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Ian Explains: Is the US economy good or bad?
What’s going on with the US economy? On Ian Explains, Ian Bremmer breaks down the confusing state of America’s financial health.
Trying to make sense of economic indicators right now can be an exercise in illogic: unemployment is down, but inflation is still stubbornly sticky. Interest rates are higher than they’ve been in two decades, but stock indexes are closing at record highs. Adding to confusion, the upcoming US presidential election means that the economy is front and center, but Democrats and Republicans have a partisan interest in making things seem worse or better than they actually are. So what’s really going on?
When you look at the world’s post-Covid recovery, America is an outlier. US GDP grew faster than any other advanced economy last year. Wages are rising faster than they have in years, inflation, while sticky, is nowhere near its 2022 highs, and unemployment has been under 4% for the longest stretch since the 1960s. So why do only 28% of US voters have a positive view of the economy right now? Some economists are calling this moment “vibe-cession,” warning the negative “vibes” could have a major impact on the presidential election in November.
Catch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
Biden slams Nippon Steel deal — but Tokyo plays it cool
US President Joe Biden on Thursday came out against Japan’s largest steel producer acquiring Pittsburgh-based US Steel, saying America must “maintain strong American steel companies powered by American steelworkers.”
Nippon Steel made an offer worth over $14 billion in December, and shortly afterward the White House indicated it would be scrutinized by the Committee on Foreign Investments in the United States. For now, the deal is still on, but CFIUS review is usually reserved for deals involving companies from potential adversaries – not from trusted allies like Japan — and presidents rarely comment before the committee finishes.
But this is 2024. Biden and presumptive GOP nominee Donald Trump are battling over blue-collar workers in key swing states like Michigan and Pennsylvania in November. Trump promised to block the deal “instantaneously” during a meeting with Teamsters earlier this year, and Biden has never been shy to flex his union bona fides.
How does Tokyo feel? Discretion seems to be the better part of valor for Prime Minister Fumio Kishida.
“Tokyo understands that in love and politics, timing is everything and that the political timing of this deal is awful for Biden,” says Eurasia Group’s Japan analyst David Boling. “That doesn’t mean that Tokyo is happy that Washington is treating an ally this way. But it’s not putting up a big fuss.”
Should Canada give three F’s?
You’re leaving your role as president of the Canadian Chamber of Commerce after 17 years, which has been a transformative time. What is the biggest economic challenge facing Canada's trade with the US?
Perrin: The politics of trade has undergone a sea change in the US under the last two presidents. Previous presidents, from Ronald Reagan on, viewed America's interactions in the global economy as an opportunity to foster American prosperity, and they saw an integrated North American economy as a source of strength. More recently, however, US politicians have started to turn inward, increasingly viewing their country as a victim, and not as the primary beneficiary of international engagement. This change has led them to increasingly align themselves with domestic protectionists who want to build economic walls along the US border.
Unfortunately, this turn inward has coincided with a complacency here in Canada about our most important bilateral relationship. Even the best of friends can't afford to take each other for granted, or they will soon drift apart.
As Canada's relationship with the US has moved from being strategic to being transactional, American leaders are increasingly looking at each issue as a standalone, and they are making their decisions, not on what is in America's long-term best interest, but on where they can find immediate political advantage at home.
We need to rebuild that strategic relationship. It's vital for Canada to be seen as bringing solutions to the major problems confronting the United States, as opposed to simply pleading to be exempted from the latest punitive measure. We need to demonstrate, both in Washington and far away from it that Canada should be treated not as a problem, but as a partner.
Perrin Beatty, outgoing president and CEO of Canadian Chamber of Commerce. REUTERS/Rebecca Cook
You recently said: “Canada is increasingly being viewed by our partners in the region as a well-meaning but unserious player on the international stage." In what ways has Canada become an "unserious player," and what needs to happen to change that reputation?
Perrin: Unfortunately, we have come to see ourselves as a moral superpower whose job is to tell everyone else what they are doing wrong. And we expect them to be grateful to us for it. Too often, we are driven more by a desire for good feelings than for good results. In contrast, other countries are both faster-moving and more engaged in the issues their interlocutors consider most important. The consequence is that, where the US and other countries used to ask, “How do we get the Canadians involved?” their question is now, “Should we inform the Canadians?” The fact that we learned about the AUKUS agreement at the same time as everyone else is just one example.
