With the arrival of generative artificial intelligence (genAI), its potential impact on productivity is significant, although uncertain. GenAI, with characteristics of general-purpose technologies (GPT) and methods of invention, could raise productivity durably in the long run.
The U.S. Federal Reserve reviewed its monetary policy framework in 2025, removing the concept of flexible average inflation targeting and adopting a flexible inflation targeting approach. Powell presented this new approach in Jackson Hole, adjusting terms such as “shortfalls” and “broad and inclusive maximum employment goal”. Now, the Fed seeks to achieve full employment in a sustained manner in a context of price stability.
Uncertainty over Trump’s tariffs spans 2 to 20 years. Pessimists see them as negative but politically attractive, with trade reform distant. Optimists consider them counterproductive and expect a Democrat to reverse them.
The competition for innovation exacerbates the global overcapacity in manufacturing, with China leading the market and creating imbalances. The excess of cheap goods generates trade tensions, especially between China and the US. This affects advanced economies such as the US and the EU, and industrial policies can exacerbate the problem with excessive subsidies.
