NORTH AMERICA - Reports

Deflation is often overshadowed by inflation in economic debates, yet history shows it to be the more destabilizing force. Unlike inflation, which erodes purchasing power, deflation tightens the grip of debt, depresses spending, and can paralyze entire economies. In 2025, the United States faces a convergence of cyclical slowdowns, financial fragilities, and policy asymmetries that raise the probability of a deflationary turn.

Despite upbeat headlines—job growth, stable inflation, surging stock markets—a deeper fragility persists. Employment gains are mostly in low-productivity sectors, private hiring is weakening, and housing affordability is being squeezed by rising mortgage rates. Tech stocks buoy market indices, obscuring real weaknesses.

Bank of America offers a more positive outlook, suggesting the U.S. is likely to sidestep stagflation (stagnant growth plus high inflation) and move toward a cyclical boom. Drivers include pro-growth policies under Trump's "Big Beautiful Bill," massive investments in AI and infrastructure, and an improving regime indicator signaling economic recovery. 

Contrary to expectations, U.S. tourism held strong through summer 2025, buoyed by affluent domestic travellers. Luxury bookings offset declines among budget tourists and fewer international visitors. Forecasts by Hilton, Hyatt, and Expedia have been revised upward, though challenges persist in the mid and low-end segments

Trade pundits discuss a breakdown of the post-WWII global trade system, accelerated by policy shifts from both Washington and Beijing. The future likely lies in fragmented, issue-focused trade agreements rather than multilateral consensus—raising implications for North American trade links and investment flows. 

Investors face a delicate balancing act—mega gains in AI-related stocks (e.g., Nvidia, Tesla) clash with signs of waning macroeconomic health. With Moody’s downgrading the U.S. credit rating due to rising deficits, the article urges diversified strategies—pairing high-growth tech exposure with defensive assets like dividend stocks and treasury ETFs