US Weekly Jobless Claims Rise Marginally; Third-quarter Worker Productivity Accelerates

A new United Nations report projects the global economy will continue to experience sluggish growth, failing to recapture its pre-pandemic momentum. The forecast sees global economic growth declining to 2.7% in 2026 before ticking up to 2.9% in 2027.

This outlook, detailed in the UN's "World Economic Situation and Prospects" report, remains significantly below the 3.2% average growth rate the world enjoyed between 2010 and 2019.

US Tariffs Create Headwinds, But Resilience Prevails

The report identifies new trade tensions, sparked by a sharp increase in U.S. tariffs in 2025, as a key factor shaping the forecast. However, the absence of a wider trade war has so far limited major disruptions to international commerce.

According to the UN Department of Economic and Social Affairs, global economic activity has proven resilient despite the tariff shock. This stability was supported by several factors:

• Front-loaded shipments and inventory accumulation

• Solid consumer spending

• Monetary easing measures

• Broadly stable labor markets

While continued macroeconomic policy support is expected to soften the blow from higher tariffs, the report cautions that growth in both trade and overall economic activity will likely moderate in the near term.

A Mixed Outlook for Major Economies

The global forecast masks divergent paths for the world's largest economic blocs, from a slowdown in the United States and China to more modest growth in Europe and robust expansion in India.

United States: Slowdown Followed by Modest Rebound

Economic growth in the United States is projected to slow from 2.8% in 2024 to 1.9% in 2025. The UN forecasts a slight recovery to 2.0% in 2026 and 2.2% in 2027, aided by expansionary fiscal and monetary policies. Inflation is expected to remain above the 2% target in 2026 but should gradually cool as tariff effects fade and housing costs stabilize.

China: Growth Decelerates Despite Policy Support

China’s economy is projected to grow by 4.6% in 2026 and 4.5% in 2027, marking a slowdown from the estimated 4.9% expansion in 2025. A temporary easing of trade tensions with the U.S., including targeted tariff cuts and a one-year trade truce, has helped stabilize business confidence. Meanwhile, policy support is expected to sustain domestic demand.

European Union: Consumers Face Export Headwinds

Growth in the European Union is forecast at 1.3% in 2026 and 1.6% in 2027, a slight adjustment from 1.5% in 2025. This growth is primarily driven by resilient consumer spending. However, the report warns that higher U.S. tariffs and ongoing geopolitical uncertainty are likely to weigh on the bloc's export performance.

South Asia: India Remains a Bright Spot

Growth across South Asia is expected to moderate to 5.6% in 2026 from 5.9% in 2025, before returning to 5.9% in 2027.

India stands out with a strong forecast. After an estimated 7.4% growth in 2025, the economy is projected to expand by 6.6% in 2026 and 6.7% in 2027. The report credits this performance to resilient consumption and strong public investment, which are expected to largely offset the adverse impact of higher U.S. tariffs.

President Donald Trump is once again pushing for the United States to acquire Greenland, and his administration is treating the idea as a serious foreign policy objective. This renewed interest comes just days after the U.S. military entered Venezuela and captured its leader, escalating geopolitical tensions.

The White House has confirmed it is weighing multiple options to take control of the vast Danish island territory, ranging from an outright purchase to using the U.S. military. However, Denmark and its European allies in NATO have been firm in their response: Greenland is not for sale.

White House press secretary Karoline Leavitt stated on Wednesday that the prospect of a U.S. acquisition is "currently being actively discussed by the president and his national security team." In a related move, Secretary of State Marco Rubio announced plans to discuss the matter with Danish officials next week.

So far, Trump has not made a formal offer or suggested what he considers a fair price for the world's largest island.

Valuing Greenland: A Trillion-Dollar Question

If Denmark were to reverse its stance, acquiring Greenland would carry a massive price tag. Even conservative estimates place its potential value in the hundreds of billions, with many analysts suggesting it could be worth trillions.

One of the lowest valuations comes from historical precedent. In 1946, the U.S. made a formal offer to buy Greenland for $100 million, which Denmark rejected. That figure is equivalent to nearly $1.7 billion today. At the time, the offer represented 0.04% of U.S. GDP; the same proportion today would be about $1.2 billion.

