, recycling, and reuse. At the same time, India’s large informal recycling sector—currently operating without safety nets must be formalised through technology transfer, skilling, access to finance, and transition incentives, ensuring both environmental protection and dignified livelihoods. From an economic and urban governance perspective, the implications are significant. Rare earth corridors can catalyse clean manufacturing clusters, generate high-skill employment, and reduce import dependence. Cities and industrial regions will benefit from value-added manufacturing, innovation ecosystems, and circular-economy models that align growth. If executed with coordination and clarity, this initiative can deliver multiple dividends: lower emissions, reduced waste, enhanced competitiveness, skilled job creation, and greater self-reliance.

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

Deng Xiaoping famously said, "The Middle East has oil, China has rare earths." For decades, Beijing used this dominance as a geopolitical lever. But that playbook may finally be losing its edge. For three decades, China did what others would not. It absorbed environmental costs, invested patiently in processing and refining, trained specialised engineers, and integrated minerals into downstream manufacturing. That is how it came to dominate rare earths — not just because they are scarce, but because the middle of the value chain is complex, dirty, and capital-intensive. But each time Beijing tightens export controls, it accelerates a global response: • substitution and material innovation • diversification of sourcing • coordinated industrial policy across the US, Europe, Japan, and now India This is no longer a theoretical risk for India. Rare earths sit at the heart of semiconductors, defence platforms, EVs, renewables, electronics, and advanced manufacturing. Dependence on single-source supply chains is a structural vulnerability — economically and strategically. In my latest article, I argue that India’s next phase of industrialisation must be built around supply-chain resilience, not just manufacturing scale. That requires three shifts: • Moving beyond a PSU-only industrial model to private-sector-led capacity creation • Extending PLI frameworks upstream — into critical minerals, processing, and global asset acquisition • Enabling PSUs to co-invest with private companies, sharing risk the way the US and China already do Rare earths are only the starting point. The same logic applies to semiconductors, defence systems, clean energy technologies, and advanced materials. India has the reserves, the talent, the capital, and the institutional trust to become a global hub for resilient supply chains. What is required now is speed, coordination, and conviction.

Tariff Terror The two major surveys of consumer attitudes, the Conference Board Survey of Consumer Confidence and the University of Michigan Consumer Sentiment Index have both deteriorated sharply since November 2024. The losses were due to a toxic mix of rising uncertainty on the trajectory for inflation - expectations are moving up - and an erosion in job prospects - they are moving down. The deterioration is broad based, hitting all income and wealth levels, ages, races and party affiliations. Headlines regarding tariffs and high profile layoffs no doubt fueled those concerns. The problem is that those concerns are starting to show up in the hard data. Consumer spending, which is the single largest driver of overall growth in the US, slowed markedly in the first quarter. The slowdown in spending, notably on leisure and hospitality coupled with a rise in the saving rate, suggests that consumers are hunkering down. That is to be expected in a highly uncertain policy environment. This is the same time that the PCE measure of inflation, which the Fed targets, accelerated in February. Other input prices have risen ahead of tariffs as firms scramble to front run tariffs. Investment is rising for the moment, as firms stockpile ahead of tariffs. Those shifts are borrowing from the future. The trade balance is widening on the front-running of tariffs. That is a drag on growth. Those figures include a surge in gold bullion, which is not included in the GDP data. No matter how the data is cut, we are seeing a slowdown in overall economic growth that is punctuated by rising prices. Employment has held up but is looking much weaker in March. That gets us edging closer to a mild bout of stagflation - rising inflation and unemployment. The rise in unemployment is limited by a loss in participation in the labor force. Foreign born workers participate ar higher rates than native born and older workers. The result represents a conundrum for the Federal Reserve. Much of the Fed’s leadership has evoked the 1970s as a cautionary tale. A failure to eradicate inflation and stimulate too soon triggered a vicious cycle of inflation and unemployment, or stagflation. One Fed leader has suggested that it might need to hike rates. When were tariffs deflationary? The Smoot Hawley Tariff Act of 1930 tipped off a trade war with 25 countries and a 67% drop in global trade, which plunged the global economy deeper into the depths of the Great Depression. That was chilling. Our analysis suggests that the effective tariff rate will easily lapse the peak of the 1930s by year-end. We have retaliation and a mild bout of stagflation. No rate cuts in such a scenerio.

Unemployment continues to climb, but so do our skill shortages. There are few credible arguments to be made that current immigration policies are addressing our skills gaps, but maybe we’re overlooking one of the most underutilized talent pools: moms. The data is clear. Women spend nearly twice as much time on childcare and housework compared to men, and that imbalance has real consequences in the workplace. Forty-four percent of working mothers say they’ll likely need to change jobs to balance childcare demands, compared to just 37% of fathers. After childbirth, 24% of women exit the labor market in the first year, and 15% remain out even a decade later. During the pandemic, the lost economic value of working mothers in the US and Canada was estimated at $420 billion. So here’s the question: could solving the skills shortage be as simple as changing workplace policies so more moms can stay in, and thrive in, the workforce? If we know moms are doing more at home, then employers need to do more for moms at work. That means flexible work arrangements that reflect caregiving realities, childcare support like subsidies or emergency care days, career progression models that account for nonlinear paths, leadership development that doesn’t penalize motherhood, and inclusive cultures that value care as a leadership trait. To all the moms who are doing double duty, we see you. To all the employers who are listening, keep going. To all of us dads, be better

