Economy
US economic worries mount amid tariffs, workforce cuts
WASHINGTON
With his flurry of tariffs , government layoffs and spending freezes , there are growing worries President Donald Trump may be doing more to harm the U.S. economy than to fix it.
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The labor market remains healthy with a 4.1 percent unemployment rate and 151,000 jobs added in February.
But employment report on March 7 also found that the number of people stuck working part-time because of economic circumstances jumped by 460,000 last month. In the leisure and hospitality sectors that reflect consumers having extra money to spend, 16,000 jobs were lost.
Since January, the economic policy uncertainty index has spiked 41 percent to a level, 334.5, that in the past signaled a recession.
“I have an increasing fear we will enter into what may become known as the ‘Trump recession,'”said Nicholas Bloom, a Stanford University economist and co-developer of the uncertainty index.
“Ongoing policy turbulence and a tariff war could tip the U.S. economy into its first recession in five years.” That last recession occurred under Trump because of the coronavirus pandemic.
For his part, Trump seems comfortable with the uncertainty that he’s generating, saying that any financial pain from import taxes is a mere “disruption” that will eventually lead to more factories relocating to the United States and stronger growth.
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If Trump’s tariffs backfire, much of the price would be paid by everyday Americans who could suffer from job losses, lower wages, higher inflation and, possibly, an injured sense of national pride.
“Markets anticipate,” said John Silvia, CEO of Dynamic Economic Strategy. “The turn down the dark alley of tariffs signals higher inflation, slower economic growth and a weaker U.S. dollar. It is an economic horror movie in slow motion.”
There were multiple signs of uncertainty and concerns about the tariffs in the Federal Reserve’s beige book.
Published last week, the beige book included 47 references to uncertainty, up from just 17 in the previous edition in January.
“Many businesses noted heightened economic uncertainty and expressed concern about tariffs,” the Fed’s New York branch reported.
“Looking ahead, businesses were notably less optimistic.”
“This is the perfect storm for businesses,” said Brian Bethune, an economist at Boston College. “How can you possibly plan anything in this environment?”
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Treasury Secretary Scott Bessent said on March 7 on CNBC that suggested a core problem is that the U.S. economy has become overly reliant on government deficits and that the Trump administration would be fostering stronger growth in the private sector.
“We’ve become addicted to this government spending, and there’s going to be a detox period,” he said.
This particular form of economic rehab is coming from Trump’s Department of Government Efficiency, which is led by Elon Musk.
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But the initiative has started to downsize the federal workforce in ways that could surface in future jobs reports.
Roughly 75,000 employees took the deferred resignation plan. There are also thousands of probationary federal workers who were fired and tens of thousands of layoffs to come based on the administration’s plans.
Canadian Prime Minister Mark Carney is planning a visit to Türkiye this month for talks with President Recep Tayyip Erdoğan, in what would be the first dedicated bilateral trip to the country by a Canadian leader, Reuters reported Friday, citing four sources familiar with the plans.
One source said Carney and Erdoğan could discuss free-trade talks launched on the sidelines of a NATO summit in Ankara in July, as well as potential cooperation in energy and defense. Canadian and Turkish trade ministers agreed this week to accelerate the talks ahead of the leaders’ meeting, two sources said.
The visit would mark Carney’s latest effort to diversify Canada’s economic ties as he seeks to reduce the country’s reliance on the United States, by far its largest trading partner, following the collapse of trade talks in August.
Carney has vowed to double Canada’s non-U.S. trade over the next decade and has moved to strengthen ties with a range of countries, including China and India.
Türkiye, whose largest trading partner is the European Union, is also seeking new partnerships and investment in energy, infrastructure and mining, while expanding opportunities for its growing defense industry.
The sources did not provide dates or a detailed agenda for the visit, which is planned for later this month.
Carney’s office and Erdoğan’s office did not immediately respond to requests for comment.
No Canadian prime minister is known to have made a standalone bilateral visit to Türkiye in recent decades, though Canadian leaders have met Erdoğan and other Turkish officials on the sidelines of multilateral gatherings, including NATO and G20 summits hosted by Türkiye.
At the NATO leaders’ summit in July, Carney and Erdoğan formally launched negotiations for a free-trade agreement.
That month, Türkiye agreed to join Canada’s Defence Security and Resilience Bank as one of 10 founding member nations of Carney’s multilateral “middle powers” bank.
The two countries’ trade ministers met in June and discussed expanding cooperation on renewable and nuclear energy, according to a Canadian government statement, which also listed aerospace, defense and security as areas for potential new partnerships.
