World Bank Says U.S. Economic Growth to Halve This Year

Summary

WSJ What’s News – Episode Summary

Title: World Bank Says U.S. Economic Growth to Halve This Year
Host/Author: The Wall Street Journal
Release Date: June 10, 2025

1. World Bank Revises U.S. Economic Growth Forecast

The World Bank has significantly downgraded its forecast for U.S. economic growth for 2025, projecting it to grow by only 1.4%, a sharp decline from the 2.3% estimated in January and a steep drop from the 2.8% growth rate in 2024. This revision is primarily attributed to the economic repercussions of President Trump’s tariff policies.

Alex Osola introduces the topic at [00:34], stating, “The World Bank predicts US economic growth this year will be half of what it was last year as a result of President Trump's tariff policy.”
Paul Hannon, WSJ Economics Editor, elaborates at [02:08]:

“If you go back to January, the World Bank raised its growth forecast for this year partly because what they were expecting to see this early on is the president cutting taxes, deregulating the economy. They really didn't think the tariffs were going to come that quickly.”

2. Global Economic Implications

The tariff-induced slowdown extends beyond the U.S., impacting global economies. While the U.S. faces a substantial downturn, other economies experience more modest declines. Notably, Mexico is expected to bear significant spillover effects. Surprisingly, China remains unaffected in the World Bank’s forecast due to anticipated compensatory government investments aimed at offsetting export losses to the U.S.

At [02:44], Paul Hannon discusses the global impact:

“It's going to be pretty significant. It's not going to be as big an impact as on the US but there are significant spillovers elsewhere. The biggest is possibly Mexico. The big exception is China... the government will make sure it makes up by investing more.”

3. World Bank’s Recommendations on Tariff Policies

The World Bank advises that to stabilize global trade and mitigate economic slowdowns, governments should eliminate tariff discrepancies swiftly. However, the institution warns that further increases in tariffs could severely hinder economic growth, whereas tariff reductions might not yield substantial benefits due to persistent uncertainty.

At [03:25], Paul Hannon highlights:

“The World Bank warns that a big further increase in tariffs from where they were at the end of May would slow the economy fairly significantly. A cut in tariffs would actually have less of a positive impact. The reason for that is because there would still be an awful lot of uncertainty.”

4. Main Street Optimism Amid Economic Uncertainty

Contrasting the bleak economic forecasts, small businesses exhibit increased optimism. A survey by the National Federation of Independent Business revealed that its optimism index rose to 98.8 in May from 95.8 in the previous month, surpassing the long-term average and ending a four-month decline. This uplift is partly fueled by anticipation of economic stimulus from President Trump’s tax and spending initiatives.

5. U.S.-China Trade Negotiations

U.S.-China trade talks are underway in London, aiming to repair strained relations between the world's two largest economies. Commerce Secretary Howard Lutnick expressed optimism at [04:18]:

“The talks are going to really, really well and that he hoped they would end this evening, but if needed, they would continue tomorrow.”

6. Stock Market Movements

U.S. stock markets showed resilience, with the Nasdaq and S&P 500 each rising approximately 0.6%, and the Dow Jones Industrial Average increasing by a quarter of a percent. These gains followed a period of market volatility triggered by President Trump’s tariff announcements.

7. Los Angeles Protests and Federal Response

Protests erupted in Los Angeles in response to immigration enforcement actions, leading to the deployment of active-duty Marines. The demonstrations, sparked by Immigration and Customs Enforcement raids, escalated into clashes requiring federal intervention.

Mayor Karen Bass condemned the federal raids and the actions of demonstrators who damaged the city. During the protests, over 100 people were arrested, including 14 for looting and two police officers were injured.

From the Oval Office, President Trump defended his decision to deploy Marines, stating at [06:13]:

“This is the first perhaps of many... when they do it, if they do it, they're going to be met with equal or greater force than we met right here. We did a great job.”
He further warned that protests at the upcoming military parade in Washington would be met with "very heavy force."

