WSJ : Donations to Harvard Drop 15% in Tumultuous Year

Donations to Harvard Drop 15% in Tumultuous Year
Gifts to the school’s endowment, an important support for its operations, fall 34%

Donations to Harvard University fell nearly 15% in a year when some high-profile donors said they would stop giving money to the school over its handling of antisemitism on campus.

Harvard said in a financial report Thursday that it received $1.17 billion in gifts in the year that ended June 30, down from $1.38 billion in the same period the year before.

Gifts to Harvard’s endowment, the university’s investment fund, fell 34% to $368.1 million. The endowment itself gained 9.6% for the fiscal year.

The endowment is a crucial part of the school’s operations. Distributions from the endowment made up 37% of Harvard’s revenue for the year, the university said.

A separate form of donations—gifts that the university can spend now—rose 8.6% to $527.7 million. It was the second-highest amount received in Harvard’s history, the university said.

Harvard and other universities around the country have been rocked by pro-Palestinian protests after Hamas’s attack on Israel on Oct. 7, 2023, and the subsequent war in the region, and how the schools responded drew fierce criticism from some high-profile donors. Claudine Gay resigned as the university’s president in January over her response to campus antisemitism and mounting allegations of plagiarism.

Hedge fund billionaire Ken Griffin has said he paused donations to Harvard over his alma mater’s handling of antisemitism on campus. The family foundation of investor Len Blavatnik had stopped donations late last year.

Two Harvard task forces said in June that it found that Jewish, Muslim and Arab students were harassed, bullied and discriminated against on campus.

Harvard said in its financial report Thursday that the task forces are working on “rebuilding not only a sense of belonging but also genuine acceptance among members of our community.”

Alan Garber, Harvard’s president, had indicated that donations would be down in an interview published last week in the Harvard Crimson, the university’s newspaper.

“Some of the new commitments have been disappointing compared to past years,” Garber said.

“There are also some indications that we will see improvements in the future,” he added.

The report Thursday acknowledged that the school had been through a challenging year. “Our University will emerge stronger from this time—not in spite of being tested, but because of it,” Garber wrote.

WSJ : Chinese Growth Comes in Cooler as Investors Pin Hopes on Stimulus

Chinese Growth Comes in Cooler as Investors Pin Hopes on Stimulus
Wobbly data for the third quarter underscores challenges for Beijing policymakers seeking to boost economic activity

SINGAPORE—China’s economy slowed in the third quarter, a deceleration that highlights the urgency of Beijing’s recent pivot toward greater support for growth after months of hesitancy.

Investors’ initial euphoria over Beijing’s weekslong barrage of stimulus measures and messages of reassurance has faded, however, as doubts have crept in over just how effective any planned stimulus will be at revving up the ailing economy and bringing a festering property crisis to a close. Key details remain unclear—including, critically, how much more Beijing intends to borrow to finance its support plan and what exactly it intends to spend it on.

The result has been a roller coaster for Chinese stocks in recent weeks, as investor sentiment has swung wildly between boundless optimism and nagging unease. China’s benchmark CSI 300 index surged more than 30% in the span of six trading days through Oct. 8, then went on to shed 11% as of Thursday’s close—but is still up more than 10% since the start of the year. Hong Kong’s Hang Seng Index has tumbled 13% since that same peak, but remains around 18% higher than where it started the year.

A critical moment awaits. A key committee of China’s legislature, the National People’s Congress, is due to convene toward the end of this month. Expectations are high that it will sign off on a big new fiscal package, possibly running into hundreds of billions of dollars of extra government borrowing. Pan Gongsheng, governor of China’s central bank, reiterated on Friday earlier pledges that more monetary loosening would come before the end of the year—including a possible cut to benchmark lending rates that could come as soon as Monday.

Yet hopes for a meaningful effort to turn the economy around by putting money into the pockets of Chinese consumers, which many economists say would be the best remedy for China’s current malaise, are diminishing. Leader Xi Jinping and his top lieutenants are focused instead on managing a brewing financial crisis in local government budgets, not reorienting China’s economy away from its heavy reliance on investment and manufacturing, The Wall Street Journal has reported.

The upshot is China is likely to meet its official growth target of “around 5%” this year despite the third-quarter wobble, but a rebalancing of China’s lopsided economy isn’t in the cards. That reluctance to restructure the economy is a recipe for slower growth in the years ahead and raises the chances of persistent tensions over trade, economists say.

