Flash US PMI signals strong start to fourth quarter

The headline S&P Global US PMI Composite Output Index rose from 53.9 in September to 54.8 in October, according to the ‘flash’ reading (based on about 85% of usual survey responses). The latest reading is the highest since July and signals an acceleration of growth to a pace just above the third quarter average. Output has now risen continually for 33 months.

The service sector continued to report especially robust growth, posting the fastest expansion since July and the second-strongest increase so far this year. Inflows of new orders for services likewise improved, rising at the steepest rate seen in 2025 to date. While service providers reported signs of improving domestic demand, exports of services fell back into decline after modest growth in September.

Higher output was also reported in manufacturing, where production volumes rose for a fifth consecutive month. The expansion of factory output was the largest since August, and the second steepest since February, buoyed by the sharpest influx of new orders for just over one-and-a-half years.

However, the upturn in orders was driven by the domestic market, as export orders for manufactured goods fell sharply, dropping at the sharpest rate since February. Companies reported falling sales to markets including China and Europe, often blamed on tariff policies.

Employment rose for the tenth time in the past 11 months, with the rate of job creation improving on September’s recent low and broadly in line with the average for the year to date. An upturn in service sector job creation, albeit remaining only modest, was accompanied by slower job gains in manufacturing.

In both cases, employment growth was curtailed by a lack of suitable candidates to replace leavers but also reflected concerns over staffing needs given current sales levels and uncertainty over the demand outlook. Manufacturers reported the steepest drop in backlogs of work recorded so far this year, hinting at excess production capacity. In the service sector, outstanding business rose at the slowest rate for six months.

With backlogs of work falling, manufacturers reduced their input buying in October, though some factories continued to accumulate inventories to avoid potential price rises linked to future tariffs. Inventories of purchases rose only marginally as a result, increasing at a much-reduced rate compared to the strong tariff-related stock building reported earlier in the year.

Inventories of inputs were also again used to produce more finished goods stock, which rose at an unprecedented rate in the survey’s 18-year history during October. Warehouse stocks have now risen five times in the past six months.

Input cost inflation remained elevated in October, running below the highs seen earlier in the year but picking up slightly since September. Despite being the lowest since February, manufacturing input price inflation remained especially high, once again widely attributed to tariffs.

Service sector cost inflation meanwhile was the highest for three months, registering one of the steepest increases seen over the past two years. Higher wage costs reportedly often added to the inflationary impact of tariffs on purchased input costs.

Although overall input cost inflation accelerated slightly in October, overall average prices rose at the slowest rate since April. Firms across both manufacturing and services often reported difficulties passing higher costs on to customers in the face of subdued demand and intense competition.

In terms of prices charged, while service sector inflation eased especially sharply, to its lowest since April, goods price inflation accelerated since September but remained below rates seen in the preceding six months.

Expectations about year ahead output fell from September’s four-month high, dropping to one of the lowest seen over the past three years. Manufacturing optimism sank to the second lowest since June 2024, with only April having witnessed lower business sentiment. Service sector optimism also deteriorated and remained well below the survey’s long-run average.

Outlook concerns again centered on the detrimental impact of government policies, notably tariffs, and broader political uncertainty, though some manufacturers again often cited tariffs as a possible stimulus to domestic production. Both sectors also saw business growth expectations supported by lower interest rate policy.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:

“October’s flash PMI data point to sustained strong economic growth at the start of the fourth quarter, with business activity picking up momentum across both manufacturing and services despite some reports of businesses being adversely impacted by the government shutdown. The survey data are consistent with the economy expanding at a 2.5% annualized rate in October after a similar rise was signalled for the third quarter.

“However, business confidence in the outlook for the coming year has deteriorated further, and is at one of the lowest levels seen over the past three years as companies worry about the impact of policies, most notably tariffs. Companies are also concerned over disappointing export sales, especially in manufacturing, and factories are seeing an unprecedented rise in unsold stock. Having bought excess inputs earlier in the year to front-run tariffs, producers are making more goods to use up these inputs but are often struggling to sell the end product to customers.

“Hence, although input costs continued to rise sharply again in October, principally reflecting the pass-through of tariffs, average selling price inflation has cooled to the lowest since April as firms compete on price to win sales.”

Puzzling report:

• The flash PMI “signals an acceleration of growth to a pace just above the third quarter average” (2.5%)
• Manufacturers saw the “sharpest influx of new orders for just over one-and-a-half years.”
• New orders at service providers are “rising at the steepest rate seen in 2025 to date.”
• Yet, manufacturers reported the “steepest drop in backlogs of work recorded so far this year, hinting at excess production capacity.”
• Finished goods inventories, up in 5 of the last 6 months, “rose at an unprecedented rate in the survey’s 18-year history during October”.
• “Firms across both manufacturing and services often reported difficulties passing higher costs on to customers in the face of subdued demand and intense competition.”

So, how strong is the economy when backlogs are dropping steeply, finished goods inventories are exploding and businesses can’t pass “higher costs on to customers in the face of subdued demand and intense competition.”

Could it be that the tariffs saga disrupted the purchasing/production/selling process so much that it created an illusion of demand growth that was really only inventory accumulation now facing slow domestic demand and declining exports?

Indeed Job Postings keep falling through October 17, down almost 4% since August 23rd, and 3.4% since the latest official JOLTS report (August).

September CPI: An Oasis in the Data Desert

An unusual CPI Friday came in softer-than-expected for the month of September. CPI growth moderated to a 0.3% increase over the month, which was still strong enough to lift the year-over-year rate to 3.0%, the highest reading since January. A 4% monthly jump in gasoline prices kept the heat turned up on headline inflation. Despite the gain in gas prices, prices for electricity and utility gas services declined 0.7%, continuing a streak of three months of decline and tempering the rise in overall energy prices. Food inflation remained on its moderating trend, with grocery prices rising 0.3%, down from a 0.6% gain in August. (…) Forward-looking measures of commodity prices suggest food inflation will continue to cool in the coming months, as stronger yields and softer export demand have reduced food producers’ pricing power.

Source: U.S. Department of Labor and Wells Fargo Economics

Source: U.S. Department of Labor and Wells Fargo Economics

Excluding food and energy, the core CPI rose 0.2% in September (0.23% unrounded). (…) Core goods inflation moderated a touch, rising 0.22%, sightly softer than the 0.28% advance in August. The pullback was driven by used vehicle prices, which fell 0.4% after a 1% gain the prior month. New vehicle prices were firmer at +0.2%, while apparel prices posted the second consecutive robust reading at +0.7%.