8. Investigation into Foreign Influence on Elon Musk

An exclusive report revealed that U.S. government agencies, including the Department of Homeland Security and the Justice Department, investigated foreign nationals' interactions with Elon Musk's properties in 2022 and 2023. The probe focused on individuals from Eastern Europe and other regions who might have attempted to influence Musk. The investigation, predating the Trump administration, underscores ongoing concerns about foreign interference, though Musk did not comment on the matter.

9. Congressional Stock Trading Amid Tariff Announcements

Following President Trump’s Liberation Day tariffs announcement in early April, an analysis by The Wall Street Journal uncovered that over a dozen House lawmakers and their family members engaged in more than 700 stock trades between April 2 and April 8. This spike coincided with significant market volatility.

Katie Stetch Farrick, covering Congress for the WSJ, explained at [08:45]:

“During that week... we discovered that there was more trading activity than there had been historically.”
Most trades were conducted through financial advisors without direct input from the lawmakers, as noted at [09:36].

The episode also delves into ongoing discussions about restricting lawmakers from trading individual stocks to prevent potential conflicts of interest. Some lawmakers are proactively moving their investments into mutual funds or blind trusts in anticipation of new regulations.

10. Tragic High School Shooting in Graz, Austria

A devastating high school shooting in Graz, Austria, resulted in 10 fatalities and approximately a dozen injuries. The suspected perpetrator, a 21-year-old local man, died by suicide at the scene. Authorities report that the attacker had no prior criminal record and legally owned the weapons used. The motive remains under investigation.

11. Record Savings Rates in 401(k) Plans

Despite market volatility earlier in the year, Americans are improving their retirement savings. Fidelity Investments reported that the average savings rate in 401(k) plans reached a record 14.3% of income in the first quarter of 2025, nearly meeting the 15% annual recommendation by financial advisors. Ann Tergeson, covering retirement and personal finance, attributes this resilience to savers' commitment to their investment plans, with only 6% altering their investment allocations during the downturn.

At [12:29], Ann Tergeson remarked:

“People really don't make a lot of changes when the market declines. The data really proves that out. People really stick with their investments and continue to contribute.”

12. Closing Remarks

The episode concludes with acknowledgments to the production team and a preview of upcoming content, including further analysis on stock trading by lawmakers. Additionally, brief advertisements from KPMG, Oracle, and Viking are interspersed but are not covered in the content summary.

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For more insights and updates, tune into future episodes of WSJ What’s News.

Transcript

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[Alex Osola]

The World bank predicts US economic growth this year will be half of what it was last year as a result of President Trump's tariff policy.

[Paul Hannon]

The World bank warns that big further increase in tariffs from where they were at the end of May would slow the economy fairly significantly and a cut in tariffs would actually have less of a positive impact. The reason for that is because there would still be an awful lot of uncertainty.

[Alex Osola]

Plus, members of Congress and their families made hundreds of stock trades as US Tariffs were being rolled out. And President Trump warns protesters in other cities as Marines arrive in an on edge Los Angeles. It's Tuesday, June 10th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's the top headlines and business stories that move THE Today, the U.S. economy might grow half as much as initially predicted this year, while the global economy is set to suffer a more modest but still significant slowdown. That's according to a new estimate from the World bank out today. For more, I'm joined by WSJ Economics editor Paul Hannon. So in its January report, Paul, the World bank forecast a 2.3% increase in US gross domestic product. Now it's expecting just a 1.4% growth, which has a sharp decrease from the 2.8% growth in 2024. So when I think about what's different between now and January, of course, President Trump's tariffs are the first thing that comes to mind is that the main reason that the World bank pointed to for the predicted slowdown?

[Paul Hannon]

Very much so, yes. If you go back to January, the World bank raised its growth forecast for this year partly because what they were expecting to see this early on is the president cutting taxes, deregulating the economy. They really didn't think the tariffs were going to come that quickly. So they've had to go back, take another look at this, and their conclusion is that, yeah, it's going to take quite a big bite out of the growth they expected to see this year in the US Economy and other economies around the world.

[Alex Osola]

Yeah, let's talk about that a little bit. So what kind of impact could they have on global economic growth?

