The art of balancing: the Fed, Congress and the US economy in spring 2025


 The world of finance is anything but calm today. Like a stormy sea, the American market is shaken by waves of change, and the horizon is clouded with uncertainty. Spring 2025 has brought a whole bouquet of economic challenges that could reshape the financial landscape not only of the United States but of the entire world. Let’s take a look at the main trends defining the economic reality of this spring.

Dancing on the Edge: The Specter of a Government Default

Like the sword of Damocles, the threat of reaching the U.S. government debt ceiling hangs over the American economy. The U.S. Treasury is sounding the alarm, though Treasury Secretary Scott Bessent assures the public:

“The U.S. government will never allow a default. We will raise the debt ceiling. The Treasury will not perform any tricks; we will ensure the debt ceiling is increased.”
(Izvestia, May 6, 2025)

U.S. government debt has already surpassed $36 trillion—a staggering figure (Lenta.ru, May 6, 2025). If Congress does not decide to raise the debt ceiling, a technical default could become a reality as early as July this year. Bloomberg analysts warn:

“A U.S. default could be declared as early as mid-July 2025 if Congress refuses to raise the government debt limit.”

Trade Wars: A New Stage of Confrontation

President Donald Trump, true to his “America First” policy, has launched a new wave of protectionism. The newly imposed import tariffs, reaching up to 185% in some cases and 30–55% for certain countries, are intended to bring manufacturing back to American soil and create new jobs. According to the Treasury, these measures could bring in $300 to $600 billion annually (Lenta.ru, April 4, 2025).
Treasury Secretary Scott Bessent notes:

“Could it be somewhere between $300 and $600 billion a year? Absolutely.”

However, every decision has a chain of consequences, and this initiative has already met with retaliatory measures from trading partners. Canada, Mexico, and China have announced preparations for counter-tariffs (Voice of America, March 2025).

The Dollar: The End of the “Safe Haven” Era?

At the spring meetings of the IMF and World Bank, the specter of a crisis of confidence in the dollar was in the air. For the first time in a long while, there is a mass sell-off of U.S. Treasuries and a weakening of the “greenback” on global markets (WSWS.org, May 2, 2025).
Scott Bessent tried to reassure the world community:

“The U.S. wants a strong dollar, and it is still profitable to hold.”

However, as Citigroup’s chief economist Nathan Sheets notes:

“People are playing out scenarios that once seemed unthinkable, and they are doing so very seriously, in the spirit of preparing for a major crisis.”

Bears on Wall Street: The Stock Market in the Red Zone

The American stock market, which was recently setting records, has entered a so-called “bear phase.” The Dow Jones index suffered a dramatic drop of more than 2,200 points in April amid escalating tariff wars (Marketinfo.pro, April 2025).
As of May 7, 2025, the Dow Jones Industrial Average stands at 41,050 points—significantly below the peak of 45,067 points reached in November 2024 (LiteFinance, May 2025).

The S&P 500 also shows signs of fatigue, trading at 5,639 points after peaking at 6,144 points (LiteFinance, May 2025).
The tech-heavy NASDAQ, while still in a long-term uptrend, has not escaped a correction.

Federal Reserve Chairman Jerome Powell does not hide his concern, warning of the risks of both accelerating inflation and slowing economic growth:

“We are facing a unique dilemma: inflationary pressure and signs of a cooling labor market require us to be as flexible and cautious as possible.”
(CNBC, March 2025)

Forecasts Darken: Rating Agencies Sound the Alarm

Leading rating agencies are revising their forecasts downward. Fitch has lowered its expectations for U.S. economic growth in 2025 (Finam.ru, March 2025), and Moody’s warns of the risk of declining economic activity due to rising costs and regulatory instability (Profinance.ru, March 2025).

A New Philosophy of Consumption: The “No Buy” Era

Amid economic uncertainty, a new philosophy of consumption—No Buy—is gaining popularity among Americans, encouraging people to forgo non-essential purchases and focus on paying down debt (Voice of America, March 2025). This reflects growing consumer caution as the economic storm approaches.

Sector Analysis: Who Will Weather the Storm?

The technology sector, despite the correction, remains the locomotive of the American economy. The “Big Seven” companies (Apple, Microsoft, Google, Amazon, and others) show stable financial results, though investors are becoming wary of potential overvaluation and the threat of tighter regulation.

The industrial and transportation sectors have come under pressure from the tariff war and rising production costs. Companies with global supply chains are particularly vulnerable.

The financial sector remains relatively stable, but bond market volatility and a potential rise in loan defaults create additional risks for banks.

Energy companies show mixed dynamics: traditional players benefit from rising commodity prices, while “green” energy faces uncertainty due to changes in subsidy policies.

The consumer sector is under pressure as Americans become more frugal. Retailers and consumer goods manufacturers are forced to revise their forecasts downward.

Looking Ahead: The Horizons of the American Economy

Despite the current correction, the long-term prospects for the U.S. market remain moderately positive. Analysts predict a possible recovery and even growth of the S&P 500 index to 6,800–7,000 points by the end of the year (LiteFinance, May 2025).
However, the path to these heights will be strewn with risks: from a possible default and the consequences of trade wars to inflationary pressures and political uncertainty.

In this economic drama, the main actors remain the Federal Reserve, which must balance curbing inflation and supporting economic growth, and the U.S. Congress, whose decisions will determine the fate of the national debt.

Summary:
Spring 2025 will undoubtedly go down in history as a period of serious trials for the American economy—a period that will define economic trends for years to come. Like captains of a ship in a stormy sea, investors and businesspeople will need wisdom, patience, and strategic thinking not only to preserve but also to grow their capital in these turbulent times.

Sources:

· Lenta.ru: U.S. Alarmed by Default Risk

· Izvestia: U.S. Treasury Secretary Rules Out Default

· LiteFinance: Dow Jones Forecast for 2025

· LiteFinance: S&P 500 Forecast for 2025

· Marketinfo.pro: U.S. Economic News

· WSWS.org: Dollar Crisis at IMF Meeting

· Finam.ru: Fitch Lowers U.S. Growth Forecast

· Profinance.ru: Moody’s Warns of Worsening Prospects

· Voice of America: U.S. Economy

· Investing.com: What Could Go Wrong in the U.S. Economy in 2025

 #экономика #финансы #США #фондовый рынок #инвестиции #рыночные индексы #2025

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