The three-month annualized rate for apparel prices has now risen to 5.3%, the highest since April 2024 in a potential sign of tariffs having an impact on prices for imported goods. Through the month-to-month noise, core goods inflation continues to creep higher.

Services inflation showed clearer signs of moderation. Core services prices rose 0.24%, down from 0.35% in August. The slowdown was led by primary shelter, which receded to a 0.15% gain from an unexpectedly strong reading in August. Owners’ equivalent rents in particular were soft, rising just 0.1%, the softest reading since November 2020. Looking through the monthly volatility, the slowdown in primary shelter inflation has played a key role in the disinflation of the past couple years, and price growth in this sector is nearly back to its pre-pandemic pace where we expect it to stick going forward.

Elsewhere in core services it was a mixed bag, with airfares (+2.7%) and lodging away from home (+1.3%) coming in a bit hotter than we expected but motor vehicle insurance (-0.4%) coming in weaker than expected. (…)

Source: U.S. Department of Labor and Wells Fargo Economics

Source: U.S. Department of Labor and Wells Fargo Economics

Inflation appears to be neither spiraling out of control nor imminently returning to 2%. The year-over-year change in the core CPI held steady at 3.0% (3.1% NSA) in September, and the three-month annualized rate also held firm at 3.6%. The disinflation of 2023-2024 seems to have stalled out this year, and the underlying pace of consumer price growth appears stuck around 3%.

We are probably not yet past the peak impact on price growth from tariffs, which in our view will not be in the rear view mirror until sometime in the first half of next year.

EARNINGS WATCH

143 companies in the S&P 500 Index have reported earnings for Q3 2025. Of these companies, 87.4% reported earnings above analyst expectations and 10.5% reported earnings below analyst expectations. In a typical quarter (since 1994), 67% of companies beat estimates and 20% miss estimates. Over the past four quarters, 77% of companies beat the estimates and 18% missed estimates.

In aggregate, companies are reporting earnings that are 8.2% above estimates, which compares to a long-term (since 1994) average surprise factor of 4.3% and the average surprise factor over the prior four quarters of 7.1%.

Of these companies, 81.9% reported revenue above analyst expectations and 18.1% reported revenue below analyst expectations. In a typical quarter (since 2002), 62% of companies beat estimates and 38% miss estimates. Over the past four quarters, 67% of companies beat the estimates and 33% missed estimates.

In aggregate, companies are reporting revenues that are 2.4% above estimates, which compares to a long-term (since 2002) average surprise factor of 1.3% and the average surprise factor over the prior four quarters of 1.5%.

The estimated earnings growth rate for the S&P 500 for 25Q3 is 10.4%. If the energy sector is excluded, the growth rate improves to 11.2%.

The estimated revenue growth rate for the S&P 500 for 25Q3 is 6.7%. If the energy sector is excluded, the growth rate improves to 7.3%.

The estimated earnings growth rate for the S&P 500 for 25Q4 is 7.9%. If the energy sector is excluded, the growth rate improves to 8.2%.

Actually, the 143 companies having reported so far logged earnings up 17.0% on revenues up 7.6%.

Revenue growth is more than twice actual inflation and much above wage growth rates, hence the extraordinary jump in margins.

S&P Global’s PMI covers a full spectrum of company sizes. Obviously, the comments above about subdued demand and squeezed margins must not apply to the cohort of larger companies.

This is confirmed by this chart from Ed Yardeni showing that the smaller companies are not experiencing a profit boom, are they?

Eurozone new order growth hits two-and-a-half year high in October

The seasonally adjusted HCOB Flash Eurozone Composite PMI Output Index, based on approximately 85% of usual survey responses and compiled by S&P Global, rose to 52.2 in October from 51.2 in September, posting above the 50.0 no-change mark for the tenth consecutive month and signalling a solid monthly increase in business activity. The rate of expansion was the joint-fastest in just under two-and-a-half years, equal with that seen in May 2024.

Growth was recorded across both monitored sectors, and led by services where the latest increase in business activity was the strongest since August 2024. Manufacturing production rose for the eighth month running. The latest expansion was slight, but marginally quicker than that seen in September.

A solid increase in output was registered in Germany, where the pace of growth hit a 29-month high. Similarly, the euro area excluding Germany and France posted the fastest rise in activity for two-and-a-half years. Bucking the wider trend, France posted a fourteenth consecutive monthly reduction in output, and one that was the sharpest since February.

Companies often raised their business activity in response to a steeper increase in new orders during October as the pace of growth in new business reached the highest since April 2023. Here too, the overall expansion was led by the services sector, but manufacturing new orders broadly stabilised following a fall in September. While overall new orders increased at a faster pace at the start of the final quarter, new business from abroad continued to decrease. New export orders (which include intra-Eurozone trade) declined only slightly, however, and at one of the slowest rates since the current sequence of contraction began in March 2022

Encouraging trends in output and new orders contributed to a renewed increase in staffing levels during October, following a marginal fall in September. Employment has now risen in seven of the past eight months, with the increase in October the joint-fastest in 16 months, equal with that seen in August. Jobs growth was centred on the services sector, where the pace of job creation was the sharpest since June 2024. Meanwhile, manufacturing employment decreased at the fastest pace in four months.

Backlogs of work stabilised in October, thereby ending a period of depletion stretching back to April 2023. Service providers posted the first accumulation of outstanding business for a year-and-a-half, while manufacturing backlogs decreased slightly. Notably, Germany posted a first rise in work-in-hand since July 2022

The rate of input cost inflation eased for the second month running in October, dipping to a three-month low and coming in below the series average. Services input prices increased at a softer pace, while manufacturers posted a renewed rise in their cost burdens, albeit one that was only marginal.