The Russian invasion of Ukraine two years ago should have been seen by Canada as world-changing, and our response should have been both meaningful and swift, with us marshaling what we have to offer in defense of the democracies. For example, Canada has an abundance of the “three F’s” – food, fuel, and fertilizer – and critical minerals that are essential to global stability. What we lack is the infrastructure, the vision, and the will to bring them to global markets to give countries an alternative to sending dollars to despots. This could be Canada's moment, but only if we are prepared to seize it.
You were a former defense minister under Mr. Mulroney, so you know about dealing with a dangerous world. But now, everyone is looking at the impact of the US election. Are we headed into a period of instability, conflict, and the dismantling of both trade and defense alliances that have been built since World War II?
Perrin: The problems we face, from global poverty to pandemics to wars to global climate change, all require an effective, coordinated international response. Instead of that, we are witnessing countries turning inward on themselves, as well as the increasing ineffectiveness of global institutions like the UN, the World Trade Organization, and the WHO in actually resolving issues that go to our very survival.
When I was privileged to be in government, there was a sense that, when the leaders of the G7 – leaders who included Reagan, Thatcher, Mitterrand, Kohl, and Mulroney – came together, problems would be resolved. Today, when international meetings take place, you get the feeling that our problems are bigger than our leaders. In fairness, the world is a much more complex and dangerous place today, but that's precisely why we need leaders whose vision, determination, and morality are up to the challenge. As your question suggests, we're at a crossroads that will determine whether we will be able to maintain the institutions and strategies that have guaranteed democracy, peace, and prosperity since the Second World War. The stakes have never been higher.
AI is both a transformative opportunity and a destabilizing threat. What is your view of how will impact business?
Perrin: Like businesses the world over, Canadian businesses will be transformed either for the better or for the worse by AI. AI, like the nuclear genie, can't be put back into the bottle. Our challenge is first to understand it, then to decide how to mitigate its potential bad effects, and then to determine how to unleash its positive aspects. In this instance, the technology is developing at a pace that far outstrips our capacity to understand it and manage it well. However, calls to initiate some sort of a standstill until we have thought these things through are naïve and unworkable; all that would happen is that the unscrupulous players would widen their lead.
The challenge for Canadian policymakers is how to successfully work with others on coordinated policies that limit the dangerous aspects of AI without denying its benefits to our industry and our society.
If there is a second Trump Presidency, what should Canada expect from the 2026 review/renegotiation of USMCA trade deal?
Perrin: Many Canadians expected that when Joe Biden became president, he would reverse the Trump protectionist measures. However, that assumption overlooked the fact that, in the past, Republicans were more in favor of free trade, while Democrats were more protectionist. In fact, the Biden administration has actually deepened some of the protectionist policies initiated by Donald Trump.
The danger is that the election will be a contest between two candidates trying to demonstrate who is more protectionist. Canadians must respect the right of US voters to determine their own government, just as we would insist on the Americans respecting our rights, but we need to demonstrate that it is in Americans' self-interest to foster a stronger relationship with their closest neighbor and best friend. And we must do that, not by special pleading, but by coming up with solutions to problems.
Finally, what is the best-case scenario for the US-Canada relationship in terms of economic prosperity and security? Is there a way to slalom through the protectionism, AI disruptions, political polarization, climate challenges, and conflicts and see a time of increased joint prosperity?
Perrin: The best-case scenario is that we restore a strategic partnership with the world's greatest superpower. We've let the relationship slide for too long, and it won't be easy to regain that position. But I believe it can be done if we muster the vision and the will to make it happen.
Last thing: You worked for Brian Mulroney, who recently passed away. He was the architect of the North American Free Trade Agreement and worked closely with Ronald Reagan. What lesson can today’s leaders learn from that time?
Perrin: As Canadians commemorate Brian Mulroney, our leaders should ask what they can learn from Canada's last great transformative prime minister. Brian Mulroney understood that governments don't create jobs and prosperity, businesses do. He also knew that the best way to solve problems was not to shut people out but to bring them in.
It's impossible to say exactly what policies a different government would follow, but what we do know is that our economy and our country are under severe strain today. The leader history will remember best will be the one who brings people together again in what remains the most fortunate country on the face of the globe.