[Paul Hannon]

It's going to be pretty significant. It's not going to be as big an impact as on the US but there are significant spillovers elsewhere. The biggest is possibly Mexico. The big exception is China, which is a little bit strange because that's been the main focus of the conflict so far. But what the World bank thinks is whatever China loses in terms of exports to the U.S. the government will make sure it makes up by investing more. So surprisingly, the World bank has not cut its growth forecast for China.

[Alex Osola]

Could a change in the tariff rates in either direction affect this outlook?

[Paul Hannon]

In the World Bank's view, the US did face higher tariffs on its exports than it charged on imports. This is a point that the President has made and for the World bank, it's a legitimate source of grievance. And their recommendation is that governments get around the table and basically eliminate those differences quickly in order to bring some peace to the world trade situation. The World bank warns that a big further increase in tariffs from where they were at the end of May would slow the economy fairly significantly. A cut in tariffs would would actually have less of a positive impact. The reason for that is because there would still be an awful lot of uncertainty.

[Alex Osola]

That was WSJ economics editor Paul Hannon. Thank you, Paul.

[Paul Hannon]

Thanks.

[Alex Osola]

A survey showed that Main street businesses are feeling less worried about their prospects as hopes rise for an economic boost from President Trump's tax and spending mega bill. The National Federation of Independent Business said today that its optimism index, a gauge of sentiment among small firms, rose to 98.8 in May from 95.8amonth earlier. That takes the index back above its long term average and ends a four month streak of worsening sentiment. US China trade talks are in the spotlight today with a second day of negotiations in London aimed at patching up a fraying truce between the world's two biggest economies. Commerce Secretary Howard Lutnick said the talks are going to really, really well and that he hoped they would end this evening, but if needed, they would continue tomorrow. Major US Indexes built on modest gains throughout the day. The Nasdaq and The S&P 500 both rose about 0.6%, while the Dow added a quarter of a percent. Flare ups continued across Los Angeles last night after a day of mostly peaceful demonstrations over immigration enforcement that saw the Trump administration take the rare step of deploying active duty Marines to the area of Los Angeles. Mayor Karen Bass called on the federal government to stop the Immigration and Customs Enforcement raids that spurred the protests and condemned demonstrators who damaged the city. The Los Angeles Police Department said that more than 100 people were arrested during the protests that lasted into the early hours today, nearly all for failure to disperse. Fourteen people were arrested for looting, one for assault with a deadly weapon and one for vandalism. The police said two officers were treated at a hospital for injuries. Speaking from the Oval Office today, President Trump defended his decision to send in Marines and thousands of National Guardsmen. And as protests have spread to other cities, he gave this warning.

[Donald Trump]

And this is the first perhaps of many or perhaps, you know, if we didn't attack this one very strongly, you'd have them all over the country. But I can inform the rest of the country that when they do it, if they do it, they're going to be met with equal or greater force than we met right here. We did a great job.

[Alex Osola]

The president also said that any protests at the military parade set to take place in Washington on Saturday, quote, will be met with very heavy force. We're exclusively reporting that several U.S. government agencies, including the Department of Homeland Security and the Justice Department in 2022 and 202320 tracked foreign nationals coming and going to Elon Musk's properties. That's according to people familiar with the matter. The investigation focused on people visiting Musk from countries in Eastern Europe and elsewhere who might have been trying to influence him. The probe, which predates the current Trump administration, highlights concerns about the number of foreign nationals in Musk's orbit. Musk didn't respond to requests for comment. A White House spokeswoman referred requests for comment to DHS and the FBI had and White House officials said they had no knowledge of any previous investigation. The FBI declined to comment. Coming up, as Trump rolled out the Liberation Day tariffs, lawmakers were trading stocks heavily. More on that after the break.

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[Alex Osola]

In early April, as markets tanked in response to President Trump's announcement of his Liberation Day tariffs, members of Congress and their families were busy trading stocks. A Wall Street Journal analysis found that from April 2, when Trump launched the sweeping tariffs to April 8, the day before he paused, many of them, more than a dozen House lawmakers and their family members made more than 700 stock trades. Katie Stetch Farrick covers Congress for the Wall Street Journal and joins me now. Katie, what do we know about these trades?