While input costs increased at a slower pace at the start of the fourth quarter, the opposite was true with regards to output prices, which rose at the fastest pace in seven months. Manufacturers increased their selling prices for the first time in six months, joining the services sector in recording inflation. Service providers raised charges at a solid pace that was sharper than seen in September. Solid increases in output prices were registered in Germany and the euro area excluding the largest two economies, but French companies raised their charges only slightly amid deteriorating customer demand

Although Eurozone manufacturers continued to scale back their purchasing activity in October, the pace of decline eased from that seen in September. This was also the case with regards to stocks of inputs, but holdings of finished goods decreased at a faster pace than in the previous month. Meanwhile, suppliers’ delivery times lengthened solidly. Moreover, the rate of deterioration in vendor performance intensified for the fourth consecutive month and was the most pronounced for three years. Delivery delays were still much less marked than seen in the period following the COVID-19 pandemic, however

Despite stronger expansions in output and new orders in October, business confidence waned to a five-month low and was weaker than the series average. Weaker optimism in the 12-month outlook for output was signalled across both the manufacturing and services categories. Sentiment was relatively muted in Germany and France, but firms in the rest of the eurozone remained strongly confident that output will rise over the coming year

Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“France is increasingly becoming a drag on the eurozone economy. While the economic situation in Germany brightened significantly in October, the rate of contraction has accelerated for two months in a row in France. As a result, economic growth in the eurozone, even though accelerating a bit, has been much weaker than it otherwise could have been. Uncertainty about whether the current government under Sebastien Lecornu can remain in power for much longer in view of the disputes over the 2026 budget is causing unease and contributing significantly to the weak economic situation in France. As an important buyer of products and services from other eurozone countries, France’s weakness contributes to the fragility of the recovery in the rest of the eurozone.

Industry in the eurozone has been stagnating for practically six months. The marginal improvement in the headline PMI to 50 offers little hope of a turnaround. This is all the more true given that new orders have been similarly weak. In this environment, manufacturing companies have accelerated their workforce reductions in an effort to adapt to weaker demand conditions and become more efficient at the same time. Although companies have been able to pass through slightly higher prices to their customers, input prices have also risen somewhat, meaning that profit margins are unlikely to have increased significantly.

Inflation in the eurozone services sector remains moderate. The rate of inflation for sales prices has risen slightly, but remains close to the long-term average. Cost increases were slightly lower in October, so there is little danger from this side in the short term. The European Central Bank, which pays particular attention to inflation in the service sector, is likely to see this data as confirmation of its stance not to implement further interest rate cuts.”

Japanese business activity increases at slowest rate in five months amid renewed drop in sales

The headline seasonally adjusted S&P Global Flash Japan PMI Composite Output Index fell from 51.3 in September to 50.9 in October, to signal a further increase in overall private sector output across Japan. However, the rate of growth was the softest recorded in five months and only marginal.

Underlying data highlighted that the service sector continued to drive the overall upturn in output, as manufacturing production continued to contract. That said, the rate of services activity growth slipped to a four-month low in October, while factory output declined at a slightly faster pace.

At the composite level, overall new business declined for the first time in 16 months, albeit marginally. This was due to a combination of weaker sales growth in the service sector and the steepest reduction in new orders placed with manufacturers since February 2024. Foreign demand for Japanese goods and services meanwhile fell again in October, though the overall rate of decline was the slowest seen in four months and modest.

Japanese companies continued to increase their staff numbers in September, thereby stretching the current sequence of payroll growth to just over two years. That said, the rate of job creation was weaker than the average seen over this period, with both service providers and manufacturers recording only marginal increases in headcounts. Overall levels of outstanding business at Japanese firms meanwhile declined for the first time since May.

The latest survey pointed to stronger cost pressures across Japan’s private sector, with average input prices rising at a sharp and accelerated pace in October. Notably, operating expenses increased at quicker rates across both the manufacturing and service sectors, with panellists often linking this to higher labour, raw material and fuel costs and a weaker yen.

Consequently, both goods producers and service providers raised their average selling prices again in October. Overall, charges increased at a solid pace that was the quickest in three months.

Although firms across Japan remained generally confident that output will increase over the next 12 months, the degree of optimism edged down from September and was below the survey’s long-run average. Trends diverged by sector, as services companies were less upbeat about the year ahead while manufacturers were more confident.

China Commerce Minister Says US and China Can Find Solutions

(…) “The economic and trade consultations between China and the US fully demonstrate that based on mutual respect and equal consultation, China and the US can find solutions to address each other’s concerns,” Commerce Minister Wang Wentao said during a briefing on China’s next five-year plan. Wang also reiterated that China opposed decoupling and disrupting supply chains. (…)

• China Says Dutch Nexperia Seizure Places Supply Chain at Risk

China’s Commerce Minister warned that the Dutch state’s move to take control of Chinese-owned chipmaker Nexperia has “seriously affected” the stability of the global supply chain.

The minister, Wang Wentao, urged the Dutch to urgently resolve the issue, according to a Chinese government readout of a call with Dutch Economic Affairs Minister Vincent Karremans.

The Dutch government, separately, said it would remain in contact with Chinese authorities to work “toward a constructive solution.”

Talks between the two governments come a week after the Dutch state seized control of Nexperia using an emergency Cold-War era law. The company is a subsidiary of China’s Wingtech Technology Co. Ltd and a key supplier of mature chips used by the automotive and consumer electronics industries. The move heightened European trade tensions with Beijing, which retaliated by blocking Nexperia from exporting products from the company’s Chinese plant.

Chip shortages are likely to hit key suppliers within a week, while the impact could spread across the entire sector within 10 to 20 days, Bloomberg has reported, according to people familiar with the matter. (…)

Both parties “are fully aware the time is of the essence here as well,” he said. (…)

On Beijing’s recent measures to curb rare earth exports, Wang said it was a “normal practice to improve its export controls system, according to the ministry. He said China has consistently facilitated export approvals for EU companies.

China Vows to Double Down on Tech Self-Reliance as U.S. Rivalry Heats Up Beijing remains determined to hit the annual goal of around 5% growth in gross domestic product

The elites of China’s ruling party set out the goal in a communique issued after a four-day political gathering centered around charting the course for the world’s second-largest economy over the rest of the decade.

China will aim to “significantly improve” its autonomy in technology over the next five years, officials said after the high-level meeting—known as the fourth plenum—wrapped up Thursday.

The readout of the closed-door conclave also included a pledge to step up high-end manufacturing, another measure viewed as part of Beijing’s efforts to hold its own against the U.S.

As China’s population shrinks and ages, Beijing is betting on leapfrogging technological advance and innovation to boost productivity. Policymakers are increasingly seeing technological prowess as key to national security as geopolitical tensions rise.

Other key targets in the new five-year policy blueprint included forging a unified national market, bolstering domestic consumption, improving social welfare and modernizing the armed forces. (…)

They also pledged to step up policy support for the economy when necessary. (…)

Overseas renminbi lending surges as China steps up campaign to de-dollarise Beijing’s push for renminbi trade and investment will speed move from dollar-based to multi-polar monetary system, analysts say

(…) External renminbi loans, deposits and bond investments by Chinese banks quadrupled to more than Rmb3.4tn ($480bn) over the past five years, as policymakers more aggressively pursue their long-term goal of reducing the centrality of the dollar in global financial flows.

