Global and Luxembourgish News August 2025
Week 31: This week brought a labour market shock in the U.S., a major data credibility controversy, and confidence swings among consumers. Luxembourg advanced reforms to strengthen its fund industry while maintaining stable growth. Let’s dive in.
U.S. job growth collapses in July, prompting recession fears
Picture: Reuters
The U.S. economy added just 73,000 jobs in July, far below expectations. The unemployment rate rose to 4.2 %, and earlier job gains were revised down by 258,000. Hiring slowed across most sectors, with only health care and social assistance showing positive numbers. Economists are warning of labor market fatigue as long‑term unemployment climbs and wage growth weakens. Markets are now pricing in a faster Fed policy shift, with rate cut expectations moving forward to September.
Source: Reuters
Trump fires BLS commissioner, sparking data independence concerns
Picture: Bilyonario News Channel
President Trump has removed Bureau of Labor Statistics head Erika McEntarfer following the release of weaker-than-expected job figures. The move has drawn sharp criticism from economists and lawmakers who view it as political interference in a historically independent agency. Markets responded cautiously, with bond yields sliding amid uncertainty about future data reliability. Experts warn this could undermine investor confidence and long‑term credibility of U.S. economic indicators.
Source: Time
Consumer confidence rises despite economic uncertainty
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The U.S. Consumer Confidence Index rose to 97.2 in July, beating forecasts. This comes even as job market anxiety is rising—20 % of consumers reported trouble finding work. Inflation expectations declined to 5.8 %, helping offset concerns about slowing growth. Analysts note the resilience in confidence is likely driven by recent energy price drops and a stabilisation in housing sentiment. However, wage pessimism and borrowing cost concerns remain high.
Source: Investopedia
Luxembourgish News August 2025
Draft bill modernises carried interest tax for fund managers
Picture: Institute for Economcis
On 24 July, Luxembourg submitted Bill No. 8590 to modernise the tax treatment of carried interest, aligning it with recent OECD and EU standards. The legislation aims to clearly distinguish carried interest from regular income and introduce favourable tax treatment for performance-based compensation in alternative investment funds. It applies to both fund management employees and directors working with AIFs. The reform is expected to enhance Luxembourg’s competitiveness as a fund domicile and bolster legal certainty for managers and investors alike. Parliamentary approval is anticipated before the end of 2025.
Source: JDSupra
Luxembourg GDP forecast lifted to 1.7 % in 2025 by EU commission
Picture: PreZero
The European Commission’s Spring 2025 forecast raised Luxembourg’s real GDP growth to 1.7 % in 2025 and 2.0 % in 2026. After only 1.0 % in 2024, recovery is expected to be supported by domestic demand, investment rebounds and wage indexation. Inflation is projected to decelerate to around 2.1 % in 2025. Public debt will remain manageable, though government deficits may widen slightly in coming years.
Source: Economy-Finance
