President Trump’s recent tariff announcements, and the global response, have meant a fast-changing policy landscape with significant effects on our global, national, and subnational outlook.
Marquis Green
US President Trump ordered a 25% tariff on autos and auto parts, starting on April 3.
President Trump ordered a 25% tariff on autos and auto parts, starting on April 3.
Wealth effects proved to be a quite reliable tailwind to consumer spending this cycle.
Our bottom-up framework of how imports feed into consumer spending identifies where we expect the largest tariff impacts.
Our internal recession models support our opinion that a looming downturn is unlikely, despite rising recession risks.
Tariff threats and heightened trade policy uncertainty began causing stress in supply chains.
Despite weaker-than-expected gains in headline consumer and producer prices in February, the source data that feed into the PCE deflator show few signs of a slowdown, something that won’t sit well with the Federal Reserve as the boost from tariffs is still to come.
Cuts to the Federal government workforce, which we estimate to be 200,000 in 2025, will have a modest impact nationally, but more significant implications for the Washington, DC metropolitan economy as it accounts for 17% of all non-military federal jobs in the US.
Tariffs typically result in a one-off rise in the level of prices.
A North American trade war unfolded in dramatic fashion this week.
As consumer sentiment deteriorated, concerns about the outlook for consumer spending increased. While there’s a statistically significant relationship between sentiment and consumption, the economy has withstood shocks to sentiment without falling into a recession.
On March 4, President Trump placed 25% blanket tariffs on Canada and Mexico, except Canadian energy products that would be subject to 10% tariffs, and an additional 10% across-the-board tariff on China.
The nominal goods trade deficit was at its widest in January, signaling businesses had front-loaded goods shipments ahead of new and potential tariffs from the Trump administration.
The Federal Reserve’s policy strategy review is likely to codify what officials are already doing in practice – regular inflation targeting.
We will revise the forecast for federal employment significantly lower this year, and in subsequent years, because of the announced layoffs and anecdotes about the number of federal employees that have accepted the buyout offer.
First-quarter GDP is tracking weakly at 1% annualized, but we think a lot of the swings in the data are driven by temporary factors, including the unseasonably cold weather in January and the front-loading of imports ahead of tariffs.
After a surge of activity during the Covid-19 years, growth in life science-related industries has
slowed considerably and we expect job gains to lag in the coming years as the market corrects.
For many households, tax refunds represent the biggest cash-flow event of the year. It’s early, but we think this will be a favorable tax-refund season for filers.
The risks to our participation rate forecast are numerous and largely weighted to the downside, implying unemployment could fall further.
