The rate at which carbon dioxide is accumulating in the Earth's atmosphere slowed in June 2025, reversing a brief uptick in the previous month's data. The change resumes a downward trend that has been in place since the end of 2024.

This period coincides with slowed output within China's economy. Much of this negative change occurred in response to new and expanded tariffs and trade sanctions imposed by the United States. 2024 had seen elevated carbon dioxide emissions arise out of China as the nation's factories rushed to meet orders for goods to beat the clock on the outgoing Biden administration's final trade restrictions and expanding tariffs expected to take effect in January 2025.

In April 2025, the Trump administration rolled out its global tariff program, which continued the downward pressure on China's industrial sector. Reuters describes several of the factors contributing to the nation's reduction in CO₂ emissions:

The latest tariffs imposed by U.S. president Donald Trump on Chinese products have impacted the demand for China-made goods and caused production lines to slow down across a variety of manufactured items.

The overall energy needs of these industries have been reduced by the slower pace on construction sites and production lines in factories. This has allowed power generation companies to reduce their production.

These dynamics have shown up in the pace at which carbon dioxide accumulates in the Earth's atmosphere because China is, by far and away, the world's largest producer of CO₂ emissions. The following chart shows how the trailing twelve month average of the year-over-year change in the concentration of atmospheric carbon dioxide measured at the remote Mauna Loa Observatory has evolved from January 2000 through June 2025:

Because the industrial sector of China's economy has slowed so much since the end of 2024, the reduction of demand for electrical power is expected to reduce China's CO₂ emissions to a "record low". Here's Reuters again:

China's utilities have been able to achieve record-low emissions in the first half of 2025 by focusing on clean energy supplies.

According to the energy portal, electricitymaps.com, carbon dioxide emissions per Kilowatt Hour (kWh) of Electricity averaged 492 Grams during the first half of 2025.

This was the first time a reading under 500 grams per kWh had been recorded. It is also down from 514g/kWh in the same period of 2024, and 539g/kWh between January and June 2023.

With a large portion of its industries running at reduced capacity, China has been able to use a larger share of its renewable energy sources to provide power, reducing its CO₂ emissions by significant amount. Reuters indicates however that an improvement in fortune for China's industrial sector will reverse that achievement:

China's power requirements will rise if the manufacturing and construction sectors recover. This will lead to a return of fossil fuels that emit pollution.

If China's economy is still slowed by the construction debt and the tariff concerns, then the use of fossil fuels could be further reduced, which would lead to further emissions reductions from the power sector.

Carbon dioxide is not the only kind of emission that is being reduced. The reduction of China's economic output during 2020's Coronavirus Pandemic also reduced emissions of aerosols, which a new study indicates contributed to an acceleration of global warming. Here's the abstract from the recently published paper:

Global surface warming has accelerated since around 2010, relative to the preceding half century¹–³. This has coincided with East Asian efforts to reduce air pollution through restricted atmospheric aerosol and precursor emissions₄–₅. A direct link between the two has, however, not yet been established. Here we show, using a large set of simulations from eight Earth System Models, how a time-evolving 75% reduction in East Asian sulfate emissions partially unmasks greenhouse gas-driven warming and influences the spatial pattern of surface temperature change. We find a rapidly evolving global, annual mean warming of 0.07 ± 0.05 °C, sufficient to be a main driver of the uptick in global warming rate since 2010. We also find North-Pacific warming and a top-of-atmosphere radiative imbalance that are qualitatively consistent with recent observations. East Asian aerosol cleanup is thus likely a key contributor to recent global warming acceleration and to Pacific warming trends.

It's not yet clear how economists and environmentalists feel about the role of tariffs operating as a de facto carbon tax that reduces carbon dioxide emissions along with economic activity or to the reduction of the emissions of aerosol pollutants and the resulting cleaner air contributing to global warming.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Online Data]. Updated 14 July 2025.

Samset, B.H., Wilcox, L.J., Allen, R.J. et al. East Asian aerosol cleanup has likely contributed to the recent acceleration in global warming. Commun Earth Environ 6, 543 (2025). DOI: 10.1038/s43247-025-02527-3.

Image credit: Friedlingstein, Pierre et al. Global Carbon Budget 2024. GtCO2 slidedeck PDF. 14 March 2025.

The S&P 500 (Index: SPX) kept marching on to new heights in the trading week ending on Friday, 18 July 2025. The index hit a new record high of 6,297.36 on Thursday before dipping to 6,296.79 to end the week about 0.6% higher than the previous week's close.