However, modern analyses suggest this figure is far too low.

"Something in the trillions looks about right," said Douglas Holtz-Eakin, president of the center-right think tank American Action Forum (AAF).

Tapping into Natural Resource Wealth

A January 2025 study by the AAF attempted to calculate a price for Greenland by analyzing its natural resources and real estate potential.

The study, citing geological survey data from the U.S., Denmark, and Greenland, found that the island's known critical mineral and energy resources are valued at more than $4.4 trillion. This number drops to $2.7 trillion if oil and natural gas are excluded, as Greenland stopped issuing exploration licenses for these in 2021 due to environmental concerns.

However, extracting this wealth is a major challenge. Greenland's harsh climate and small population of around 57,000 people result in a low "resource-to-reserve conversion rate."

For example, while Greenland has over 36 million metric tons of known rare earths, its accessible reserves are only 1.5 million tons—a conversion rate of just 4.2%. Applying this rate across all resources, the AAF study produced a "lower bound" estimate of $186 billion.

Strategic Value and National Security

President Trump has emphasized that his primary motivation is national security, not just economic gain. "Right now, Greenland is covered with Russian and Chinese ships all over the place," Trump said Sunday. "We need Greenland from the standpoint of national security."

The U.S. military already operates a base in Greenland, but full control of the island would give America a dominant foothold in the strategic Arctic region. Experts note it would also provide greater access to new shipping lanes opening up due to climate change.

To quantify this strategic value, the AAF study compared Greenland to Iceland. It calculated that buying all the real estate in Iceland would cost the U.S. $1.28 million per square kilometer, for a total of $131 billion. Applying the same price-per-kilometer metric to Greenland's vast territory results in an estimated value of nearly $2.8 trillion.

A Wide Spectrum of Estimates

The AAF's multi-trillion-dollar figure is not an outlier. Other analyses have also produced massive valuations.

• In 2019, the Financial Times' Alphaville placed a "very conservative" value of $1.1 trillion on Greenland.

• That same year, Iwan Morgan, a professor at University College of London, told CNN the cost could reach the trillions, highlighting the immense political and legal hurdles of such a deal.

• In contrast, former New York Federal Reserve economist David Barker offered a much lower range last January: $12.5 billion to $77 billion. Barker's calculation was based on adjusting the prices of past U.S. territorial acquisitions, such as Alaska and the U.S. Virgin Islands, for GDP growth.

Despite the wide range, Holtz-Eakin of the AAF believes his group's estimate is conservative because it doesn't fully capture the geopolitical stakes.

"They're pricing the economics of it. But let's face it, this is not about economics," he explained. "What price do you put on our standing in NATO or the global order? I put a big price on that."

The U.S. House of Representatives is set to approve a three-year extension of Affordable Care Act (ACA) subsidies, a move that puts it on a direct collision course with the Senate, where the bill is expected to fail.

These enhanced ACA tax credits, often called Obamacare subsidies, are a critical issue for millions of Americans who purchase health insurance on ACA marketplaces. Their scheduled expiration at the end of 2025 has already been linked to rising premiums and was a central conflict during last fall's record-long government shutdown.

House Pushes Through Extension Despite GOP Division

The vote on the House floor was made possible by a rare procedural maneuver. At the end of last year, four moderate Republicans joined Democrats in signing a discharge petition led by Minority Leader Hakeem Jeffries. This tool allows a majority of lawmakers to bypass leadership and force a vote on a bill.

The petition successfully cleared a key procedural hurdle on Wednesday, with nine Republicans ultimately voting with Democrats to advance the measure. This came despite opposition from Speaker Mike Johnson, highlighting a significant split within the Republican party on the issue.

Senate Signals A Swift Rejection

Even with House approval, the bill's prospects in the Senate appear nonexistent. Senator Bernie Moreno, a Republican from Ohio involved in bipartisan negotiations on the matter, was blunt in his assessment.

"What the House is going to pass tomorrow will not pass in the United States Senate," Moreno told reporters on Wednesday. He noted that the Senate had already voted down a similar three-year extension in December. "It probably wouldn't be put on the floor, because why waste floor time on something we've already considered?"