As part of this campaign, China is also opening more channels for foreign investors to buy renminbi-denominated bonds.

But officials have focused their efforts on boosting the renminbi’s role in trade, partly as a defence against policies enacted in the US and elsewhere that weaponise the dollar — such as this week’s EU sanctions targeting Chinese banks accused of helping Russia to secure weapons parts overseas.

“From China’s perspective, [settlement in renminbi] is important because it shows that no matter what happens, it can still trade,” said Adam Wolfe, emerging markets economist at Absolute Strategy Research in London. Recent data from China’s State Administration of Foreign Exchange shows the external fixed-income assets of Chinese banks more than doubling over the past decade to more than $1.5tn, with the share denominated in renminbi expanding rapidly to almost $484bn at the end of June. This includes $360bn of renminbi loans and deposits, up from $110bn in 2020.

Similarly, the Bank for International Settlements estimates that overseas bank lending in renminbi to borrowers in developing countries rose by $373bn in the four years to the end of March.  (…)

With interest rates in China relatively low, sovereign borrowers including Kenya, Angola and Ethiopia have converted old dollar debts into renminbi this year. Indonesia and Slovenia recently announced plans to issue renminbi bonds, and last month Kazakhstan’s development bank sold a Rmb2bn offshore bond at a yield of just 3.3 per cent.

A big part of the expansion in renminbi lending has been in trade finance. Data from cross-border payments system provider Swift shows that the renminbi’s share of global trade finance quadrupled over the past three years to 7.6 per cent in September, making it the second most-used currency in trade finance after the US dollar.

China has further bolstered the use of the renminbi overseas through a network of offshore clearing banks, both Chinese and foreign, and through swap lines with trading partners around the world. It comes as Beijing has pushed the use of its own cross-border payments system, Cips, where the value of transactions has risen from a negligible amount a decade ago to more than Rmb40tn in every quarter since the start of last year. Cips transactions have expanded even as the renminbi’s share of global payments on the Swift system has fallen.

Bert Hoffman, a professor at the National University of Singapore’s East Asian Institute, said this most likely indicated a migration of payments to the Chinese system — furthering Beijing’s desire to move away from a dollar-based global monetary system to a multi-polar one. Chinese officials believe that “a dollar-based system is inherently unstable and has disadvantages that a multicurrency system would not have,” Hoffman said.

Chinese customs data suggests such plans are advancing. It shows the value of Chinese trade transacted in renminbi soaring to more than Rmb1tn a month over the past decade, with about 30 per cent of China’s trade and more than half of its cross-border transactions now settled in renminbi.

China’s capital controls, however, have long hindered the renminbi’s international appeal — according to the IMF, it made up just 2.1 per cent of official reserves at the start of this year. One problem is a lack of readily available renminbi assets. Policymakers are moving to address this.

Hong Kong authorities have embarked on a plan to make the city a hub for fixed income and currency trading. Simultaneously, Beijing has opened its domestic interbank repo market to foreign investors, allowing them to use renminbi fixed-income assets as collateral for renminbi loans. The repo initiative “deals with some of the pain points for foreign investors”, said Karen Lam, head of Hong Kong securitisation and derivatives at law firm Simmons & Simmons. “It only makes sense for investors to allocate more into these assets if they are able to use them for more than just holding and generating an income.”

Last month, Hong Kong authorities announced a “road map” to bolster the city’s markets by supporting issuance and liquidity, particularly in renminbi. “It’s as significant as what Hong Kong did with the stock connect programmes,” said Paul Smith, head of markets for Japan, north Asia and Australia at Citi, referring to the channel connecting the Hong Kong stock exchange to mainland bourses. “Ultimately, it will accelerate the renminbi as a funding currency.”

Over the summer, Beijing broadened the scope of its bond connect programme to allow more mainland Chinese investors to invest in Hong Kong’s fixed income market, which Smith said connects offshore issuers of renminbi debt with a “deep pool of renminbi liquidity”.

Experts agree that China has little interest in the renminbi taking the place of the US dollar in the global financial system. But by boosting the renminbi’s involvement in international trade and investment, “China may get the best of both worlds,” said Smith at Citi. Beijing’s policies are bringing that target into view, analysts say. “The policy is moving very gradually, but all of the elements that would make a much more rapid internationalisation work — they’re falling into place,” said Hoffman.

Trump Terminates Trade Talks With Canada Over Reagan Tariff Ad

The ad in question comprises excerpts from an address Reagan gave in 1987 in which he defended the principles of free trade and slammed tariffs as an outdated idea that stifles innovation, drives up prices and hurts US workers.

Funded by the government of Ontario, the ad seeks to sow doubt among Republican voters by using one of the party’s most iconic voices.

Trump, however, said the move appears timed to interfere with a looming Supreme Court case challenging the legality of much of his signature foreign economic policy. The president has warned of disaster if the high court overturns his country-based tariffs, including forcing the government to refund companies billions of dollars in already-paid duties.

The court is scheduled to hear oral arguments in the case on Nov. 5.

The Ronald Reagan Presidential Foundation and Institute had criticized Ontario for running the ad, saying that they didn’t seek permission to use the remarks, and that “selective audio and video” in the ad “misrepresents” Reagan’s full address.

The remarks from Reagan backed his decision to tariff Japanese imports, while defending free trade and warning of the long-term effects from tariffs. (…)

Canada to Take ‘Bold’ Risks to Reset Economy, PM Carney Says The Canadian economy contracted in the second quarter on a deep drop in exports

(…) “To confront a more dynamic, competitive, and hostile world, we must chart a new course,” Carney said in remarks before students at the University of Ottawa on Wednesday. “We used to take big, bold risks in this country. It is time to swing for the fences again. That’s what the upcoming budget will be about.”

Carney revealed one of the budget plan’s ambitious targets—to double the level of exports to non-U.S. markets within a decade. About three-quarters of Canadian exports are U.S.-bound, and about one-fifth of the country’s gross domestic product is tied to trade with the U.S.

The budget plan, to be unveiled Nov. 4, represents Carney’s policy response to position the economy for growth in the face of a protectionist U.S. (…)

• U.S. Trade War Drives Canada to Fast-Track Port Expansion Officials say upgrade of Montreal’s port will help Canadian importers and exporters find alternatives to the U.S.