Türkiye has held talks with Canadian engineering firm AtkinsRealis, South Korea’s Korea Electric Power Corporation and China’s State Power Investment Corporation over potentially building its second and third nuclear power plants. Russia’s Rosatom is building the country’s first.
An executive at AtkinsRealis, which holds the exclusive license for Canadian-designed CANDU reactors, told Reuters this year that the company expects Türkiye to complete an initial review of its CANDU reactors following an information exchange, potentially paving the way for formal talks on a plant bid.
In a step that helped improve bilateral ties in 2024, Canada lifted weapons-export restrictions on Türkiye, including controls on optical technology used in drones that Türkiye exports to dozens of countries.
Bilateral trade, however, remains relatively small.
Türkiye accounted for less than 0.3% of Canada’s total merchandise trade in 2025, at C$4.34 billion ($3.05 billion), compared with C$1 trillion in trade with the U.S., according to Statistics Canada data.
Canada mainly exports lentils, aircraft and electronics to Türkiye, while importing medical devices, fishing vessels, aircraft engines and jewelry.
S&P Global Ratings does not expect the ongoing investigation and liquidation of over 100 investment funds in Türkiye to put downward pressure on the country’s sovereign credit rating, according to its analysts.
S&P is due to publish its second credit rating and outlook review for Türkiye this year on Oct. 16. In its latest assessment in April, the agency affirmed Türkiye’s rating at BB-/B and maintained its outlook as stable.
Turkish authorities have stepped in to resolve the fund turmoil that erupted last month after suspected price manipulation in a number of thinly traded stocks triggered heavy losses and redemption pressures at investment funds.
Almost half a million investors hold stakes in more than 100 investment funds with combined assets of nearly $20 billion that authorities ordered to be liquidated in mid-September.
Karen Vartapetov, S&P Global Ratings’ director and lead analyst for Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS), said the regulatory measures and policy response to the fund investigation had been “quick and convincing,” adding that authorities had managed to contain the issue without a broader negative impact on the financial system.
“There is not much evidence that this process has negatively affected confidence and perceptions of the Turkish economy,” Vartapetov told Anadolu Agency (AA), according to a Turkish transcript of his remarks.
From a macroeconomic perspective, there has so far been limited impact, with the issue appearing to remain largely isolated, he said.
S&P had not observed significant reactions in areas it monitors, including the exchange rate, dollarization, financial conditions and banking-sector liquidity, according to Vartapetov.
If the fund-related developments remain isolated, they would not create downward pressure on the sovereign rating, he said.
“I think the negative effects will be limited if the fund crisis remains isolated and households continue to have confidence in real-currency assets,” Vartapetov said.
He stressed that sovereign ratings are determined by a committee and that the developments involving the funds would inevitably be discussed as part of that process.
S&P would likely highlight the episode as a risk, Vartapetov said, but added that there was not yet clear evidence of significant macroeconomic consequences.
If the issue remains confined to “a narrow asset class,” it would not be a “game changer” for investor sentiment, he said.
Reserve recovery supports rating
Vartapetov also discussed S&P’s outlook for Türkiye’s growth, inflation and international reserves.
The agency expects average inflation of around 30% this year and economic growth of close to 3%, he said. Inflation lastly eased to 31.51% in August.
Reserve adequacy remains one of the most important parameters for Türkiye’s credit rating, Vartapetov said.
Türkiye entered the year with reserves at a very high level, including record gross reserves. The Central Bank of the Republic of Türkiye (CBRT) used some reserves to contain the negative impact of higher energy prices, but later replenished part of the amount, he said.
“Gross reserves are therefore somewhat below January-February levels, but the recovery in reserves is supportive of the credit rating,” Vartapetov said.
Net reserves are not as strong as gross reserves but have also recovered, he added.
Vartapetov said household behavior had been another key focus for S&P in assessing Türkiye’s credit profile in recent years.
The agency has been monitoring whether households continue to prefer the Turkish lira, lira-denominated assets and bank deposits or shift toward the dollar, which could put pressure on foreign-exchange reserves.
Despite geopolitical developments in the Middle East, high energy prices and the fund investigation, households’ stance toward the lira has remained relatively strong, Vartapetov said.
“We have not seen much evidence of dollarization picking up again. Financial-system dollarization has not increased,” he said.
Policy response seen as ‘quite strong’
Regina Argenio, director of financial institutions ratings in the region at S&P Global, said the biggest immediate impact of the fund developments had been felt in the stock market, where equity valuations declined.
“Beyond the initial correction, however, we have seen valuations stabilize,” she said. Data arrive with some delay and may not yet provide the full picture, but there had also been no major movement in bank liquidity, she added.
Argenio said it was important that the problems remained isolated to the funds concerned and described the policy response so far as “quite strong.”