That's despite the ongoing debate among Federal Reserve officials on how to set interest rates. Inflation data released during the week continues to defy the belief of some Fed officials that tariffs will someday cause widespread inflation, which would push the Fed to keep rates higher, while others are growing concerned by the slowing growth of the U.S. economy, which would prompt the Fed to lower interest rates.

Speaking of slowing growth, the Atlanta Fed's GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 declined to +2.4% from the +2.6% level it forecast a week earlier. The forecast for growth in the current quarter has been slowing throughout the quarter.

With the Fed's Open Market Committee meeting next week, the CME Group's FedWatch Tool is projecting the Fed will continue to hold the Federal Funds Rate in a target range of 4.25-4.50% until its 17 September (2025-Q3) meeting when it is expected to cut the rate by a quarter percent. Beyond that date, the FedWatch tool anticipates additional quarter point rate cuts at 12-week intervals on 10 December (2025-Q4), 18 March (2026-Q1), and 17 June (2026-Q2).

For the alternative futures-based model, the growing attention on what the Fed will be doing with interest rates appears to have prompted a shift in the forward-looking focus of investors from 2026-Q2 toward the nearer-term future quarter of 2026-Q1.

Here are the market-moving headlines, such as they were, on the trading week ending on Friday, 18 July 2025.

Monday, 14 July 2025

• Signs and portents for the U.S. economy:
• Trump intensifies trade war with threat of 30% tariffs on EU, Mexico
• Trump demands more concessions as EU holds off on US tariff countermeasures
• Trump tariffs would lift US factory jobs, cut overall income, San Francisco Fed says
• Oil falls 1% as Trump gives Russia 50 days to avoid new sanctions
• Fed minion says they see no reason to cut interest rates now:
• Fed's Hammack sees no urgent reason to lower rates - Fox Business
• Bigger trouble, stimulus developing in China:
• China's exporters rush to beat Trump's next big tariff deadline
• Eurozone minions looking for US trade deal, ECB minions expected to pause rate cuts:
• EU to push for deal with U.S, to avoid prohibitive tariff
• EU ready to hit US with 21-bln-euro tariff list, Italy foreign minister says
• Don't panic: Europe Inc cautions calm as bloc tries to avert 30% US tariffs
• Exclusive: Tariff threat complicates ECB's July decision but won't derail pause to rate cuts, sources say
• Wall Street closed slightly higher as investors now brace for inflation and earnings data
• Wall Street ends with modest gains as investors await earnings, economic data

Tuesday, 15 July 2025

• Signs and portents for the U.S. economy:
• US consumer prices pick up in June; underlying inflation still tame
• CPI rises 0.3% M/M as expected in June; core CPI rises slightly less than consensus
• Oil holds steady as Trump's 50-day deadline for Russia eases supply fears
• Chief Fed minion's job in jeopardy, other minions starting to think tariffs won't cause much inflation:
• US Treasury Secretary Bessent says ‘formal process’ for Powell successor has started, Bloomberg News reports
• Fed's Powell asks for watchdog review of project criticized by Trump officials
• Investors seek protection from risk of Fed chief's ouster
• Fed's Collins urges patience on rates, says tariff hit may be more modest
• Fed's Logan sees holding rates steady a while longer
• Bigger trouble, stimulus developing in China:
• China's economy slows as consumers tighten belts, US tariff risks mount
• VIEW China's Q2 GDP grows 5.2% y/y, above market forecast
• China home prices fall at fastest pace in 8 months, stimulus calls rise
• ECB minions wish they had a 'steady hand':
• ECB's Nagel calls for 'steady hand' amid tariff turmoil
• Wall Street closed mixed as the latest inflation and bank earnings data arrived
• Traders stick to bets on September Fed rate cut after inflation report

Wednesday, 16 July 2025

• Signs and portents for the U.S. economy:
• US producer prices unchanged; tariffs raise goods costs
• 'Cool' US Producer Prices Blow Up Tariff-Flation Narrative
• Oil eases 1% as US fuel stock builds put focus on demand
• US manufacturing output edges up in June
• Chief Fed minion's job in jeopardy, or not; another Fed minion claims inflation rising, but Fed's survey of businesses doesn't see it:
• Trump says he is not planning to fire Fed's Powell
• Trump indicated to Republican lawmakers he will fire Fed's Powell, CBS reports
• Fed's Bostic: Recent data show price pressures may be building
• Beige Book Spells Trouble For Powell: Mentions Of "Inflation" Tumble To 4 Year Low, As Growth Concerns Mount
• US economic activity rises but outlook pessimistic, Fed says
• Bigger trouble, stimulus developing in China:
• Beneath China's resilient economy, a life of pay cuts and side hustles
• Wall Street ends higher after brief slump on Powell firing confusion
• Wall Street closed in the green as Trump targets Powell and softer PPI data arrived