China’s economy expanded 4.6% in the July-to-September quarter compared with the year-earlier period. That was a touch slower than the 4.7% year-over-year expansion in the second three months of the year. For the first nine months of 2024, China says the economy has grown 4.8% from the same period in 2023, putting it at the low end of the “around 5%” goal.

“These GDP figures seriously jeopardize the government’s growth target for this year. It will take a huge stimulus-fueled push to generate a turnaround in growth sufficient to attain the target,” said Eswar Prasad, professor of trade policy at Cornell University and a former head of the International Monetary Fund’s China division. “Generating more balanced growth that is driven by household consumption and private business investment represents an even bigger challenge.”

Still, other data Friday showed some signs of stabilization in the economy in September after a weak July and August. Retail sales rose 3.3% in the first nine months of the year compared with the same period in 2023, while unemployment edged down to 5.1% last month from 5.3% in August.

Industrial production rose 5.8% in the nine-month period compared with a year earlier, unchanged from the previous reading for January to August. Over the same period, investment in buildings, equipment and other fixed assets was similarly unchanged, at 3.4%.

“On the whole, the economy is still functioning in a smooth and stable manner,” despite challenges from a tepid property market, rising local government debt and weakening market confidence, said Bi Jingquan, chairman of a Beijing think tank affiliated with the National Development and Reform Commission, China’s top economic-planning agency.

Beijing’s target of 5% GDP growth for this year “is still possible, but it could come under 5%,” Bi, a former NDRC vice chairman, said at the FutureChina Global Forum in Singapore.

Beijing’s policy pivot came in late September, when Pan, the central bank governor, announced plans to cut interest rates and support China’s swooning stock market by offering central bank funds to investors.

A cascade of policy announcements followed, some of which were new while others reheated old promises. Homeowners were told they would be able to refinance their mortgages at lower rates, a trickier process in China than in the U.S. Economic planners pledged to clear a backlog of unsold homes. China’s finance minister said he would ensure some $300 billion of unspent borrowing proceeds would be plowed into the economy this year and that banks would get new capital.

One promising signal that stimulus is having an effect: Home sales during the seven-day National Day holiday earlier this month doubled compared with last year, National Bureau of Statistics spokesman Sheng Laiyun said at a news conference Friday.

On Thursday, China’s housing ministry said it would redevelop one million homes in rundown urban shantytowns and said it would prod banks to double the loans on offer for developers to around $500 billion, part of a broader attempt to complete unfinished homes. It remains to be seen whether either move will lead to any durable improvement; property stocks slumped after Thursday’s announcement.

Though officials have yet to spell out the scale of their overall stimulus plan, economists mostly expect new borrowing to come to somewhere between 1 trillion and 3 trillion yuan, equivalent to between about $140 billion and $421 billion, though some are holding out for more like 10 trillion yuan.

Logan Wright, a partner at New York-based research firm Rhodium Group who leads its China markets research, said the policy moves since late September show the government is becoming more responsive to the economy’s short-term weakness. But he said fiscal policy needs to focus on consumption to have a big effect, and that deep-seated problems weighing on growth, such as decaying local government finances, will require bolder changes.

“It is a better situation this month than last month,” he said. “But does this change the central tendency of the economy? Probably not.”

Other data Friday showed the property crisis is far from over, underscoring the importance of government efforts to address a widespread lack of home-buyer confidence. New home prices in 70 Chinese cities fell 6.1% in September compared with a year earlier, worse than the 5.7% drop recorded in August, official data showed. Of the 70 cities, 68 recorded year-over-year price declines, unchanged from August.

Figures earlier this week showed export growth slowing sharply in September to 2.4% in year-over-year terms, compared with 8.7% in August, suggesting buoyant export growth could be petering out as the global economy slows and trade barriers go up to Chinese goods.

>>> US After Hours Summary: NFLX +4.8% higher on upside earnings; ISRG +5.8% als

After Hours Summary: NFLX +4.8% higher on upside earnings; ISRG +5.8% also up on earnings; MGPI -17.2% falls on weak guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ISRG +5.8%, NFLX +4.8%, MCB +2.7%, OCFC +2%, CCK +1.9%