Prime Minister Mark Carney is fast-tracking the expansion at the Port of Montreal as Canada seeks to grow trade outside of the U.S. Port officials say the new container-handling terminal will cost about 1.6 billion Canadian dollars, the equivalent of $1.15 billion, and that it is crucial for strengthening Canada’s overseas trade.

“Our economy in Canada was really built north-south,” said Montreal Port Authority Chief Executive Julie Gascon. “But we are a maritime nation. So reconnecting with our roots as a maritime nation and improving our trade balance with other nations with whom we have trade agreements is part of the strategy.”

Carney selected Montreal as one of five projects of national importance, in addition to a liquefied natural gas facility, a nuclear power project and two copper mines, that will be fast-tracked by a newly created Major Projects Office. Montreal port officials say the designation will accelerate regulatory approvals and financing. (…)

Montreal grew into a logistics hub because of its proximity to major metropolitan areas in Quebec and Ontario as well as its connections via rail and the St. Lawrence Seaway to factories and farms in the U.S. Midwest. But the river limits the size and weight of vessels that can call at the port.

North American ports, including Canada’s East Coast gateways at Halifax, Nova Scotia, and Saint John, New Brunswick, have spent millions of dollars dredging harbors and berths to accommodate the enormous containerships that increasingly ply major ocean trade lanes. The St. Lawrence River’s depth of about 37 feet means that even smaller containerships, which carry the equivalent of about 6,500 containers, can’t always sail fully laden to Montreal. (…)

Canada’s leaders are betting demand at Montreal will surge as Canadian exporters stung by U.S. tariffs turn to Europe, the Middle East and South Asia to grow trade ties.

The U.S. accounts for about 80% of Canadian exports. More than half of Canadian exporters expect tariffs to hurt their business, according to a recent survey by Canada’s national statistics office. Almost one-quarter of those businesses said they plan to seek customers outside the U.S.

Canada’s three busiest eastern container ports are well-positioned to pick up more trans-Atlantic business, especially with free trade partners such as the European Union.

Trump Pardons Convicted Binance Founder Pardon follows months of efforts by Changpeng Zhao to boost the Trump crypto company

President Trump has pardoned Changpeng Zhao, the convicted founder of the crypto exchange Binance, following months of efforts by Zhao to boost the Trump family’s own crypto company.

The president signed the pardon on Wednesday, people familiar with the matter said. Trump recently indicated to advisers that he was sympathetic to arguments of political persecution related to Zhao and others, one of the people said.

White House press secretary Karoline Leavitt said that Trump had “exercised his constitutional authority by issuing a pardon for Mr. Zhao, who was prosecuted by the Biden Administration in their war on cryptocurrency.” She added: “The Biden Administration’s war on crypto is over.” (…)

A pardon will likely pave the way for Binance, the world’s largest crypto exchange, to return to the U.S. after the company pleaded guilty in 2023 to violating U.S. anti-money-laundering requirements and was barred from operating in the country. (…)

Since Trump’s election, Binance has also been a key supporter of his family’s World Liberty Financial crypto venture, a business that has driven a huge leap in the president’s personal wealth.

The Justice Department imposed a record $4.3 billion fine and burdensome oversight on Binance, which the department said had become a colossal money-laundering hub through which sanctioned groups and criminal organizations laundered billions of dollars in illicit funds.

The pardon may also prematurely end the Justice Department’s three-year Binance monitorship, set up to ensure the company complies with U.S. financial crime laws. However, it likely won’t end a separate monitorship established by the Treasury Department without the additional approval of Trump or the Treasury secretary. (…)

World Liberty has generated significantly more income for the Trump family in the past year than their property portfolio ever has annually.

Binance has been one of the main drivers of the growth of World Liberty’s dollar-pegged cryptocurrency, called USD1. It delivered World Liberty’s first big break this spring when it accepted a $2 billion investment from an outside investor paid in USD1. Binance has also incentivized trading in USD1 across platforms it controls.

World Liberty has said that Zhao is friends with Zach Witkoff, a World Liberty co-founder whose father Steve Witkoff is Trump’s special envoy, but the venture hasn’t struck any business deal with Binance. (…)

China’s Economy Has A Few Major Problems

China’s economy is struggling with excessive debt, deflation, excess capacity, and a rapidly aging population. China continues to rely on exports to support economic growth. China has been increasingly accused of dumping its excess production in world markets. This is exacerbating trade frictions, especially with the US.

The Chinese government’s efforts to stimulate domestic consumption have largely failed to achieve this goal. The problem is that Chinese consumers are depressed because many of them are experiencing a significant negative wealth effect from the losses they incurred when China’s property bubble burst. The stock market has also whipsawed them. Consider the following:

(1) New home prices have been falling since mid-2022. They fell 2.2% y/y during September. This marks the 26th consecutive month of decline, reflecting persistent weakness in demand.

(2) The housing slump is dragging down consumer confidence and household spending.

(3) Retail sales in China grew by 3.0% y/y in September 2025, marking the slowest expansion since August 2024. While the overall growth is positive, it reflects a cooling trend compared to the 3.4% increase in August. While some consumer categories are rebounding, others—especially discretionary goods—are losing momentum. Adjusted for the 0.8% y/y drop in China’s CPI for goods, retail sales rose 3.8%. However, this measure has been growing more slowly than industrial production since early last year, which is causing deflation.

(4) The Peoples Bank of China has been providing a stimulative monetary policy by reducing bank reserve requirements and lowering its official interest rate. Yet the y/y growth in bank loans has dropped nearly in half over the past three years to 6.6% y/y.

(5) China’s bank loans rose to a record high of $38.0 trillion in September. That’s a staggering amount of debt, and that is only bank loans.

(6) Both short-term and long-term government interest rates remain depressed below 2.00%.

(7) China’s major stock market indexes have been very volatile and nearly flat for 18 years!

(8) China’s stock market has performed very well this year, with the FTSE China index up 34.7% ytd. Technology (34.8%) has performed well, but even better-performing sectors include Basic Materials (77.7%), Health Care (67.6%), and Consumer Discretionary (48.3%).

Goldman Sachs adds these data:

Household consumption declined sequentially: According to the NBS quarterly household survey, household disposable income grew by 4.5% yoy (3.9% quarter-over-quarter annualized) in Q3, vs. 5.1% yoy (1.9% quarter-over-quarter annualized) in Q2. Household nominal consumption growth measured in year-over-year terms slowed to 3.4% in Q3 from 5.2% in Q2. On a sequential basis after our seasonal adjustment, household consumption per capita in nominal terms decelerated to -2.9% quarter-over-quarter annualized in Q3, vs. an increase of 3.4% quarter-over-quarter annualized in Q2. The deceleration in consumption growth was mainly driven by weaker spending on food, medicine and medical services, and residence.