Beyond judicial proceedings, authorities had provided liquidity to the market and appointed banks to handle the liquidation of the funds, she added.
Türkiye’s newly established board tasked with overseeing the rapid liquidation of investment funds caught in the recent turmoil said Friday that work had been carried out on draft amendments to the Capital Markets Law and that the relevant institutions had been instructed to finalize the proposed changes.
The statement followed a meeting of the Fund Coordination Board set up last week and chaired by Vice President Cevdet Yılmaz. The State Supervisory Council (DDK) has also been assigned to examine the issue.
The fund turmoil erupted last month after suspected price manipulation in a number of thinly traded stocks triggered heavy losses and redemption pressures at investment funds.
Almost half a million investors hold stakes in more than 100 investment funds with combined assets of $20 billion that authorities ordered to be liquidated in mid-September.
The board reviewed on Friday the results of measures already taken and discussed new steps, according to the statement by the Directorate of Communications.
It reviewed secondary regulations and a timetable for payments linked to decisions taken by the Capital Markets Board on Wednesday.
The SPK said it would begin making interim payments to investors in the funds that were ordered to shut down.
Investors in asset managers Tera Portföy, Pusula Portföy, Atlas Portföy and Hedef Portföy will receive their full net investment amount if it is below TL 1 million ($20,404). Investors whose net investment amount is TL 1 million or above will receive TL 1 million as an interim payment.
The procedure will start with money market funds, the SPK said.
Friday’s statement said the draft amendments, on which work has been underway for some time, were also discussed. It stressed that the planned regulations should not impose any additional burden on citizens.
The directorate described the problem as arising in a “specific and limited” part of the fund market. It said work to resolve it would continue quickly and effectively, in line with capital markets rules and guided by fairness and equity.
The problems emerged in early September, when the SPK changed its guidelines for investment funds. Funds could no longer put all their assets into a single stock and were required to diversify.
The move sought to address concerns that many funds were heavily invested in a small number of obscure or hard-to-sell stocks.
To comply, some funds began selling holdings, which spooked investors and set off a rush to cash out. Several fund management companies then admitted they could not meet redemption demands.
On Sept. 16, authorities ordered 131 funds managed by seven companies into liquidation.
Top officials, including Treasury and Finance Minister Mehmet Şimşek, have sought to reassure markets, saying the turmoil does not threaten the wider financial system and describing the problem as limited.
Şimşek told investors on Thursday that authorities had moved quickly to contain problems and prevent them from developing into a systemic crisis, adding that further regulatory measures would be needed.
Speaking separately on Thursday, President Recep Tayyip Erdoğan said developments in the fund market would not pose a threat to the economy. He said authorities would not allow the issue to become a threat to Türkiye’s economic security or social stability.
Prosecutors are also investigating. The SPK said some funds had caused price movements that could not be explained by company fundamentals, and it filed criminal complaints over alleged manipulative transactions.
Authorities have imposed travel bans and asset freezes, while arresting 65 people, including top financial executives, as of Friday.
The share of individuals in Türkiye using generative artificial intelligence nearly doubled in a year, rising to 37.6% in 2026 from 19.2% in 2025, data released by the national statistics authority showed Friday.
The share of businesses using AI also increased, reaching 14%, the Turkish Statistical Institute (TurkStat) said, while a lack of expertise emerged as the biggest obstacle for companies considering adopting the technology.
In 2026, the share of women using AI stood at 38.1%, compared with 37.2% among men, the data showed. The highest adoption rate was recorded among people aged 16-24, at 64.9%. This was followed by those aged 25-34 at 55.7% and the 35-44 age group at 38.1%.
AI use also increased with educational attainment.
Among university graduates, the adoption rate reached 62.7%, compared with 45.4% among high school or vocational high school graduates, 35.5% among those with primary or lower-secondary education and 8.5% among primary school graduates.
Among individuals using AI, 86.4% said they used the technology for personal purposes. Professional use stood at 37.3%, while 32.6% reported using AI for formal education.
Professional use was higher among men, at 43.2%, compared with 31.2% among women. For education, the corresponding rates were 36.1% for women and 29.1% for men.
Business adoption booms
The share of enterprises using AI technologies has also risen sharply, from 2.7% in 2021 to 14% in 2026.
Adoption was highest among businesses with 250 or more employees, at 37.1%. The rate stood at 17% among enterprises with 50-249 employees and 12.8% among those employing 10-49 people.
By economic activity, the highest rate of AI use was recorded in telecommunications, programming and information technology activities, at 63.7%.