Ohio Senator Bernie Moreno has stated the House bill will not pass in the Senate.

Moreno did suggest, however, that the House bill could serve as a legislative "vehicle" that the Senate working group could amend with its own proposal.

Bipartisan Senate Group Seeks Compromise

That bipartisan working group, which includes Moreno and Senator Susan Collins of Maine, has been trying to broker a different deal. Members have indicated they are nearing an agreement on a two-year extension of the ACA tax credits, shorter than the House's three-year proposal.

Despite progress, several key disagreements remain before a final deal can be reached.

The Hyde Amendment: A Key Sticking Point

One of the most significant hurdles is the Hyde Amendment, a long-standing policy that bans the use of federal funds for most abortions. Many Republicans are pushing to strengthen its provisions as part of any healthcare deal.

The debate grew more complex earlier this week when President Donald Trump urged Republicans to be "flexible" on the Hyde Amendment, drawing some criticism from within his own party.

Moreno, however, maintained that the core principle was not up for debate. "We don't do federal funding for abortions," he said. "That's a long-standing tradition, nobody's looking to change that."

The U.S. economy is posting some of its most impressive productivity numbers in decades, a trend that is pushing down business labor costs and accelerating the fight against inflation. If artificial intelligence is the engine behind these gains, we may be at the dawn of a new era of efficiency. However, with the data shrouded in uncertainty, the Federal Reserve should treat this boom with caution, not as a clear signal to cut interest rates.

A Stunning Spike in Economic Efficiency

In the third quarter, labor productivity—the output per hour from nonfarm employees—jumped at a 4.9% annualized rate, the strongest performance since 2023, according to the Bureau of Labor Statistics. Excluding the unusual rebound periods following recessions, this marks the second-highest reading in 20 years.

At the same time, unit labor costs fell for the second quarter in a row, dropping 1.9% after a 2.9% decline in the prior period.

On the surface, this is great news. America's growing efficiency is creating a path for inflation to continue its three-year slowdown, even as the economy grows and the stock market hits record highs. Yet, the cause of this productivity surge remains unclear, leaving its sustainability—and its implications for interest rates—an open question for Fed policymakers.

The AI Factor: Revolution or Anomaly?

The most straightforward explanation may be the right one: artificial intelligence. According to the Census Bureau's Business Trends and Outlook Survey, about 18% of U.S. firms reported using AI in the past two weeks, a figure more than triple the adoption rate seen in early 2024. While a recent change in the survey's wording might account for some of this jump, the trend is undeniable.

Research suggests AI could be a game-changer for knowledge-based work.

• Marketing: A study by Harang Ju and Sinan Aral found that teams pairing humans with AI were a remarkable 73% more productive than all-human teams.

• Software Development: Another recent study showed that developers using an AI tool completed 26% more tasks.

However, the technology's impact isn't universal. One experiment involving taxi drivers found an AI tool provided a modest 7% productivity boost for low-skilled drivers but had almost no effect on those who were already proficient at their jobs. This suggests AI's effectiveness depends heavily on the industry, the context, and the initial skill level of its users.

The Fed's High-Stakes Policy Dilemma

The productivity boom presents a complex puzzle for monetary policy. While falling unit labor costs are disinflationary, higher productivity also tends to increase demand for investment capital and raise the economy's potential growth rate. Together, these forces can push up the "neutral" rate of interest—the level that neither stimulates nor restricts economic growth.

If policymakers focus only on cooling labor costs, they might be tempted to cut rates aggressively. This could leave financial conditions too loose, risking asset bubbles or a resurgence of inflation. Fed Governor Stephen Miran recently told Bloomberg Television he supports cutting the benchmark rate by another 150 basis points this year, to a range of 2% to 2.25%, arguing that current policy is restrictive and inflation is under control.

Yet, there are signs of lingering price pressures. A separate report from the Federal Reserve Bank of New York showed that consumers expect inflation to be 3.42% over the next year, up from 3.20% in the previous survey and well above the central bank's 2% target. After five years of elevated prices, these expectations could become a self-fulfilling prophecy if not managed carefully.