Which contradicts Yardeni who says discretionary spending has slowed the most.

The labor market softened further: The official urban surveyed unemployment rates rose slightly from 5.1% in Q2 to 5.2% in Q3 after our seasonal adjustments, and the weighted average of employment sub-indexes under various PMI surveys declined in Q3 vs. Q2. Various wage-related indicators showed slower growth in Q3. Specifically, year-over-year growth of official wage income and migrant workers’ monthly average income declined to 4.2% and 2.4% in Q3, respectively, from 4.7% and 3.0% in Q2. The labor cost sub-index in the Cheung Kong Graduate School of Business (CKGSB) Business Condition Index (BCI) survey also showed slower growth in Q3. Our revamped wage tracker suggests urban wage growth moderated further to 3.8% yoy in Q3 from 4.0% yoy in Q2.

Household savings rate ticked up: The household savings rate increased from 31.3% in Q2 to 32.4% in Q3 after seasonal adjustments and rose above pre-Covid trend-implied levels. Our estimated “household excess deposits“, which compares the actual amount of household bank deposits to their pre-Covid trend, reached RMB 57 trillion in Q3. Global historical experience shows that it is hard to change households’ savings behavior, and the most important driver of consumption in China is still likely to be income growth.

Limited impact of consumption boosting policies so far: The NBS consumer confidence index remained depressed in the first two months of Q3 (August as the latest data available). The government has rolled out a few easing measures to boost consumption in recent months, including the nationwide childbirth subsidy, a subsidy program launched in July for elderly citizens with moderate to severe disabilities to support elderly care services consumption in late July, a free pre-school program in August, and a temporary interest subsidy for consumption-related loans in September. However, the macro impact of these programs has been very limited so far.

China’s $1 Billion of Daily US Exports Show Xi’s Bargaining Power

Six months into Donald Trump’s trade war, the resilience of Chinese exports is proving just how essential many of its products remain even after US levies of 55%.

Every day, about a billion dollars worth of goods is crossing the Pacific from China to the US, with the amount ticking up in September from August. Despite double-digit drops in the value of overall trade during the past half a year, some products have recently seen an increase from 2024, defying trade strains between Beijing and Washington.

The upshot is that US tariffs appear somewhat limited in their ability to control what American firms import, as China’s sway over sectors such as rare earths and electronics makes its products hard to dislodge, at least in the short term. That may change over time, especially if Trump further hikes tariffs, as the Republican leader has repeatedly threatened to do.

All that’s giving President Xi Jinping more bargaining power as his trade negotiators head into talks aimed at extending a 90-day tariff truce that’s set to expire in November. In the third quarter, more than $100 billion worth of Chinese goods arrived in the US, helping Beijing keep economic growth on track for its annual target and pushing the bilateral trade surplus up to $67 billion.

Trump on Tuesday predicted an upcoming meeting with his Chinese counterpart would yield a “good deal” on trade, while also cautioning the expected sitdown at a summit in South Korea next week could still fall apart. The US leader has listed rare earths, fentanyl and soybeans as the top trade issues for his side to discuss with China. (…)

While almost all the top 10 exports to the US slumped last quarter from a year earlier, shipments of e-cigarettes rose, according to a Bloomberg analysis of China’s customs data. E-bikes are also seeing strong US demand, with Chinese firms exporting more than $500 million worth in the three months through September, slightly up on a year earlier.

Exports of refined copper cathodes have soared in value terms from almost nothing to $270 million in the past three months, with electrical cables rising 87% to $405 million. (…)

Cracks in Trump’s tariff wall are probably making some of the trade possible by keeping costs down.

ANZ’s Xing said American importers are able to pay a lower levy by declaring the customs value of goods based on their first sale in a third country, and then raising the price when the items reach a US port. Trans-shipping via Mexico or Vietnam means some firms are likely not paying the full tax.

“There are a lot of loopholes,” Xing added. US Customs “just don’t have enough manpower to address them.”

In the July-September quarter, companies in China shipped almost $8 billion worth of smartphones, laptops, tablets and computer parts to the US. While that was less than half the amount sold in the same period last year, it still represented a substantial haul considering the high tariffs.

And despite the end of the “de minimis” rule allowing small parcels to enter the US duty-free, US consumers have kept buying billions of dollars worth of packages from e-commerce platforms such as Shein Group Ltd. and PDD Holdings Inc.’s Temu. While tariffed at 54%, Chinese data showed about $5.4 billion worth of these small packages were sent to the US since the Trump administration closed the loophole in May.

Business to business e-commerce exports also soared, jumping to $201 million in September from about $31 million in August. The surge may indicate Chinese online platforms are moving from selling direct to US consumers to shipping first in bulk and then breaking that down into smaller packages in the US. (…)

There’s been a collapse in exports of games consoles, with companies such as Nintendo Co. and Microsoft Corp. choosing to deliver them from Vietnam and elsewhere instead of paying the higher tariff to ship from China. And US consumers now look to be buying TVs elsewhere, with a 73% drop in the value of LCD sets exported from China to the US last quarter.

Canada: Inflation picks up in September despite a weakening economy

Inflation in September surprised economists by rising two tenths of a percentage point above expectations, with the overall index coming in at 2.4%. Food prices jumped 0.5% in the month, the sharpest increase in six months. On a three months annualized basis, the price of food increased 5.2%, contributing significantly to recent inflation.

Inflationary pressures in September were still fairly widespread, with six of the eight main components rising from August at an annualized rate above the Bank of Canada’s target. Is the September’s CPI report enough to prevent the Bank of Canada from lowering rates at the end of the month? The decision is certainly more complicated following this report, but we believe that it should still favor accommodation.

It is true that total inflation was the highest in seven months (0.4%, m/m), but core inflation measures are much less concerning in September. Deputy Governor Mendez’s recent speech clearly indicated that the Bank of Canada had made another U-turn in regard to their core measures by stating that CPI-Trim and CPI-Median should no longer be prioritized.

For this reason, we will now track these two measures, as well as inflation excluding food and energy and the CPIX (the Bank of Canada’s former core inflation measure). Taking the average of these four measures, the price increase in September was only 0.24%, which is uncomfortable for the Bank of Canada but much less worrying than the increase in the total index. Over three months, the annualized rate of increase is 2.3%, only a few tenths of a percentage point above the target.

