Unadorned Notes: March 18-21, 2025
Fed Holds Rates, Cuts Outlook; Markets Reel Amid Tariff Turmoil; Trump Moves to Dismantle Education Department; Trump Escalates Courtroom Showdown; Trump Acts on Critical Minerals
Economics, Finance, and Business
Fed Holds Rates, Cuts Outlook: The Federal Reserve kept its benchmark interest rate unchanged at approximately 4.3%, citing uncertainty from recent tariff and fiscal policy changes. Officials revised their 2025 forecasts, projecting slower GDP growth at 1.7% and higher inflation at 2.7%, up from January’s 2.5%. While recent inflation progress has slowed, the Fed signaled it may tolerate temporary tariff-driven price increases. Policymakers also announced a reduction in the pace of balance sheet runoff beginning in April 2025, lowering monthly Treasury roll-offs to $5 billion. Business sentiment and consumer expectations have become increasingly uncertain, complicating the central bank’s path forward on rate policy.1
Global Growth Outlook Dims Further: Global real GDP growth for 2025 has been revised down to 2.5%, the weakest pace since 2009 excluding the pandemic period, due to escalating trade policy uncertainty and widespread tariff actions. The decline in growth momentum is reflected in recent Purchasing Managers’ Index (PMI) data, highlighting broad-based economic softening. A modest recovery to 2.7% is projected for 2026, supported by expected fiscal stimulus in Europe, though risks remain elevated. North America, particularly the United States, experienced the sharpest forecast downgrades amid rising inflation and weaker-than-expected early 2025 economic data. The Federal Reserve has held rates steady, with future policy shifts dependent on deeper economic deterioration.2
Markets Reel Amid Tariff Turmoil: Global financial markets experienced heightened volatility in early 2025 as U.S. President Donald Trump’s tariff policies triggered investor flight from U.S. equities. European and Chinese stocks outperformed, with defense and tech sectors leading gains, while U.S. Big Tech declined sharply and Wall Street saw substantial outflows. Emerging economies such as Turkey, Indonesia, and Colombia faced intensified political and fiscal instability, prompting currency declines and emergency central bank actions. In the United Kingdom, concerns over missed fiscal targets ahead of the March 26 Spring Statement raised speculation about potential austerity or tax hikes. Central banks in Australia and Japan are closely monitoring inflation data, as global price pressures remain elevated due to trade policy uncertainty.3
U.S. Equity Funds See Exodus: U.S. equity funds recorded $33.53 billion in net outflows during the week ending March 19, 2025, the largest since December 2024, amid heightened tariff concerns and caution ahead of the Federal Reserve’s policy announcement. The outflows reversed the prior week’s $4.84 billion in net inflows and were led by large-cap funds, which saw $27.38 billion in withdrawals. Sectoral fund redemptions slowed, though technology, communication services, and healthcare sectors experienced continued selling. U.S. bond funds posted a $513 million outflow, breaking an 11-week streak of inflows, while investors shifted capital into government and treasury funds. Money market funds also saw heavy redemptions, with $28.83 billion withdrawn following $13.43 billion the previous week.4
U.S. Home Sales Rebound Unexpectedly: U.S. existing home sales rose 4.2% in February 2025 to an annualized rate of 4.26 million units, surpassing forecasts, driven by increased inventory and seasonal factors despite elevated mortgage rates. The number of homes for sale climbed 5.1% month-over-month and 17% year-over-year to 1.24 million, easing supply constraints. Median home prices reached a February record of $398,400, up 3.8% from the prior year, while time on market lengthened to 42 days. First-time buyers accounted for 31% of sales, below the 40% benchmark considered necessary for market strength. Ongoing economic uncertainty from federal policy shifts and trade tensions may limit further gains despite stable mortgage rates and Federal Reserve signals of potential rate cuts.5
Google Acquires Wiz for $32B: Google LLC announced a definitive agreement to acquire cloud security firm Wiz, Inc. for $32 billion in an all-cash transaction, marking its largest acquisition to date. The deal, pending regulatory approval, will integrate Wiz into Google Cloud to strengthen its security and multicloud capabilities in the AI-driven computing era. Wiz provides a widely adopted platform that secures major cloud and code environments, serving enterprises, startups, and public sector organizations. Google stated the acquisition will enhance automation, reduce security costs, and bolster defenses against AI-driven cyber threats while preserving Wiz’s compatibility across major cloud providers. The move underscores Google Cloud’s strategic investment in cybersecurity and its intent to lead in scalable, multicloud security solutions.6
GM, NVIDIA Partner on AI: General Motors and NVIDIA announced a strategic collaboration to integrate AI, simulation, and accelerated computing across GM’s vehicle development, factory operations, and robotics systems. GM will deploy NVIDIA Omniverse and Cosmos to create digital twins for manufacturing optimization and train robotics for tasks such as material handling and precision welding. The partnership also includes using NVIDIA DRIVE AGX, built on the Blackwell architecture, to power future GM vehicles with advanced driver-assistance and in-cabin safety systems. These initiatives aim to enhance manufacturing efficiency, reduce downtime, and accelerate the development of intelligent, connected vehicles.7