Publishing, broadcasting and content activities followed at 57.1%, while computer and communication equipment repair activities recorded an adoption rate of 32.4%.
Among enterprises using AI, 51% said they used the technology for marketing or sales activities.
AI use for research and development and innovation stood at 46.3%, while 43.4% used it in production or service processes.
Some 67.8% of AI-using enterprises relied on open-source AI software, while 49.1% used closed-source software.
The share of enterprises that had AI systems developed by external providers stood at 46.5%, compared with 32.1% that developed them using their own employees.
1 in 6 firms processes personal data
Some 16.6% of enterprises using AI said they processed personal data about individuals through the technology.
Such data included gender, age, occupation, educational status, address information, purchase records and facial images.
Meanwhile, 8.3% of enterprises that did not currently use AI said they were considering adopting it.
Among enterprises considering AI adoption but not yet using the technology, the biggest obstacle was a lack of relevant expertise, cited by 72.3%.
This was followed by legal uncertainty over who would be responsible for potential harm arising from AI use, at 66.4%, and concerns over data protection and privacy, at 65.4%.
The Group of Seven industrialized nations agreed to release 100 million barrels of oil, beginning with substantial volumes of diesel, as fuel prices hit record highs in the United States and President Donald Trump said the diesel supplies would be released immediately.
Trump and his Republican Party face pressure to address surging prices ahead of November’s midterm elections. Trump announced the action Friday on social media, saying, “Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil. The process will begin immediately.”
The president faces lagging approval ratings as the Iran war and his trade battles have increased U.S. prices for oil and other goods.
Gas prices in the U.S. and abroad have soared during the eight-month-long war, a cost Trump has repeatedly said is worth it for making sure Iran does not obtain nuclear weapons. Trump has insisted prices will come down after the war, though there’s no end in sight.
The national average for a gallon of diesel in the U.S. was $6.37 on Friday, according to AAA, after hitting a record $6.52 on Sept. 22.
Trump had a conversation overnight with French President Emmanuel Macron, the chair of the G7, about the need to address rising fuel prices and the availability of petroleum products, according to the French Embassy in the U.S. Macron on Friday then chaired a videoconference of G7 leaders to discuss the issue.
France holds the rotating presidency of the G7 group and made the announcement in a statement released after video-conference talks that Macron presided over. The International Energy Agency will coordinate the effort to combat soaring fuel prices. “We will implement our commitments with a coordinated release through the IEA of 100 million barrels (MB) to begin immediately over 4 months, including a frontloaded substantial diesel release within the first 20 days by G7 members and partners,” the statement said.
A new AP-NORC poll found that a majority of U.S. adults blame Trump for higher prices, and approval of his handling of the economy hit a new low.
Trump has grown increasingly frustrated with what he sees as a disconnect between his achievements and the public’s view of his work. Trump this week gave himself an A-plus for his work on the economy but said “we’re doing an extremely poor job of promotion.”
World food prices rose in September to their highest in nearly four years as logistics disruptions and weather concerns affected crop markets, the United Nations’ Food and Agriculture Organization (FAO) said Friday.
Fears about a severe El Nino weather pattern have pushed international sugar prices to an 18-month high, while a war-related collapse in Black Sea trade pushed wheat futures to a three-year peak early last month.
The FAO Food Price Index, which tracks monthly changes in international prices for a basket of food commodities, averaged 136.0 points, up from a revised 134.0 for August and the highest reading since November 2022.
“We are seeing a persistent and increasingly broad-based build up in global commodity prices, as disruptions in the Strait of Hormuz and the Black Sea combine with climate shocks, putting pressure on energy, transport and key food commodities,” FAO Chief Economist Maximo Torero said.
“If sustained, these pressures will soon pass through to consumer food prices, especially in food and energy import-dependent countries,” he said in a statement.
FAO’s sugar price index jumped 6.1% from August in a third consecutive monthly increase, as adverse weather threatened to curb supply in major production zones.
The agency’s cereal price benchmark rose 5.1% on the month, with reduced yield prospects for US corn adding to pressure from disruptions to Black Sea grain trade.
Vegetable oil prices edged up 0.9%, driven by palm oil on the back of strong demand and concerns over El Nino-related production risks in Southeast Asia.
FAO’s overall meat index eased 1.1%. That reflected lower poultry prices, partly linked to a drop in European Union demand as new import rules took effect.
In a separate report, FAO kept its forecast for global cereal production in 2026 almost unchanged at 2.979 billion metric tons, 2.1% below the previous year’s peak but still the second-largest harvest on record.
FAO cut its forecast for world cereal trade in 2026/27 by 0.7% from last month, citing lower wheat and maize export expectations amid constrained Black Sea shipping.
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