Thursday, 17 July 2025

• Signs and portents for the U.S. economy:
• US retail sales growth, steady job market bolster Fed's rate-cut delay
• Oil jumps after further drone attacks on Iraq oil fields
• US import prices rise marginally in June
• Fed minions still planning to hold rates steady this month, still claiming tariffs will cause significant inflation, but thinking about cutting rates in months ahead and need better way of doing business:
• Fed's Kugler: No rate cut for some time as tariffs pass through to prices
• Fed's Williams says tariff economic impact is only just starting
• Fed's Williams won't comment on Trump attacks on central bank
• Fed's Bostic: Recent data show price pressures may be building -Fox Business
• Fed's Daly says 'reasonable' to expect two rate cuts before end of 2025
• Ex-Fed Governor Warsh says new accord between Treasury, central bank needed
• Bigger CO2 emissions developing in China:
• China's record-breaking heat pushes power demand to new high
• BOJ minions get reason to stop rate hikes, JapanGov minions negotiating tariffs with US:
• Japan's exports drop as US tariffs hit automobiles, pressure set to intensify
• Japan exports drop 0.5% y/y in June
• Japan holds US tariff talks with Lutnick, eyes meeting with Bessent
• Trump says US will stick to 25% tariff on Japan, may have deal with India soon
• Eurozone minions see lurking gloom from US tariffs, ECB minions think economy looks steady:
• US tariffs would eat up German growth this year and next, Bundesbank chief says
• Euro zone economy, ECB outlook steady despite US tariff threats: Reuters poll
• S&P 500, Nasdaq notch record closes as retail sales and earnings fuel rally
• Wall Street lifted as data, corporate earnings show consumer strength

Friday, 18 July 2025

• Signs and portents for the U.S. economy:
• US single-family homebuilding hits 11-month low; building permits slump
• Trump signs stablecoin law as crypto industry aims for mainstream adoption
• Trump pushes for 15-20% minimum tariff on all EU goods, FT reports
• Oil steadies as mixed US economic and tariff news offset new Russia sanctions
• US drillers add oil/gas rigs for first time in 12 weeks, Baker Hughes says
• Potential replacement Chief Fed minion pushes for rate cut, other Fed minion signals will use new tariff announcement as rationale opposing rate cut:
• Fed’s Waller pushes for July rate cut
• Waller says he's willing to lead Fed if Trump asks, but no contact so far
• Fed's Goolsbee: new tariff announcements may delay rate cuts
• Fed's rate-cut delay intact as inflation fears override Trump pressure
• https://www.reuters.com/world/us/feds-powell-responds-white-house-fed-headquarters-renovation-2025-07-17/
• Bigger trouble, stimulus developing in China:
• China says successful US trade talks make return to tariff war unnecessary
• China moves to encourage foreign reinvestment as FDI slumps
• China expected to keep lending rates steady, focus turns to Politburo meet
• Chinese automakers should pursue 'rational competition' in EV industry, official says
• Stocks retreat from recent highs to end mixed as more Trump tariffs weigh on markets
• S&P, Nasdaq end on subdued note after brief dip on latest Trump tariff rumbling

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of two Federal Reserve officials having an animated discussion about whether to cut US interest rates. One is pointing to a chart that says 'SLOWING ECONOMY' the other is pointing to a chart that says 'TARIFFS MAY CAUSE INFLATION SOMEDAY'."

Over the last few years, Artificial Intelligence (AI) systems in the form of chatbots have become widespread. Over the same time, they have been improving.

But what are they? And how do they work?

The answers to those questions can go a long way to explaining how much can you trust this remarkable and evolving technology. 3Blue1Brown's Grant Sanderson put together a fantastic video introduction into what these AI systems are and how they work.

How AI chatbots work is remarkable, but those workings come with some notable limitations. Although AI chatbots rely on some pretty sophisticated math to do what they do, they're not terribly good at actually doing math. At least not quite yet. This is one of the areas in which the capabilities of AI systems are being expanded and progress is being made.