Companies trading higher in after hours in reaction to news: AURA +6.9% (provides update from phase 1 trial for Bel-sar), TNYA +1.9% (announces updates on TN-201 gene therapy program), VERI +1.7% (Getac Technology to offer its customers Veritone Redact), ROKU +1.1% (in sympathy with NFLX earnings), LECO +0.4% (increases dividend), DIS +0.3% (in sympathy with NFLX earnings), CSX +0.3% (CSX, CP and G&W announce that Surface Transportation Board approved transaction that creates New CPKC-CSX connection linking Mexico, Texas and the U.S. Southeast), WBD +0.2% (in sympathy with NFLX earnings), PARA +0.2% (in sympathy with NFLX earnings), BWXT +0.2% (receives DoE approval for Hanford Tank to begin contract), LEU +0.1% (wins DoE award), OEC +0.1% (names new CTO)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: MGPI -17.2%, WAL -4.7%, WDFC -3%, MRTN -2.8%, OZK -0.8%, FNB -0.4%

Companies trading lower in after hours in reaction to news: BHC -3.2% (BHC rejects bondholders' debt restructuring proposals, exploring sale of BLCO, according to WSJ), MSB -2.4% (increases dividend), BLCO -1.2% (BHC rejects bondholders' debt restructuring proposals, exploring sale of BLCO, according to WSJ), DCBO -0.2% (teams up with Intercap Impact to create Owl, a free e-learning platform)

>>> US Close Dow +0.37% S&P -0.02% Nasdaq +3.69µ Russell -0.25%

Closing Stock Market Summary
The S&P 500 (-0.02%) and Nasdaq Composite (+0.04%) settled near their prior closing levels, the Dow Jones Industrial Average closed 0.4% higher, and the Russell 2000 (-0.3%) declined slightly after leading index gains this week.

There was a negative bias under the index surface related to rising market rates and the notion that the Fed won't be as aggressive as previously thought after more solid economic data. Decliners led advancers by an 11-to-10 margin at the NYSE and by a 3-to-2 margin at the Nasdaq.

This morning's data included September retail sales, which were stronger than expected, and initial jobless claims, which were not as bad as feared. The 10-yr yield, at 4.03% shortly before the data, settled eight basis points higher than yesterday at 4.08%. The 2-yr yield, at 3.95% before 8:30 ET, settled at 3.98% after reaching 4.00%.

Downside moves in the equity market were somewhat limited due in part to strength in semiconductor stocks.
The PHLX Semiconductor Index (SOX) settled 1.0% higher after Taiwan Semiconductor Manufacturing Company (TSM 205.84, +18.36, +9.8%) reported pleasing Q3 results, along with better-than-expected Q4 guidance.

Positive responses to earnings results from the likes of Blackstone (BX 169.73, +10.02, +6.3%) and Dow component Travelers (TRV 264.82, +21.87, +9.0%) also provided a measure of support to the equity market.

Five S&P 500 sectors closed higher led by energy (+0.4%), information technology (+0.4%), and financials (+0.3%). The rate-sensitive utilities (-0.9%) and real estate (-0.7%) sectors closed near the bottom of the pack.
  • S&P 500: +22.5% YTD
  • Nasdaq Composite: +22.4% YTD
  • S&P Midcap 400: +15.0% YTD
  • Dow Jones Industrial Average: +14.7% YTD
  • Russell 2000: +12.5% YTD

Reviewing today's economic data:
  • Weekly Initial Claims 241K (consensus 270K); Prior was revised to 260K from 258K, Weekly Continuing Claims 1.867 mln; Prior was revised to 1.858 mln from 1.861 mln
    • The key takeaway from the report is that it is muddled by the effects of the hurricanes, yet it is being greeted with a sense of pleasant surprise that initial jobless claims were much better than feared.
  • September Retail Sales 0.4% ( consensus 0.2%); Prior 0.1%, September Retail Sales ex-auto 0.5% (consensus 0.1%); Prior was revised to 0.2% from 0.1%
    • The key takeaway from the report is that consumer spending on goods accelerated in September with notable increases seen in many discretionary categories like miscellaneous store retailers (+4.0%), clothing and clothing accessories (+1.5%), and food services and drinking places (+1.0%). This is a "no landing" type of report.
  • October Philadelphia Fed Index 10.3 ( consensus 4.0); Prior 1.7
  • September Industrial Production -0.3% (consensus -0.1%); Prior was revised to 0.3% from 0.8%, September Capacity Utilization 77.5% (consensus 77.9%); Prior was revised to 77.8% from 78.0%
    • The key takeaway from the report is that industrial production in September was pressured by two extraordinary factors, which implies a rebound in growth should follow as those extraordinary factors find correction. The Boeing strike held back growth by an estimated 0.3% and the effects of Hurricanes Helene and Milton subtracted an estimated 0.3%.
  • August Business Inventories 0.3% (consensus 0.3%); Prior was revised to 0.3% from 0.4%
  • October NAHB Natural Gas Inventories 43 (consensus 43); Prior 41

Friday's economic calendar includes the September Housing Starts and Building Permits report at 8:30 ET.

