WSJ What’s News: Detailed Summary of “OECD Slashes U.S. Growth Forecast” Episode

Release Date: June 3, 2025

In this episode of WSJ What’s News, hosted by Luke Vargas from The Wall Street Journal, listeners are presented with an in-depth analysis of the latest economic forecasts, geopolitical tensions, and significant policy shifts affecting global markets. The episode delves into the OECD's revised growth projections for the U.S., the evolving dynamics of U.S.-China trade negotiations, South Korea's pivotal presidential election, FEMA's controversial hurricane response plan, and emerging legal challenges in the tech and music industries.

1. OECD Slashes U.S. Growth Forecast

The episode opens with a critical examination of the Organization for Economic Cooperation and Development (OECD)'s latest economic forecasts. The OECD has significantly downgraded its growth projections for the United States, citing ongoing tariff-related turmoil and broader global economic uncertainties.

• Luke Vargas introduces the topic, highlighting that "Global growth is set to slow this year and next as US Tariffs introduce widespread economic uncertainty and risk, leading to higher for longer inflation" (01:09).

• Matthias Corman, OECD Secretary General, elaborates on the factors contributing to this forecast: "The main headwinds are lower export growth as a result of retaliatory measures from some trading partners, the impact of high policy uncertainty and a marked slowdown in net immigration" (02:00).

• The OECD projects U.S. economic growth to dip to 1.6% in 2025, a stark decline from the previous year's 3.3% and March's projection of 2.2% (01:09).

• The forecast also anticipates U.S. inflation nearing 4% this year, a trend expected to persist globally, potentially keeping interest rates elevated and increasing borrowing costs, thereby dampening economic activity.

2. US-China Trade Tensions and Negotiations

A significant portion of the episode is dedicated to exploring the strained relationship between the United States and China, particularly focusing on recent developments in trade negotiations.

• Ling Ling Wei, Chief China Correspondent for The Wall Street Journal, provides insights into China's strategic shift in trade negotiations. She notes, "What really jumped out at me is how Xi Jinping wants a different kind of negotiation than the one in the first Trump term" (03:58).

• The current Chinese chief negotiator, He Lifang, represents a departure from previous negotiators. Unlike his predecessor, He lacks proficiency in English and has limited experience engaging with American officials, signaling a more hardline stance. Wei explains, "He Lif doesn't speak English and he doesn't have as much of experience dealing with Americans as some of his predecessors did" (04:52).

• He Lifang is staunchly defending China's industrial policies, refusing to acknowledge overcapacity issues. He argues, "the fact that we're selling so much cheap stuff to the rest of the world should be viewed as a positive by comparison" (04:52).

• The episode highlights China's strategic use of export controls as leverage in negotiations. Wei details, "The Chinese really have already used export controls as a very potent tool to hit back at the US and will continue to use that as leverage in future negotiations" (06:19).

• Emphasizing China's push for self-reliance, Wei states, "Xi Jinping has significantly beefed up the country's self-reliance. They believe they're in a better position to drive a harder bargain" (07:25).

3. China's Manufacturing Sector: Signs of Strain

The podcast also addresses concerns within China's manufacturing sector, drawing on data from the China Caixin Manufacturing Purchasing Managers Index (PMI).

• Rebecca Fung reports that the PMI fell to 48.3 in May, indicating a contraction in manufacturing activities, as readings below 50 denote shrinking activity (02:42).

• Additionally, a sub-index tracking factory production declined for the first time in 19 months, suggesting that "Chinese manufacturing activities has not fully recovered despite the US And China trade truce" (02:42).

• Despite these challenges, business optimism saw an uptick in the previous month, with companies hopeful for a resolution to the ongoing trade conflict (03:12).

4. South Korea's Pivotal Presidential Election

Shifting focus to East Asia, the episode covers South Korea's recent presidential election, a critical event given the country's strategic importance.

• Tim Martin, Korea Bureau Chief, discusses the implications of the election outcome: "The stakes are very high for South Korea, one of America's biggest trading partners and allies" (09:16).

• The ruling conservatives appear poised for defeat, with voters expressing dissatisfaction following the recent imposition of martial law late last year.

• The new president's approach will be crucial in shaping South Korea's trade relations with the U.S., especially regarding ongoing negotiations with the Trump administration and addressing security concerns related to China and North Korea.

5. FEMA Scraps New Hurricane Response Plan

Back in the United States, the Federal Emergency Management Agency (FEMA) has made a controversial decision to discard its newly developed hurricane response plan just days into the hurricane season.

• Luke Vargas reports, "Agency workers were left stunned after new FEMA leader David Richardson suggested he recently learned there was an annual hurricane season" (10:10).

• This move comes amid significant workforce reductions and the elimination of key programs, raising questions about the agency's preparedness. A FEMA representative dismissed concerns, asserting that there is no uncertainty regarding the agency's hurricane response strategy.

6. Meta Challenges European Commission Over DMA Enforcement

The tech industry is another focal point, with Meta (Facebook) taking legal action against the European Commission's crackdown under the Digital Markets Act (DMA).

• Luke Vargas outlines the issue: "Meta platforms are taking on the European Commission today, challenging the bloc's crackdown on the company's social networking business" (10:10).

• Meta argues that features like Messenger and Marketplace should not be classified as "core platform services" subject to DMA's stringent regulations. Other tech giants, including Apple and ByteDance's TikTok, are also contesting the DMA, which mandates easier access for rivals on their platforms or face hefty fines.

7. Music Industry Sets Precedent for AI-Generated Remixes

Concluding the episode, Vargas touches upon groundbreaking developments in the music industry concerning artificial intelligence.

• Three major music labels—Universal, Warner, and Sony—are in negotiations with AI startups Suno and Udo to establish new standards for AI-generated remixes.

• The labels seek compensation models where artists and labels are paid when their music is used to train generative AI models. This involves developing "fingerprinting and attribution technology similar to YouTube's Content ID" to monitor and monetize AI-driven musical creations.

• Agreements may also involve the labels taking equity stakes in the AI startups, signaling a significant shift in how intellectual property and creative works are managed in the age of artificial intelligence.

Conclusion

This episode of WSJ What’s News provides a comprehensive overview of pressing economic and geopolitical issues affecting global markets. From the OECD's sobering economic forecasts to the intricate maneuvers in U.S.-China trade negotiations, the podcast offers valuable insights for listeners seeking to understand the complex forces shaping today's world. Additionally, the discussions on FEMA's policy shifts, South Korea's political landscape, and emerging challenges in the tech and music industries underscore the multifaceted nature of contemporary global affairs.

Notable Quotes:

• Matthias Corman: "The main headwinds are lower export growth as a result of retaliatory measures from some trading partners, the impact of high policy uncertainty and a marked slowdown in net immigration." (02:00)

• Ling Ling Wei: "He Lif doesn't speak English and he doesn't have as much of experience dealing with Americans as some of his predecessors did." (04:52)

• Ling Ling Wei: "The Chinese really have already used export controls as a very potent tool to hit back at the US and will continue to use that as leverage in future negotiations." (06:19)

• Ling Ling Wei: "Xi Jinping has significantly beefed up the country's self-reliance. They believe they're in a better position to drive a harder bargain." (07:25)

• Tim Martin: "The stakes are very high for South Korea, one of America's biggest trading partners and allies." (09:16)

Produced by Daniel Bach and Kate Bullivant. Supervising Producer: Sandra Kilhoff.