Likewise, AI systems that use Large Language Models (LLM) designed to sequentially predict the next word in their responses to prompts aren't very good at inferring how those words might realistically relate in a scenario beyond how it encountered them in its training. You can see this by giving an AI system a simple mystery to solve. Like one from G.T. Karber's Murdle Jr.

Short of specifically training an LLM with the mysteries and solutions that it will be given to solve, it's not likely a generally-trained AI chatbot will be capable of reliably performing that task any better than a system that randomly picks out a suspect, murder weapon, and room from a game of Clue. While they might be able to assemble words together into something that looks and sounds like a solution to these kinds of puzzles, AI systems cannot infer how the words they really connect in scenarios they haven't been spoon fed.

On the other hand, if you know how the LLMs behind AI chatbots work, you can probably use them more effectively to perform the kinds of tasks they can be good at, such as summarizing information contained within the sources on which it has trained. Like any tool, the best results come from knowing how to use them.

The climbing limo method of forecasting future GDP in the United States projects the nation's economic output in the recently finished second quarter of 2025 will be around $30.5 trillion.

This estimate assumes the momentum the U.S. economy recorded in growing between 2024-Q1 and 2024-Q3 will be sustained through the current quarter. Unfortunately, the U.S. economy's momentum has been slowing, which suggests GDP for 2025-Q2 will come in below that estimate.

Speaking of which, that exact scenario played in the first quarter of 2025, which we can confirm with the third estimate of that quarter's GDP that was reported on 26 June 2025. The climbing limo method had forecast the economy would U.S. grow $30.1 trillion in nominal, non-inflation adjusted terms, which we projected three quarters ago. The actual figure came in at $30.0 trillion, which is not far off from that projection, but still undershoots it. This outcome confirms the nation's nominal economic growth has slowed.

We're citing these figures as if they're fully fixed, but they are still subject to annual revisions. The Bureau of Economic Statistics typically performs an annual revision for its GDP data sometime during the third quarter of each year, most often in July. When it does, we'll regenerate all the climbing limo forecasts based on how the official data changes.

Until then, the following chart shows the climbing limo method's forecast against the recorded nominal GDP over the past 12 quarters for which GDP data has been finalized outside of the BEA's annual revisions.

Regardless of revisions, the GDP data for 2025-Q2 will be something to watch because of the global tariff war that erupted on 2 April 2025 at the start of the quarter. The tariff war may have something of a wild card effect on the U.S. economy's growth trajectory, hinging on multiple factors that have been playing out within the economy during the last few months.

References

U.S. Bureau of Economic Analysis. National Income and Product Accounts. Table 1.1.5. Gross Domestic Product. [Online Database]. Accessed 26 June 2025.

Political Calculations. Forecasting GDP Using the Climbing Limo. [Online Tool]. 10 May 2005.

Image Credit: Microsoft Copilot Designer. Prompt: "A long limousine driving up a bumpy chart showing GDP growth".

The outlook for the S&P 500's dividends in the current and remaining quarters of 2025 improved in the month since we presented our previous snapshot of their future.

The amount of dividends expected to be paid out in each of these quarters has risen above the levels recorded on 13 June 2025, but by varying amounts. Both the recently ended quarter of 2025-Q2 and the now current quarter of 2025-Q3 saw small increases. The fourth quarter of 2025 however is projected to have a much larger gain than was forecast in the previous month.

Here are the projections recorded as of the close of trading on Monday, 14 July 2025.

• 2025-Q2: Increase of $0.14, rising to $19.35 per share
• 2025-Q3: Increase of $0.13, rising to $19.26 per share
• 2025-Q4: Increase of $0.49, rising to $19.76 per share

The following animated chart shows how expectations for the S&P 500's quarterly dividends per share changed in the month from 13 May 2025 to 14 July 2025. If you're reading this article on a site that republishes our RSS news feed, you may need to click through to our site to see the animation.

How changes in the outlook for dividends at specific points of time in the future contribute to changes in stock prices is described by this math.

More About Dividend Futures Data

For this series, we have been taking a snapshot of the CME Group's S&P 500 quarterly dividend futures data shortly after the second or third week of each month.

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarter's dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the now "current" quarter of 2025-Q3 began on Saturday, 21 June 2025 and will end on Friday, 19 September 2025. From the perspective of dividend futures, 2025-Q4 will become the current quarter on Saturday, 22 September 2025.

Because dividend futures are tied to options contracts that run on this schedule, that makes these figures different from the quarterly dividends per share figures that are reported by Standard and Poor. S&P reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Dividends' written above it, which we added.