The Iran war just handed Russia an unexpected lifeline—but it's a sugar high, not a cure. A tanker called the Sarah—quietly picking up Russian oil off the Omani coast last month—just changed course mid-voyage to head for India after the US issued a sanctions waiver. That single U-turn tells the whole story. Before the Gulf crisis, Russia's oil revenues were down 44% year-on-year. Its budget deficit hit 90% of its annual target in just two months. Sanctions, lower prices and a shrinking pool of buyers were finally biting. Then the Strait of Hormuz closed. Brent shot from $70 to over $100. Suddenly Russian barrels—similar in quality to Gulf crude—became a very sought-after alternative. Urals crude, once heavily discounted, is now trading at a premium to Brent. Three tailwinds are now blowing Moscow's way: → Higher prices (~$1.6bn extra to the Kremlin per $10/barrel increase) → Eroded Western sanctions → China's energy vulnerability pushing it closer to Russian pipeline deals But this doesn't fix Russia's structural decline. Ukraine's strikes on energy infrastructure continue. The industry can barely invest in new capacity. Output is still expected to fall ~3% a year. And more money hasn't translated into battlefield gains. The maths have changed. The trajectory hasn’t. https://lnkd.in/exT4YBfJ

I recently read the Channel NewsAsia commentary on healthspan and the “longevity dividend”, and it reminded me of a misconception I used to hold early in my career. I believed that reducing healthcare spending would automatically reduce GDP. After all, GDP is measured by expenditure and healthcare is a large component of national spending. This is true at a surface level, but it misses a deeper economic reality. When population health improves, we spend less on avoidable complications, repeated hospitalisations and long-term care because people genuinely require fewer sick-span services. The reduction in health expenditure is not a loss to the economy. It is a reallocation. Resources that are freed up do not disappear. They flow into more productive sectors that drive long-term growth. These include education, skills development, innovation, retail, family wellbeing and community participation. These sectors have far higher economic multipliers than spending on dialysis, amputations, strokes or frailty management that could have been prevented upstream. This is the core insight of the CNA commentary. A one-year gain in healthy life can add billions in preserved productivity and cost savings. It shifts ageing from being viewed as a fiscal burden to becoming a source of national strength. When older adults stay healthy, families remain economically active, the workforce stabilises and the overall economy becomes more resilient. As a clinician trained in public health and health economics, I now see that healthspan is not just a medical priority. It is an economic strategy. Investing in prevention, nutrition, physical activity and community-based support is far more impactful than trying to restore health after it has already declined. Singapore has demonstrated again and again that we can turn constraints into strategic advantage. The next frontier is to turn longevity into a story of health preservation and economic vitality. The question is no longer whether we can afford to invest in healthspan. The real question is whether we can afford not to. https://lnkd.in/gxD9mM9S

Tariffs Stir Economic Worries as Job Openings and Manufacturing Slow Wednesday’s data on job openings and manufacturing sentiment added to concerns about slower growth and higher prices amid rising tariffs. 🏭 Manufacturing activity and sentiment contracted again after a brief two-month period of modest expansion, largely due to the anticipated impact of tariffs on orders and prices. While the principle behind tariffs is to benefit domestic producers, the disruption in trade among some of the world’s most integrated trading partners is not something American manufacturers can adjust to overnight. This was clearly reflected in the survey, as most respondents pointed to the negative impact of tariffs on their production. 💸 The rise in the “prices paid” component of the survey also suggested that prices have already increased—even before tariffs have taken effect. The problem is that, because everyone expects prices to rise due to tariffs, it becomes easier for manufacturers to pass those cost increases on to consumers. Facing growing uncertainty, manufacturers indicated less willingness to ramp up hiring, with the employment component of the survey falling to a six-month low. 📊 This aligns with the slowdown in job openings in February, particularly in the manufacturing sector. While most of the job opening data suggests continued normalization rather than significant weakness, we expect more downside in the coming months as the effects of tariffs and federal government layoffs become more apparent. Currently, federal job postings remained solid according to February data, though we believe this likely overstated the true demand for government workers. ⚖️ Even with a further slowdown in the labor market, we don’t expect the resulting downward pressure on wage inflation to be enough to offset the sharp increases in goods inflation driven by tariffs. As a result, this could further fuel concerns about a “stagflation-lite” scenario in the coming months.

In Canada, women spend about 24% more time in poor health—roughly 14 years lived with disability compared to 11 years for men—and this creates both a major personal burden and a large economic drag. By 2040, closing this gap could give each Canadian woman about seven more healthy days per year, and boost Canada’s economy by approximately $37 billion annually. The latest McKinsey & Company's study identifies core drivers of this gap: 📌 an efficacy gap, where treatments and clinical research are less tailored or less effective for women (for example, cardiovascular or cancer treatments validated primarily in men 📌 a care-delivery gap, where women—especially in rural, Indigenous, racialized or low-income groups—get delayed, fragmented or lower-quality care 📌 a data gap, where women’s health conditions are under-measured and sex/gender-disaggregated data is lacking. The study stresses that Canada, despite its strong health system and resources, ranks poorly among major economies for the women’s-health‐related economic gap, so the potential upside is both large and achievable. To realise this opportunity, it outlines a multi-stakeholder call to action: governments, health systems, research institutions, businesses and investors need to invest in women-centric research and innovation, improve sex- and gender-disaggregated data collection, tailor care delivery to women’s needs, and integrate women’s health more fully into workplace and policy frameworks. It highlights that this isn’t just about reproductive health—many of the high-impact conditions are things like cardiovascular disease, migraines, menopause and mental health—so addressing them can strengthen workforce participation, productivity and national economic growth. Find out more via link 🔗 https://lnkd.in/eCippyuA #womenshealth #healthcaregap #femtech #innovation #healthcareresearch #healthcareinnovation #healthcareinvestment