Given that both the future of productivity and the neutral interest rate are fundamentally unknowable, the most prudent path forward is a cautious one. The Fed should proceed slowly, waiting for more data on productivity, inflation, and the labor market. Central banking demands humility, especially on the cusp of a potential technological revolution.

The United States has officially pulled out of the Green Climate Fund (GCF), a major international climate institution based in South Korea, the Treasury Department announced Thursday. The decision is effective immediately.

This move comes just one day after President Donald Trump signed a memorandum to exit 66 global organizations identified as running contrary to U.S. interests.

Immediate Withdrawal from the GCF

In a formal notification to the Green Climate Fund, the Treasury Department confirmed the U.S. would not only withdraw from the fund but also give up its seat on the GCF board.

The GCF, headquartered in Incheon, was established in 2010 under the U.N. Framework Convention on Climate Change (UNFCCC). Its primary mission is to support developing nations in their efforts to mitigate and adapt to climate change. The Trump administration's withdrawal from the GCF is consistent with its previous decision to leave the UNFCCC.

Administration Cites Economic Priorities

The Trump administration justified the withdrawal by framing the GCF's objectives as incompatible with its own economic goals.

"Our nation will no longer fund radical organizations like the GCF whose goals run contrary to the fact that affordable, reliable energy is fundamental to economic growth and poverty reduction," said Secretary of the Treasury Scott Bessent.

The Treasury Department stated that continued U.S. participation was no longer consistent with the administration's priorities. It also reiterated a commitment to advancing all sources of affordable and reliable energy as essential tools for reducing poverty and fostering economic expansion.

A Broader Retreat from Global Pacts

The exit from the Green Climate Fund is part of a wider policy shift. On Wednesday, President Trump initiated the process to withdraw the U.S. from 66 international organizations, agencies, and commissions.

Secretary of State Marco Rubio explained that these organizations were flagged during a review of international bodies that the Trump administration considers "wasteful," "ineffective," and "harmful."

WASHINGTON (dpa-AFX) - After ending the previous session on opposite sides of the unchanged line, the major U.S. stock indexes are turning in another mixed performance during trading on Thursday.

While the Dow has moved back to the upside following yesterday's pullback, the tech-heavy Nasdaq has moved notably lower.

Currently, the Nasdaq is well off its worst levels of the day but still down 148.06 points or 0.6 percent at 23,436.21.

The S&P 500 is also down 4.34 points or 0.1 percent at 6,916.59, while the narrower Dow is up 179.84 points or 0.4 percent at 49,175.92.

The mixed performance on Wall Street comes as traders seem reluctant to make more significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 60,000 jobs in December after climbing by 64,000 jobs in November. The unemployment rate is expected to edge down to 4.5 percent from 4.6 percent.

The jobs data could have a significant impact on the outlook for interest rates ahead of the Federal Reserve's next monetary policy meeting later this month.

The Fed is widely expected to leave interest rates at its January 27th-28th meeting but is seen as likely to cut rates by at least another quarter point in the coming months.

Ahead of the monthly jobs report, a report released by the Labor Department this morning showed first-time claims for U.S. unemployment benefits edged up by slightly less than expected in the week ended January 3rd.

The Labor Department said initial jobless claims crept up to 208,000, an increase of 8,000 from the previous week's revised level of 200,000.

Economists had expected jobless claims to rise to 210,000 from the 199,000 originally reported for the previous week.

Sector News

Housing stocks have shown a strong move back to the upside after falling sharply on Wednesday, with the Philadelphia Housing Sector Index surging by 2.7 percent.

A sharp increase by the price of crude oil is also contributing to significant strength among oil service stocks, as reflected by the 1.9 percent jump by the Philadelphia Oil Service Index.

On the other hand, semiconductor, computer hardware and networking stocks have shown significant moves to the downside, contributing to the drop by the tech-heavy Nasdaq.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong's Hang Seng Index slumped by 1.2 percent.

Meanwhile, the major European markets have moved slightly higher on the day. While the French CAC 40 Index is up by 0.2 percent, the German DAX Index is up by 0.1 percent and the U.K.'s FTSE 100 Index is just above the unchanged line.

In the bond market, treasuries have moved back to the downside amid concerns about the national debt. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.7 basis points at 4.175 percent.

Source: TradingView