Biden and Trudeau face headwinds … from Gaza
Last Thursday, after Joe Biden promised during his State of the Union to build a pier to deliver aid to Gaza, Colorado Sen. Michael Bennet shook the president’s hand, congratulated him on the speech, and urged him to push Israel to do more on “humanitarian stuff.”
Biden, caught on a hot mic, nodded in agreement and said he was pressing Israeli Prime Minister Benjamin Netanyahu. “I told him, Bibi, don’t repeat this, but we are going to have a come-to-Jesus meeting.”
The next day, in the multicultural Toronto suburb of Mississauga, Justin Trudeau's International Development Minister Ahmed Hussenannounced that Canada would resume funding the United Nations Relief and Works Agency for Palestine Refugees. Israel has alleged that 12 employees were involved in the Oct. 7 attack on Israel, leading most Western countries to withdraw aid.
Unhappy progressives
Both Biden and Trudeau are responding to pressure to shift their positions on the war in Gaza, which has rattled their electoral coalitions, posing serious challenges for them as they head toward elections in November in the United States and 2025 in Canada.
The White House is aware of the problem. Biden’s aides have had to take steps to avoid pro-Palestinian protests, booking him into smaller venues and holding back event details until the last minute to keep protesters from being able to disrupt him. That is making it hard for him to get his message about student loan relief out on university campuses.
The horrible death toll in Gaza, where thousands of civilians have been killed since October, has led to despair and anger among progressives, not just among people with roots in the Middle East, but among young people and people of color.
There has been a significant generational shift in public opinion. A December New York Times poll found 46% of 18-to-19-year-olds are more sympathetic to Palestinians, compared to 27% who are sympathetic to Israel.
“I tell people all the time, 50 years ago when we had a demonstration from the White House it would be 50 people, all of whom had an Arabic accent, and today it’s tens of thousands of people, and it's a group as diverse as America that's showing up,” says James J. Zogby, founder of the Arab American Institute.
Michigan in the balance
In February’s Democratic presidential primary in Michigan, 13% of voters chose “uncommitted,” sparking similar protest movements in other states, a way for progressives to signal their unhappiness with Biden’s support for Israel in the Gaza war. But unlike the other states, Michigan, home to about 500,000 Arab Americans, is vital if Biden hopes to stay in the White House.
“Michigan had a huge impact because it is difficult to come up with a map where Democrats win the White House without Michigan in the mix, and the percentage of Arab voters in Michigan is high enough to make the difference,” says Zogby.
While the fear isn’t that these voters would flip sides for Donald Trump, the threat is real, says Clayton Allen, US director for the Eurasia Group. “Michigan is a great example where if you see the decline in Arab-American support hold through the election, that would be enough votes — if they would not show up to vote … — that would be enough to erase what had been his margin of victory in 2020.”
Nobody on Trudeau’s side
The situation in Canada is similar. Progressives are so frustrated with the Trudeau government’s position on the war that urban areas once considered safe for the Liberals may now be out of reach for the party.
Trudeau’s fence-sitting on the Gaza war has not endeared him to pro-Israel voters either.
“The Liberal Party has lost, largely, both communities, because they’ve tried to have it both ways,” says pollster Quito Maggi, of Mainstreet Research.
“For electoral purposes, it’s not really great to have nobody on your side,” says one Liberal organizer.
The Liberals have been behind in the polls for so long that some would like to replace Trudeau before the election, but a leadership race while the war continues could be dominated by arguments over Gaza, potentially damaging the party.
The war is not causing similar problems for conservatives in either country, because their coalitions don’t include progressives who are angered by the bombing. They can sit back and watch as their progressive opponents struggle to keep their coalitions together.
Both Biden and Trudeau appear to be in no-win positions. They are angering their progressive bases but would anger other constituencies if they move too far the other way.
“Outside of that young progressive block, most US voters, in total, support US military backing of Israel,” says Allen. “So Biden does bear a risk if he skews too hard to the left. Everyone else can attack him for abandoning Israel. I think that's been one of the limiting factors. It's why we see Biden try to walk this tightrope.”
