Monthly Economic Headlines

February 12, 2025

February economic headlines

Tariffs increase import costs, market volatility and uncertainty for businesses.

President Trump levied tariffs on Canada, Mexico and China, though those for Canada and Mexico were quickly delayed a month following concessions. China retaliated with their own set of tariffs on coal, liquified natural gas, agricultural machinery and certain automobiles. See the impact to agriculture industries in the Industry Updates.

Executive orders may impact the economy.

President Trump issued an historic number of executive orders in his first weeks in office, some of which may reduce immigrant labor, limit federal government spending, increase political tensions and disrupt markets. The full extent of these orders remains unclear as many will be challenged in court and possibly rescinded.

U.S. economic outlook mixed.

While Q3 data came in strong and Q4 is shaping up to be as well, forecasters paint a mixed picture of what 2025 will bring. Some analysts predict the U.S. will outperform its peers, driven by robust demand, strong wealth effects and less restrictive monetary policy. On the other hand, others see a continuation of the slowdown that began last year driven by continued restrictive monetary policy and weakening equity values.

Inflation pressures continue.

The December CPI number came in at 2.9%, which was an increase from 2.7% in November. However, the increase was mainly due to volatile energy prices. Core CPI, which strips out energy and food, was at 3.2%, a small decline from 3.3% in November. This is a smaller reduction than economists expected but remains above the 2% target.

Federal Reserve (Fed) pauses interest rate cuts in January.

The Fed voted to keep interest rates the same at their meeting on January 28-29, as expected. Fed Chairman Jerome Powell gave no signal of when rate cuts would continue, citing uncertainty from lingering inflation and Trump’s proposed economic policies. Rates remain restrictive and the pace of rate cuts is anticipated to be more gradual moving forward. The Fed emphasized it will be data-dependent when deliberating on rate decisions.

Labor market remains strong.

The labor market started the year on a soft note with new payrolls coming in below expectation. However, the labor market remains generally strong with persistently low jobless claims and a fall in unemployment in January. The Fed called the job market ‘solid’ and noted that the unemployment rate seems to have stabilized.

Changes in total employment

Source: Bureau of Labor Statistics.

Data and trends

This section presents select economic indicators to help producers gauge the direction of their business. These metrics reflect current market dynamics and their potential impact on operations. Come back each month to stay informed and adapt swiftly to the ever-changing economic landscape.

WTI crude oil and diesel prices

Source: U.S. Energy Information Agency.

Observation: Oil prices increased mid-January as markets anticipated disruptions from U.S. sanctions on Russia, which target their oil and gas revenues. This was coupled with higher demand due to cold weather in the Midwest and Europe. Despite these factors, supply and demand conditions seem relatively balanced.

About this indicator: The West Texas Intermediate (WTI) crude oil price is a benchmark for oil pricing and influences the cost of fuels like diesel, which is essential for running farm equipment and transporting goods.

DXY Index

Source: Bloomberg.

Observation: The dollar has climbed to two-year highs, driven by stronger-than-expected employment data in early January and the general perception that President Trump's reelection is positive for the U.S. economy.

About this indicator: The DXY index measures the strength of the U.S. dollar against a basket of foreign currencies. The strength of the U.S. dollar impacts the competitiveness of agriculture producers in foreign markets. As the dollar strengthens, U.S. producers become less competitive, and vice versa.

Transportation price indices

Source: Bloomberg. Freightos. U.S. Bureau of Labor Statistics.

Observation: Container shipping costs rose as buyers frontloaded cargo ahead of Trump's inauguration and China's Lunar New Year. West Coast trucking rates also increased moderately due to this frontloading. Meanwhile, bulk vessel prices dropped significantly due to lower Chinese demand, excess vessel capacity and the stabilization of Panama Canal crossings.

About this indicator: The long-haul trucking index measures the changes in trucking freight rates over time. The Baltic Dry Index measures the average global cost of shipping bulk materials, including grains, sugar, metals, and others. The container index measures the average global cost of shipping containers. Shipping prices vary by route and carrier size based on market dynamics and may move independently from global averages (i.e. the cost to ship goods from the West Coast to Asia could remain flat even if global rates are increasing).

Operating costs for trucking

Source: American Transportation Research Institute.

Observation: Trucking operating costs rose significantly from 2021 to 2023, driven largely by increases in wages, fuel, finance, repair/maintenance and insurance. While trucking demand appears to be falling, the cost of transporting goods is unlikely to come down.

About this indicator: The American Transportation Research Institutes conducts an annual analysis of operational costs for trucking. Transportation is an important cost factor for agriculture producers.

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