FT : Patek Philippe squares up in battle for young urban buyers with Cubitus wat

Patek Philippe squares up in battle for young urban buyers with Cubitus watch collection
The brand’s new line is its first since 1999 and is targeted at the increasingly popular sporting luxe market, amid an industry downturn


Patek Philippe has today unveiled its first new watch collection in 25 years, intended to reach an urban and trendy clientele, and counter a marked downturn in the industry.

Named Cubitus, the distinctively square-shaped watch with rounded corners has a sporty design and is designed to speak to the growing fashion for shaped models. It also underscores the popularity of the sporting luxe category, in particular luxury steel watches with integrated bracelets.

The launch of the Cubitus comes as Swiss watch exports declined 12.4 per cent in September, their worst monthly performance in the year to date, according to the Federation of the Swiss Watch Industry. The independently-owned Patek Philippe is largely seen as a bellwether for the industry, despite it not disclosing its annual financial performance. According to a Swiss watch industry report by Morgan Stanley, the watchmaker is ranked as the fifth largest, with annual revenue of SFr2.1bn ($2.4bn).

“Patek is the gold standard of the high-end complication mechanical watch industry,” says Aurel Bacs, an industry veteran and senior consultant for Phillips auction house, in association with his company Bacs & Russo. “It’s very impactful what Patek Philippe do, good or bad. And now that we’re facing difficult and challenging times, it’s even more important to see in what direction they lead the road.”

Patek Philippe launching a new collection, he adds, is significant. “It’s huge in the same way as Porsche launching a new model range, or Ferrari saying we’re doing an SUV.”

The launch of the Cubitus line was held in Munich’s Bergson, a former power station turned avant-garde cultural space. Days before the launch, there was an unofficial release of pictures of one of the new watches online, sparking reactions on specialist forums and social media. Thierry Stern, Patek Philippe president, said he was “disappointed and shocked” at the leak.

The new Cubitus collection debuts in three models. The platinum Reference 5822P features a large-format date, moon phase and day of the week, all of which change instantaneously; there are six patents pending on it. This is complemented by two models with a date function: the vintage-styled Ref 5821/1AR in steel and rose gold with a blue dial, and the all-steel 5821/1A featuring an olive-green dial. The watches are priced at £75,690, £52,480 and £35,330 respectively.

The Cubitus now sits alongside the watchmaker’s other sports watch collections, the Aquanaut and the Nautilus, both of which have long waiting lists. The Aquanaut launched in 1997, while the Nautilus, first created in 1976, was relaunched in 2006. Starting prices for steel Aquanaut and Nautilus models are £19,080 for Ref 5267/200A and £27,860 for Ref 7118/1A, respectively.

Stern said the most important aspect of the new collection was the creation of a new shaped, luxury sports watch with a strong design, in a market where 85 per cent of timepieces are round. The creation of a new line would allow it to be further extended to include a family of models. “My will, for more than about 15 years, was always to find a sporty line like this,” he said.


Thierry Stern says the watch industry’s downturn is cyclical and a return to more ‘normal’ times © Christophe Michaud/Patek Philippe
Asked about his views on the state of the market, Stern said the recent downturn was more cyclical, and reflected the industry returning to more normal, conservative times, following a post-Covid exuberance. He added, however, that the mid-range watches, priced at SFr5,000-SFr10,000, were “not in good shape”.

Stern said he envisions the steel model in particular as attracting ambitious buyers aged between 30 and 50 who are “on the move”, while the platinum Ref 5822P is clearly targeted at older clients — “but someone who is still cool and likes the hype”.

Work on creating the Cubitus officially started about four years ago, with its conception rooted in Ref 5822P, which has a completely new movement. Patek Philippe’s dedicated movement department can spend up to a decade developing calibres, and the house is currently working on movements set for release up to 2039.

For the Cubitus, Stern selected from this list of in-development movements, choosing one based on Patek Philippe’s ultra-thin self-winding calibre 240, while the new calibre’s big date display suited the watch’s square dial.

A small band of just four individuals at the company were involved in the Cubitus’s creation: Stern; Jerome Pernici, commercial and marketing director; Patrick Cremers, director of the brand’s Geneva flagship; and Eric Fague, head of creation. Stern also occasionally sought the advice of his sons, who are both in their twenties. “They are learning [the business], but I also like their comments,” he said.

