Diverging economic signals in the U.S. have sparked a debate about a potential slowdown driven by President Trump’s trade policies. While consumer and business sentiment surveys hint at an impending slowdown, government data on employment and manufacturing suggest that fears of a recession may be exaggerated. This conflicting information is causing uncertainty across Washington and Wall Street, as the economy shifts from a global standout to a source of anxiety.
Surveys from the University of Michigan and The Conference Board indicate that consumers are worried tariffs will raise prices. Major companies like Nike and Delta have echoed these concerns, resulting in a significant stock market decline. Andrew Hollenhorst, Citigroup’s chief economist, noted the importance of these surveys, stating that they reflect public sentiment about future economic conditions.
In early March, consumer expectations plummeted to a historic low, with respondents foreseeing rising prices at the fastest rate in thirty years. Fed Chair Jerome Powell attempted to alleviate inflation worries, labelling outlier surveys as misrepresentations. He suggested that policymakers should maintain interest rates until clearer effects of Trump’s trade policies emerge.
Initial optimism following Trump’s election has waned due to the focus on tariffs, price hikes of essentials, and falling stock values, stirring growth apprehensions. The Trump administration has done little to soothe fears about the economy, hinting at delays before a “golden age” is realised.
Analysts like Stephanie Roth at Wolfe Research noted that the actual impact of tariffs was underestimated and should have been addressed before the anticipated growth from business-friendly policies. Hard economic data indicates a cooling economy, with moderate job gains and slight upticks in unemployment, but it still points to a robust labour market.
While some positive signs like higher factory output exist, these statistics are countered by disappointing consumer spending trends. Powell remarked that soft data reveals significant concerns, yet no immediate impacts on hard data are evident. This uncertainty weighs heavily on both Wall Street and Main Street.
Business owners like Alicia Barker are feeling the strain of fluctuating trade policies, with rising material costs exacerbating challenges. Barker highlights the difficulties in making strategic decisions amidst a fog of uncertainty regarding tariffs.
Diverging U.S. economic data raises concerns about a potential slowdown influenced by Trump’s trade policies. While sentiment surveys hint at growing anxiety, government data suggests fears of recession may be overstated. Despite some positive indicators, uncertainty persists for consumers and businesses as the impact of tariffs remains unclear.
The U.S. economy currently faces conflicting signals, with surveys indicating rising consumer anxiety while hard data suggests a more stable situation. Concerns around tariffs and their effects on prices contribute to an atmosphere of uncertainty. Policymakers remain cautious, waiting for more definitive trends before implementing changes, as business sentiment weakens under the weight of unpredictable trade policies.
Original Source: www.bnnbloomberg.ca