Both leaders would benefit from bringing the temperature down, which will only happen after the bombs stop falling on Gaza. Few outside Canada have much reason to be greatly concerned about Trudeau’s position, but the United States provides $3.8 billion in military aid to Israel every year, which gives Biden leverage over Netanyahu.
He may need to use it soon to give himself time to win back the progressives whose votes he needs to keep Trump out of the White House.
Gaza caught in the crossfire as Hamas, Israel, and the US near an impasse
The war in Gaza continues, and there are reasons to believe it’s going to persist for a long time still.
There had been a lot of hope that Israel and Hamas would have made a breakthrough deal by now trading an extended (albeit temporary) cease-fire lasting some six weeks for the release of a significant number of Israeli hostages and Palestinian prisoners. Just a week ago, it seemed likely that such an agreement would be reached before the start of Ramadan after Israel reportedly accepted the terms put forward by the United States, Qatar, and Egypt.
But with Ramadan now underway, the much-vaunted deal continues to be just out of reach. And there’s plenty of blame to go around.
Above all, Hamas now refuses to accept anything short of a permanent cease-fire and complete withdrawal of Israeli troops. The group has been emboldened by President Joe Biden’s warning to Israel that a ground incursion into Rafah absent a credible plan to protect civilians would cross a “red line” – the clearest reflection yet of the growing divide between Biden and the Israeli government.
Hamas is exploiting this rift, essentially daring the Israelis to storm a city where 1.5 million Palestinians are presently sheltering under dire humanitarian conditions with nowhere to go, just so it can weaponize civilian casualties and international outrage against them. By choosing continued fighting over a temporary cease-fire, it is putting Palestinian lives at maximum risk – as it has all the way through – to further delegitimize Israel, drive a wedge between it and the United States, and bolster its own political standing. Consider me shocked (not).
Prime Minister Benjamin Netanyahu, meanwhile, is doing what he knows best: trying to stay in power. What that means is not only that he has little interest in ending the (extremely popular) war – as he has all the way through – but also that he is more than willing to openly ignore, and even defy, Israel’s closest ally when politically expedient. Case in point: Netanyahu responded to Biden’s red line by declaring that Israel’s own red line is Hamas’ continued existence and promising to go into Rafah despite Biden’s opposition.
This was a rare instance in the war, however, when Netanyahu actually spoke for the entire Israeli war cabinet and the majority of the Israeli population rather than his private interests. Polls show that whether or not they like Bibi, and most of them don’t, the vast majority of Israelis do support the complete destruction of Hamas (whatever that means) and don’t want their military to stop short of achieving it (unrealistic as it may be). If that requires ground warfare in Rafah to take out all the organization’s remaining military capabilities, tunnels, and senior leaders, so be it. And if that comes at great loss of civilian life, creates tension with the US, and costs Israel more support on the international stage, well … that’s a price they’re willing to pay.
Accordingly, the expectation is that Israel will move forward with offensive operations in Rafah sooner or later. (Hamas no doubt is aware of that, which is partly why they continue to hold large numbers of hostages; after all, if they let them all go, what would be left to stop the Israelis from taking out their entire leadership?)
When the ground invasion happens, Biden will have no choice but to act on his red line, issued in response to mounting pressure from within his own party (not to mention blowback on the international stage) to distance himself from the Israeli government. But there’s only so much the president can credibly do given the bipartisan consensus – and his own personal support – for continued military aid to Israel no matter what … which, in turn, helps explain why the Israelis will go ahead with the Rafah incursion in the first place.
If I had to guess, the administration’s response will include a temporary pause in the delivery of some high-profile offensive weapons systems. But defensive systems like the Iron Dome won’t be affected, and the core US-Israel security relationship will remain unchanged. Progressives in Biden’s Democratic base will castigate the response as woefully insufficient … but that won’t stop Trump and most Republicans from seizing on the opportunity to claim Biden is abandoning a US ally American voters actually care about, dwarfing the damage from the botched Afghanistan withdrawal.
The domestic political impact of the pause on Biden will far outweigh its material constraint on Israel’s military capabilities, putting the president in an unenviable position. Everyone knows there is no credible risk to continued US military support for Israel. The fact that the Biden administration is having to airdrop humanitarian aid and deploy the military to circumvent a blockade being imposed by one of its closest allies makes it painfully clear that Washington has very little leverage over Israel’s actions … but no less responsibility for them in the eyes of much of the world – and many Americans at home.