An industry leader is always scrutinised in a much harsher and more close-up way than a smaller brand

Aurelrecalled Stern. Eventually, the final design codes of the Cubitus inched towards those of the Aquanaut and Nautilus, something Stern was unapologetic about considering those are the brand’s “strong lines”.

“When you expect me to go left, I like to go right,” he says. “It’s also part of my duty, to create something that people do not expect. I’m not a trend follower, and never will be. We have to surprise people.”

Auction house veteran Bacs says that, while Patek Philippe is an industry leader, brands should never underestimate the appetite of the market. “Even if your name is as great as Patek, Rolex, Ferrari, Porsche, you can get it wrong and launch something that is just not meeting the taste of the market,” he says. “And an [industry] leader is always scrutinised in a much harsher and more close-up way than a [smaller brand].”

In the meantime, Stern insists the new Cubitus is not indicative of a new strategy of launching more collections, more often, but about growing Patek Philippe’s customer base. Today, the brand produces 72,000 watches annually, around double when Stern first joined. “We had to be more selective [back then], we had no choice,” he said. Today, however, “I can slightly increase the number of different people who can own a Patek Philippe. I can open my collection a little wider.”

FT : New York art consultant pleads guilty to stealing $6.5mn from clients

New York art consultant pleads guilty to stealing $6.5mn from clients
Lisa Schiff advised wealthy collectors on contemporary works but admitted pocketing their funds intended for purchases

A former art adviser to stars including Leonardo DiCaprio has pleaded guilty to defrauding clients out of $6.5mn to fund what prosecutors claim was a “lavish” New York City lifestyle.  

Lisa Schiff, who ran a contemporary art advising business in Manhattan, had brokered deals for works by artists such as Wangechi Mutu, Sarah Lucas and Chloe Wise, but filed for bankruptcy earlier this year after being sued by former customers. 

On Thursday, US federal prosecutors said she had pleaded guilty to one count of wire fraud in “connection with the purchase and sale of approximately 55 artworks”.

They claimed Schiff — who had a roster of high-profile customers — pocketed money from her clients with which she was supposed to buy art, and diverted proceeds from the sale of certain works.

In total, Schiff defrauded “at least twelve clients, one artist, the estate of another artist, and one gallery”, according to New York federal prosecutors.

“For years, Lisa Schiff breached the trust of her art advisory clients by lying to them and diverting millions of dollars her clients had entrusted to her,” Manhattan US attorney Damian Williams said in a statement following the agreement.

A lawyer for Schiff, Randy Zelin, said the plea agreement showed his client “has accepted responsibility . . . and will continue to work to make amends”.

“This is one snapshot in a photo album filled with good work [and] professionalism,” Zelin added. “I do hope that she goes back to playing a role in the art world.”

Schiff had been a prominent figure in the city’s art scene since the launch of her SFA Advisory in 2002, and went on to open her own gallery in Tribeca in 2019.

Last year, she was accused of fraud in two civil lawsuits, including one brought by collector Candace Barasch, who claimed Schiff owed her at least $2.5mn for art purchases never fully completed. Schiff’s company filed for Chapter 7 bankruptcy protection in January.

Schiff is scheduled to be sentenced next year. She faces a maximum of 20 years behind bars, although prosecutors agreed to seek a prison sentence of no more than 51 months in her plea agreement.

Her collection, which includes artworks by Damien Hirst, is set to be auctioned at Phillips in New York next month as part of the bankruptcy process.

Reuters : Biden administration to ease restrictions on space-related exports to

Biden administration to ease restrictions on space-related exports to allies

Oct 17 (Reuters) - The Biden administration is easing export restrictions on U.S. commercial space companies to ship certain satellite and spacecraft-related items to allies and partners on Thursday, two people familiar with the matter said.

The changes are intended to make it easier for the growing U.S. commercial space industry to expand sales while also protecting national security and foreign policy interests.

U.S. space companies like Elon Musk's SpaceX, Lockheed Martin (LMT.N), opens new tab and Boeing (BA.N), opens new tab could benefit from the new rules.

Certain items involving remote sensing spacecraft or space-based logistics assembly, and servicing spacecraft will no longer need licenses for shipment to Australia, Canada, and the United Kingdom, one person said.

Some less sensitive satellite and spacecraft parts and components will no longer require licenses for shipment to over 40 countries, the person said. The countries include Canada, Australia, Japan, South Korea and most of the European Union, the second person said.