Tesla Recalls 46,000 Cybertrucks: Tesla is recalling 46,096 model year 2024–2025 Cybertrucks due to a defect in the cant rail trim, which can detach and pose a road hazard, according to the National Highway Traffic Safety Administration. The issue, involving brittle adhesive, will be remedied with a reinforced mounting system at no cost under the vehicle’s warranty. This marks the eighth recall for the Cybertruck, which has also faced issues with accelerator pedals and power inverters. Tesla’s stock has declined 35% year-to-date amid slowing sales, rising political scrutiny, and concerns about the brand’s direction. Recent acts of vandalism targeting Tesla vehicles have drawn federal attention, with officials citing politically motivated violence linked to CEO Elon Musk’s public alignment with President Donald Trump.8
Why Big Systems Fail: In The Unaccountability Machine, economist Dan Davies examines how large organizations make poor decisions through opaque systems that obscure responsibility and hinder accountability. He argues that complex institutional structures create “accountability sinks”, where no single actor is clearly responsible for outcomes. Davies critiques the traditional separation between economics and management science, asserting that economic models often ignore the real-world complexity of decision-making. He defends the often-dismissed role of middle managers, who serve as essential connectors in navigating organizational feedback and change. Davies also contends that emerging technologies like AI should prompt a rethinking of organizational design, rather than merely reinforcing inefficient systems.9
U.S. Politics, Policies, and Geopolitics
Trump Moves to Dismantle Education Department: President Donald Trump signed an executive order directing Education Secretary Linda McMahon to begin dismantling the U.S. Department of Education, stating his intention to eliminate the agency pending congressional approval. The move, which would require legislation to fully abolish the department, was met with sharp criticism from Democrats and education advocates, who warned it would harm vulnerable student populations. While some functions, including student loans and civil rights enforcement, are expected to remain, the administration plans to significantly reduce the agency’s size and scope. Public polling shows broad opposition to eliminating the department, particularly among Democrats and independents. Legal and legislative challenges are expected, as critics argue the executive order oversteps constitutional limits and undermines the federal role in public education.10
Columbia Complies With Trump Demands: Columbia University has agreed to a series of measures to regain access to $400 million in revoked federal funding, including expanded campus police powers, protest restrictions, and administrative oversight of its Middle East studies programs. The agreement follows pressure from the Trump administration, which cited concerns over antisemitism and alleged bias in academic departments. The university will appoint a senior vice provost to oversee curriculum and hiring in targeted departments and adopt a new definition of antisemitism developed by its internal task force. Columbia also committed to institutional neutrality, reforms to admissions practices, and developing new educational programming, including a K–12 curriculum. Legal and academic observers have raised concerns over the implications for university autonomy and the precedent this may set for federal intervention in higher education.11
Trump DOJ Fights Deportation Ruling: The Trump administration has escalated a legal dispute with U.S. District Judge James Boasberg, who blocked the deportation of noncitizens under the Alien Enemies Act and ordered the return of two flights to El Salvador. After refusing to turn the flights around, the Department of Justice declined to submit details under seal, citing national security and raising the possibility of invoking the state secrets privilege. DOJ attorneys have asked a federal appeals court to reverse Boasberg’s order, arguing it unlawfully intrudes on presidential authority over immigration and foreign affairs. President Donald Trump publicly criticized Boasberg, calling for his impeachment, prompting Chief Justice John Roberts to defend judicial independence and denounce impeachment threats over legal disagreements. A D.C. Circuit panel will hear arguments on the matter, which centers on executive authority and the classification of deportees as gang-affiliated despite limited U.S. criminal records.12
Trump Removes FTC Democrats: President Donald Trump dismissed Democratic Federal Trade Commission commissioners Alvaro Bedoya and Rebecca Slaughter, leaving the agency under full Republican control. The White House defended the action as within executive authority, though the FTC’s founding statute limits removals to cases of “inefficiency, neglect of duty, or malfeasance”. Both commissioners condemned the firings as unlawful, and Bedoya signaled plans to sue. The move raises concerns over the independence of regulatory agencies and the future of ongoing antitrust investigations into major technology firms. Legal challenges to similar removals at other agencies are progressing through the courts and may reach the Supreme Court.13