[Katie Stetch Farrick]

Members of Congress are required to disclose the stock trades and purchases that they make in financial disclosure statements. They file these periodically, and they also have to disclose that activity for trades that were made by their spouses or family members. So it really is meant to shine a light on any sort of financial benefit that a lawmaker could receive during that time. Nothing that we discovered was out of the ordinary, except for, of course, the number of trades compared to previous months. I mean, during that week, I don't know if you remember how crazy it was in the markets. I was so curious during that time what lawmakers were doing. So we finally had an opportunity. Once these disclosures came out, we were able to look back and see how lawmakers behaved during that chaotic period. And what we discovered was that there was more trading activity than there had been historically.

[Alex Osola]

Did any of the lawmakers explain that increased trade volume you mentioned?

[Katie Stetch Farrick]

Most lawmakers that we talked to made these trades through financial advisors, third parties, people they don't know. And so they had provided no guidance to these advisors as they were making these transactions, so only found out about them afterwards from their advisor, and they'll be able to see what they either bought or sold in their portfolios later.

[Alex Osola]

Katie, for a while there's been this conversation in Congress about changing the rules for lawmakers so that they wouldn't be allowed to make trades quite like this. Where does that stand right now?

[Katie Stetch Farrick]

That's the fascinating thing, this conversation about whether or not lawmakers should be allowed to trade individual stocks while in Congress. This comes up periodically. Came up after the pandemic when lawmakers were getting classified briefings about what to expect with COVID 19 there's a growing sense in Congress that lawmakers should not be allowed to trade individual stocks or if so, have some restrictions to it, make sure that they put those stocks in a blind trust so they aren't aware of what stocks they hold while they're in Congress. Some lawmakers that I talked with are being proactive and already gotten ahead of potential new regulations by selling off their individual stocks and moving their investments into mutual funds. Right now, there's a handful of House lawmakers from both sides of the aisle that feel very passionate about this issue. They've gotten together recently to negotiate a compromise. Bill the best of all of their ideas to try to put forth legislation that they think could actually pass that would restrict lawmakers in some form from trading individual stocks.

[Alex Osola]

That was WSJ reporter Katie Stetch Farich. Thank you so much, Katie.

[Katie Stetch Farrick]

Thanks for having me.

[Alex Osola]

Austrian authorities said that a high school shooting in Graz this morning left 10 people dead and around a dozen more injured, marking one of the worst such incidents in the country's history. The death toll from the shooting doesn't include the suspected attacker, who was found dead in what authorities described as a suicide. Officials said that the suspected attacker was a 21 year old Austrian man from the Graz area. Police said that he had no previous criminal record and carried out the attack with two weapons that he owned legally. He was a former student at the school, though he didn't graduate from it. Authorities are still investigating the motive and Americans are finally saving what they're supposed to for retirement. Well, at least close to it. A Fidelity Investments analysis of the millions of accounts it manages found that the average Savings rate in 401k plans rose to a record high 14.3% of income in the first three months of this year. That's just a shade below the 15% annual savings rate financial advisors often recommend over a four decade career, Ann Tergeson, who covers retirement and personal finance, told our your Money Briefing podcast. Why Savers Kept at It despite the volatile markets earlier this year, 401k savers.

[Ann Tergeson]

Are just notorious for their ability to stick with the plan whether they have a plan or not. But they stick with their investments and in fact they continue to contribute. In general, not many people cut back on saving. Way more people increased their savings rate than decreased it, and only 6% changed their investment allocation in the first three months of the year. So generally when you say 401 case, savers set it and forget it or put their 401k on autopilot. The data really proves that out. People really don't make a lot of changes when the market declines.

[Alex Osola]

For more from Ann, Listen to tomorrow's episode of youf Money Briefing. And that's what's news for this Tuesday afternoon. Today's show is produced by Anthony Bansy and Pierre Bienname, with supervising producer Michael Kosmides. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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