In addition, the Commerce Department will do away with license requirements for the least sensitive items like electrical connectors for most of the world, but not countries of concern like Russia and China, the people said.

The changes will be made in new rules due out from the Commerce Department on Thursday, the first person familiar with the matter said.
The rules come in response to an advanced notice of proposed rulemaking from nearly five years ago and a December 2023 National Space Council request.

After the 2019 notice came out, SpaceX urged the US to consider ways to "streamline export control regulations for US commercial space industry to lower administrative burden, decrease regulatory compliance costs and increase exports thereby bolstering the US space commercial sector and industrial base."

FT : IMF chief warns of ‘unforgiving’ debt backdrop and low growth

IMF chief warns of ‘unforgiving’ debt backdrop and low growth
Kristalina Georgieva says governments’ reluctance to rein in spending heightens public finances challenge

The head of the IMF has warned of an “unforgiving” economic backdrop for government finances around the world as she highlighted a widespread reluctance among politicians to rein in spending and raise taxes.

Kristalina Georgieva, the fund’s managing director, said rising levels of borrowing meant a growing share of government revenues was being used to cover interest payments, while “lacklustre” growth heightened the challenge of curbing debts.

“Our forecasts point to an unforgiving combination of low growth and high debt — a difficult future,” said Georgieva. Countries faced “high and rising public debt — way higher than before the pandemic”, she added, even after a fall in debt-to-GDP levels as inflation lifted nominal growth.

The managing director’s remarks ahead of next week’s IMF and World Bank annual meetings come as global public debt heads to a record $100tn by the end of 2024. Borrowing surged during the early stages of the coronavirus outbreak as economies were locked down. Many governments, including those of the world’s largest economies, are yet to bring spending under control.

The US is still running substantial budget deficits, while China’s government has recently pumped funds into the economy in an effort to support weak growth.

The IMF confirmed the world’s two largest economies were driving the global rise, in findings published this week. But in prepared remarks Georgieva also highlighted a “frightening evolution” in emerging and low-income countries, as more government income is set aside to honour debt-servicing commitments.

Georgieva said governments needed to lower debt and rebuild fiscal buffers to cope with potential economic shocks — something the managing director said “will surely come, and maybe sooner than we expect”.

Separate IMF research showed that discourse from politicians “increasingly favours fiscal expansion” rather than contraction, Georgieva said, increasing the hurdles to reining in debt.

A paper covering 65 countries and drawing on more than 4,500 manifestos from 1960 to 2022 points to a proliferation of policy proposals that tend to expand government spending. 

The share of discourse pointing to a fiscal expansion has increased 40 per cent across both advanced and emerging economies over the past three decades. Political discourse focusing on fiscal “restraint” had more than halved since its 1980s peak in advanced economies, the paper said.

“Even the traditionally fiscally conservative political parties are developing a taste for borrow-to-spend,” Georgieva said.

The US presidential election next month has been characterised by campaign pledges that point to increasing largesse on both sides of the political spectrum. The national debt stands at 99 per cent of GDP and, according to the Congressional Budget Office, is poised to surpass historical records and hit 125 per cent 10 years from now, if there are no changes to current laws. 

The Committee for a Responsible Federal Budget, a non-partisan group, found this month that if Donald Trump wins the election the debt-to-GDP ratio would rise 17 percentage points to 142 per cent of output by the middle of the next decade. The Republican nominee’s pledges to lower taxes for individuals and businesses, alongside plans to impose hefty tariffs and deport millions of immigrants, lay behind the rise.

Under Kamala Harris, the Democratic challenger, that ratio would also increase, albeit by a lesser 8 percentage points to 133 per cent of GDP in 10 years. 

In her speech, Georgieva said there had been some good news, most notably the global retreat of inflation, which had not been accompanied by a recession. Both the US and euro area labour markets are “cooling in an orderly manner”. 

However, the once-in-a-generation inflationary shock a few years ago would have enduring effects on household incomes, Georgieva warned. This is on top of continued geopolitical tensions, including the worsening conflict in the Middle East. 

Growth, meanwhile, is set to be lacklustre, according to the IMF, which in July predicted a global expansion of 3.2 per cent in 2024 and 3.3 per cent in 2025.  

“Budgets need to be consolidated — credibly, yet gradually in most countries,” said Georgieva. “This will involve difficult choices on how to raise revenues and make spending more efficient, while also making sure that policy actions are well explained to earn the trust of the people.”