Judge Blocks Trans Military Ban: U.S. District Judge Ana Reyes issued a preliminary injunction halting enforcement of President Donald Trump’s executive order banning transgender individuals from military service, citing likely violations of constitutional equal protection rights. The ruling follows the Defense Department’s policy disqualifying those with gender dysphoria and comes amid a broader pattern of legal challenges to the administration’s policies targeting transgender individuals. Reyes emphasized the judiciary’s role in checking executive overreach, especially when fundamental rights are at stake. The plaintiffs include decorated and active-duty transgender service members who argue the ban undermines their proven ability to serve. Government attorneys maintain the policy reflects longstanding discretion in military readiness standards, while critics describe it as discriminatory and harmful to morale.14
Trump Escalates Courtroom Showdown: The Trump administration remains committed to defending its immigration policies despite escalating legal clashes with federal judges and a rare public rebuke from Chief Justice John Roberts. Over 160 lawsuits have been filed against various administration actions, many in Democratic-leaning jurisdictions, but the White House sees these as steps toward eventual Supreme Court review. Tensions intensified after U.S. District Judge James Boasberg ordered a halt to certain deportations, prompting the Department of Justice to consider invoking the state secrets privilege and file appeals asserting executive authority. President Donald Trump and senior officials have continued public attacks on the judiciary, while DOJ leaders have joined court filings to shield line prosecutors from potential contempt sanctions. Additional legal battles over transgender military service and the attempted dismantling of USAID further illustrate the administration’s confrontations with the federal courts.15
Trump Acts on Critical Minerals: President Donald Trump signed an executive order invoking the Defense Production Act to accelerate U.S. production of critical minerals, citing national security concerns over dependence on foreign sources, particularly China. The order enables financing and permitting support for domestic mining and processing of materials such as lithium, nickel, and rare earth elements used in electronics and electric vehicle batteries. It directs federal agencies to identify priority mines, streamline permitting, and utilize federal lands for mineral development. The move follows China’s recent export restrictions on key minerals and broader trade tensions with major suppliers. Former mining executive David Copley was appointed to lead federal mining policy under the National Energy Dominance Council.16
Trump, Putin Agree to Partial Ceasefire: President Donald Trump and Russian President Vladimir Putin agreed to a limited ceasefire halting attacks on energy infrastructure, though Putin rejected a full 30-day truce supported by Ukraine. The agreement follows renewed negotiations amid Russia’s military advances in eastern Ukraine and rising concern among Western allies over Trump’s diplomatic overtures. Talks on broader ceasefires and a potential peace deal will begin in Saudi Arabia, but Ukraine’s participation remains uncertain. Ukrainian President Volodymyr Zelenskyy warned that Putin’s refusal of a full ceasefire signals an attempt to prolong the conflict while Russia consolidates military gains. European leaders reiterated that Ukraine must be included in any peace process and warned of growing threats from Russia’s military buildup.17
Israel Resumes Gaza Offensive: The Israel Defense Forces (IDF) launched a new ground operation in central and southern Gaza following a large-scale airstrike campaign that killed over 400 people, including 183 children, according to Gaza’s Health Ministry. The IDF stated it aims to reestablish a security perimeter and partial buffer zone, including renewed control over the Netzarim corridor. Israeli Defense Minister Israel Katz issued a warning to Gaza residents, demanding the return of hostages and the removal of Hamas or face intensified military action. Protests erupted across Israel, with demonstrators opposing the ceasefire’s collapse and accusing Prime Minister Benjamin Netanyahu of abandoning the hostages. Despite Israeli claims of targeting Hamas leaders, public pressure is mounting for renewed negotiations and a comprehensive hostage release deal.18
China Protests U.S. Panama Deal: A senior Chinese delegation visited Panama amid tensions over a proposed $22.8 billion sale of Panama Ports Company from Hong Kong-based CK Hutchison to a U.S.-led consortium headed by BlackRock. The visit follows U.S. President Donald Trump’s renewed assertions that China controls the Panama Canal, claims denied by both Panama and Beijing. Chinese state media criticized the deal as U.S. coercion and accused CK Hutchison of capitulating to American pressure. The U.S. State Department welcomed the sale as a strategic move to reduce Chinese influence near the canal, which handles 5% of global trade. The transaction remains subject to approval by Panama’s maritime regulator and is under official review.19