That poses a serious and growing political challenge for the president in an election year … and a risk of wider radicalization worldwide, in an environment where Israel and the United States have lost the global information war and are becoming more isolated, with no easy way to contain the fallout.
Biden vs. Trump redux is official
They did it again. President Joe Biden and former President Donald Trump have mustered enough delegates in the primaries to secure their respective party nominations heading into this November’s presidential election — not that anyone expected otherwise.
For Biden, it was his win in Georgia last night that clinched it for the Democrats, while for Trump it was the GOP tally in Washington state. The rematch of 2020 comes despite both men’s unpopularity: Recent polling has Biden’s disapproval rating at 56.5%, while Trump’s unfavorable rating is nearly as high at 52.5%.
What’s next: The matchup that has looked inevitable for months is officially underway, but it’s unclear when, or whether, Biden will face off with his predecessor in debates. Trump has said, “I’m ready to go, ANY TIME, ANY PLACE!” Biden has appeared open to the idea, noting that it “depends on his behavior.”
In the meantime, expect plenty of campaign events and advertisements focused on both men’s ages, abortion, the economy, illegal immigration, and entitlements (more on that below).
Biden hits Trump on threats to cut entitlements
On Monday, a TV interviewer asked Donald Trump to detail his “outlook on how to handle entitlements: Social Security, Medicare and Medicaid?” His response: “There is a lot you can do in terms of entitlements — in terms of cutting — and in terms of also the theft and the bad management of entitlements.”
Within hours, strategists working on President Joe Biden’s reelection campaign issued a 20-second digital response for release on its X, Facebook, Instagram, and Threads social media accounts. It featured Trump’s words followed by a quick clip from Biden’s State of the Union Speech last week in which he pledged that “If anyone here tries to cut Social Security, Medicare or raise the retirement age, I will stop you.”
The Trump campaign quickly accused the Biden team of twisting Trump’s meaning. A spokesman insisted he meant cuts to “waste” in the programs, not to benefits.
Despite widespread concerns about the impact of long-term US debt, cuts to entitlement benefits or calls to raise the retirement age have long been taboo – nearly 80% said last year that they opposed reducing the size of Social Security – in American politics. We may find out this election year if that’s still true.
Trump has opened divisions within his own party on this issue in the past, and no matter what he says on it in the future, the Biden campaign will highlight his every word.Hard Numbers: India & EFTA sign trade deal, Oppenheimer's Oscars, Biden's big haul, Portuguese polls, Irish vote down constitutional change, New hope for Libya
100 billion: India has signed a trade agreement with the four members of the European Free Trade Association — Iceland, Liechtenstein, Norway, and Switzerland — aimed at integrating supply chains and opening new opportunities for trade and investment. The deal includes a commitment to invest a whopping $100 billion in India over the next 15 years to create 1 million jobs.
7: The big winner at the Oscars on Sunday was "Oppenheimer," director Christopher Nolan's historic drama about the invention of nuclear weapons, which took home seven prizes, including Best Film. The documentary "20 Days in Mariupol" also won Ukraine its first Oscar.
10 million: The Biden campaign says it raised over $10 million in the 24 hours following the State of the Union, which served as a de facto campaign event. It’s the campaign’s largest one-day haul yet. With a long eight-month campaign ahead, the Biden team has been stockpiling a war chest as Trump fought contested primaries (not to mention legal battles).
79: The Portuguese center-right Democratic Alliance took 79 seats in Sunday's elections, ousting the incumbent socialist party but falling well short of the 115 seats it would need for a majority government. The party's leader, however, swore he would not work with the far-right Chega party, which surged in the polls, to establish a majority.
73.93: On Friday, Irish voters rejected proposed constitutional changes concerning the concept of family and care in a nationwide referendum. The first proposal would have recognized “family” as a couple without regard to their sex, while the second aimed to strip reference to the role of women in the home. Well over half, some 67.7% of Irish voters, opposed the first, while 73.93% said no to the second.
3: Progress in Libya’s long conflict may soon be at hand: On Sunday, three leaders agreed on the need to form a new unified government to supervise the country’s long-delayed elections. Elections were due in December 2021, but fell apart owing to disputes over who was eligible to run.