This inflation backdrop would be worrying if the economy were showing signs of strength, but this is definitely not the case. Tariff uncertainty continues to weigh on business confidence, with hiring and investment intentions remaining sluggish in light of the business outlook survey. There is therefore a high risk that this economy in excess supply (and too many workers on the sidelines) will become even more so in the coming months.

As for inflationary pressures, there was no indication in the BOS that businesses felt they had pricing power. In fact, on average, anticipated output price growth is similar to what has been seen recently. In conclusion, we continue to favor a rate cut at the next decision, and the need for further accommodation will depend on the federal budget and a potential de-escalation of trade tensions with the United States.

FYI:

There is a positive correlation between the crude oil price and the 10-year US Treasury bond yield (chart). If the oil price continues to fall and the Fed eases on October 29, the yield is likely to fall below 4.00% possibly down to 3.75%. (Ed Yardeni)

A Quality Bull?

Schroeder

AI CORNER

What AI to use in late 2025

Every few months I write an opinionated guide to how to use AI¹, but now I write it in a world where about 10% of humanity uses AI weekly. The vast majority of that use involves free AI tools, which is often fine… except when it isn’t. OpenAI recently released a breakdown of what people actually use ChatGPT for (way less casual chat than you’d think, way more information-seeking than you expected). This means I can finally give you advice based on real usage patterns instead of hunches. I annotated OpenAI’s chart with some suggestions about when to use free versus advanced models.

If the chart suggests that a free model is good enough for what you use AI for, pick your favorite and use it without worrying about anything else in the guide. You basically have nine or so choices, because there are only a handful of companies that make cutting-edge models.

All of them offer some free access. The four most advanced AI systems are Claude from Anthropic, Google’s Gemini, OpenAI’s ChatGPT, and Grok by Elon Musk’s xAI. Then there are the open weights AI families, which are almost (but not quite) as good: Deepseek, Kimi, Z and Qwen from China, and Mistral from France. Together, variations on these AI models take up the first 35 spots in almost any rating system of AI. Any other AI service you use that offers a cutting-edge AI from Microsoft Copilot to Perplexity (both of which offer some free use) is powered by one or more of these nine AIs as its base.

How should you pick among them? Some free systems (like Gemini and Perplexity) do a good job with web search, while others cannot search the web at all. If you want free image creation, the best option is Gemini, with ChatGPT and Grok as runners-up. But, ultimately, these AIs differ in many small ways, including privacy policies, levels of access, capabilities, the approach they take to ethical issues, and “personality.”

And all of these things fluctuate over time. So pick a model you like based on these factors and use it. However, if you are considering potentially upgrading to a paid account, I would suggest starting with the free accounts from Anthropic, Google, or OpenAI. If you just want to use free models, the open weights models and aggregation services like Microsoft Copilot have higher usage limits.

Now on the hard stuff.

If you want to use an advanced AI seriously, you’ll need to pay either $20 or around $200 a month, depending on your needs (though companies are now experimenting with other pricing models in some parts of the world). The $20 tier works for the vast majority of people, while the $200 tier is for people with complex technical and coding needs.

You will want to pick among three systems to spend your $20: Claude from Anthropic, Google’s Gemini, and OpenAI’s ChatGPT. With all of the options, you get access to advanced, agentic, and fast models, a voice mode, the ability to see images and documents, the ability to execute code, good mobile apps, the ability to create images and video (Claude lacks here, however), and the ability to do Deep Research.

They all have different personalities and strengths and weaknesses, but for most people, just selecting the one they like best will suffice. Some people, especially big users of X, might want to consider Grok by Elon Musk’s xAI, which has some of the most powerful AI models and is rapidly adding features, but has not been as transparent about product safety as some of the other companies. Microsoft’s Copilot offers many of the features of ChatGPT and is accessible to users through Windows, but it can be hard to control what models you are using and when. So, for most people, just stick with Gemini, Claude, or ChatGPT.

Just picking one of these three isn’t enough, however, because each AI system has multiple AI models to select. Chat models are generally the ones you get for free and are best for conversation, because they answer quickly and are usually the most personable. Agent models take longer to answer but can autonomously carry out many steps (searching the web, using code, making documents), getting complex work done. Wizard models take a very long time and handle very complex academic tasks. For real work that matters, I suggest using Agent models, they are more capable and consistent and are much less likely to make errors (but remember that all AI models still have a lot of randomness associated with them and may answer in different ways if you ask the same question again.)

Same question asked of a chat model and an agentic one. You can see the chat model answered “off the top of its head” while the agentic model did outside research and checked a lot of assumptions before answering,

For ChatGPT, no matter whether you use the free or pay version, the default model you are given is “ChatGPT 5”. The issue is that GPT-5 is not one model, it is many, from the very weak GPT-5 mini to the very good GPT-5 Thinking to the extremely powerful GPT-5 Pro. When you select GPT-5, what you are really getting is “auto” mode, where the AI decides which model to use, often a less powerful one.

By paying, you get to decide which model to use, and, to further complicate things, you can also select how hard the model “thinks” about the answer. For anything complex, I always manually select GPT-5 Thinking Extended (on the $20 plan) or GPT-5 Thinking Heavy (if you are paying for the $200 model). For a really hard problem that requires a lot of thinking, you can pick GPT-5 Pro, the strongest model, which is only available at the highest cost tier.

For Gemini, you only have two options: Gemini 2.5 Flash and Gemini 2.5 Pro, but, if you pay for the Ultra plan, you get access to Gemini Deep Think (which is in another menu). At this point, Gemini 2.5 is the weakest of the major AI models (though still quite capable and Deep Think is very powerful), but a new Gemini 3 is expected at some point in the coming months.

Finally, Claude makes it relatively easy to pick a model. You probably want to use Sonnet 4.5 for everything, with the only question being whether you select extended thinking (for harder problems). Right now, Claude does not have an equivalent to GPT-5 Pro.

If you are using the paid version of any of these models and want to make sure your data is never used to train a future AI, you can turn off training easily for ChatGPT and Claude without losing any functionality, but at the cost of some functionality for Gemini. All of the AIs also come with a range of other features like projects and memory that you may want to explore as you get used to using them.

The biggest uses for AI were practical guidance and getting information, and there are two ways to dramatically improve the quality of your results for those kinds of problems: by either triggering Deep Research mode and/or connecting the AI to your data (if you feel comfortable doing that).

Deep Research is a mode where the AI conducts extensive web research over 10-15 minutes before answering. Deep Research is a key AI feature for most people, even if they don’t know it yet, and it is useful because it can produce very high-quality reports that often impress information professionals (lawyers, accountants, consultants, market researchers) that I speak to.

Deep Research reports are not error-free but are far more accurate than just asking the AI for something, and the citations tend to actually be correct. Also note that each of the Deep Research tools work a little differently, with different strengths and weaknesses. Even without deep research, GPT-5 Thinking does a lot of research on its own, and Claude has a “medium research” option where you turn on Web Search but not research.

Connections to your own data are very powerful and increasingly available for everything from Gmail to SharePoint. I have found Claude to be especially good in integrating searches across email, calendars, various drives, and more – ask it “give me a detailed briefing for my day” when you have connected it to your accounts and you will likely find it impressive. This is an area where the AI companies are putting in a lot of effort, and where offerings are evolving rapidly.

I have mentioned it before, but an easy way to use AI is just to start with voice mode. The two best implementations of voice mode are in the Gemini app and ChatGPT’s app and website. Claude’s voice mode is weaker than the other two systems. Note the voice models are optimized for chat (including all of the small pauses and intakes of breath designed to make it feel like you are talking to a person), so you don’t get access to the more powerful models this way.

All the models also let you put all sorts of data into them: you can now upload PDFs, images and even video (for ChatGPT and Gemini). For the app versions, and especially ChatGPT and Gemini, one great feature is the ability to share your screen or camera. Point your phone at a broken appliance, a math problem, a recipe you’re following, or a sign in a foreign language. The AI sees what you see and responds in real-time. It makes old assistants like Siri and Alexa feel very primitive.

Claude and ChatGPT can now make PowerPoints and Excel files of high quality (right now, Claude has a lead in these two document formats, but that may change at some point). All three systems can also produce a wide variety of other outputs by writing code. To get Gemini to do this reliably, you need to select the Canvas option when you want these systems to run code or produce separate outputs. Claude has a specialized artifacts section to show some examples of what it can make with code. There are also very powerful specialized coding tools from each of these models, but those are a bit too complex to cover in this guide.

ChatGPT and Gemini will also make images for you if you ask (Claude cannot). Gemini has the strongest AI image generation model right now. Both Gemini and OpenAI also have strong video generation capabilities in Veo 3.1 and Sora 2. Sora 2 is really built as a social media application that allows you to put yourself into any video, while Veo 3.1 is more generally focused. They both produce videos with sound. (…)

Beyond the basics of selecting models, there are a few things that come up quite often that are worth considering:

• Hallucinations: In many ways, hallucinations are far less of a concern than they used to be, as newer AI models are better at not hallucinating. However, no matter how good the AI is, it will still make errors and mistakes and still give you confident answers where it is wrong. They also can hallucinate about their own capabilities and actions. Answers are more likely to be right when they come from advanced models, and if the AI did web searches. And remember, the AI doesn’t know “why” it did something, so asking it to explain its logic will not get you anywhere. However, if you find issues, the thinking trace of AI models can be helpful.

• Sycophancy and Personality: All of the AI chatbots have become more engaging and likeable. On one hand, that makes them more fun to use, on the other it risks making AIs seem like people when they are not, which creates a danger that people may form stronger attachments to AI. A related issue is sycophancy, where the AI agrees with what you say. The reasons for this are complicated but when you need real feedback, explicitly tell the AI to act as a critic. Otherwise, you might be talking to a very sophisticated yes-man.

• Give the AI context to work with. Though memory features are being added, most AI models only know basic user data and the information in the current chat, they do not remember or learn about you beyond that. So, you need to provide the AI with context: documents, images, PowerPoints, or even just an introductory paragraph about yourself can help – use the file option to upload files and images whenever you need, or else use the connectors we discussed earlier.

• Don’t worry too much about prompting “well”: Older AI models required you to generate a prompt using techniques like chain-of-thought. But as AI models get better, the importance of this fades and the models get better at figuring out what you want. In a recent series of experiments, we have discovered that these techniques don’t really help anymore (and no, threatening them or being nice to them does not seem to help on average).

• Experiment and have fun: Play is often a good way to learn what AI can do. Ask a video or image model to make a cartoon, ask an advanced AI to turn your report or writing into a game, do a deep research report on a topic that you are excited about, ask the AI to guess where you are from a picture, show the AI an image of your fridge and ask for recipe ideas, work with the AI to plot out a dream trip. Try things and you will learn the limits of the system.

I started this guide mentioning that 10% of humanity uses AI weekly. By the time I write the next update in a few months, that number will likely be higher, the models will be better, and some of the specific recommendations I made today will be outdated. What won’t change is the fact that people who learn to use these systems well will find ways to benefit from them, and to build intuition for the future.

The chart at the top of this post shows what people use AI for today. But I’d bet that in two years, that chart looks completely different. And that isn’t just because AI changed what it can do, but also because users figured out what it should do. So, pick a system and start with something that actually matters to you, like a report you need to write, a problem you’re trying to solve, or a project you have been putting off. Then try something ridiculous just to see what happens. The goal isn’t to become an AI expert. It’s to build intuition about what these systems can and can’t do, because that intuition is what will matter as these tools keep evolving.

The future of AI isn’t just about better models. It’s about people figuring out what to do with them.

I personally have been using Perplexity Pro and Gemini for a while and my uses just keep increasing. There is a search button on the blog but AI makes it useless. I simply ask Perplexity to search something on Edge and Odds. Easy and quick.

We are currently travelling in Italy and AI is always by us for just about anything. It’s getting better at finding the best ways to get from A to B, find the best prices and how to reserve. And much more. Contrary to what Ethan Mollick says, Perplexity knows where we are and the whole context of our trip. I doubt Perplexity makes money from my $20 monthly subscription.

Voters are split over banning AI data center construction

The rapid proliferation of data centers to fuel the growth of artificial intelligence in the United States has left public officials on both sides of the partisan aisle and energy companies alike blaming the tech industry for the rising cost of consumer electricity.

Public opinion is mixed when it comes to whether such construction should stop, Morning Consult’s new survey shows, as voters — most of whom are inclined to blame AI data centers for rising electricity prices — show signs that they’d be willing to tap the brakes on the industry’s growth as more become aware of the costs. 37% of voters support a ban on the construction of AI data centers in their communities, compared with 39% who oppose it and 24% who are unsure how they feel.