However, we want to remind clients that while trade headlines dominate the narrative, a broader set of economic and market indicators deserve equal attention.
This past week offered just such an opportunity, with new data on employment, GDP growth, inflation and corporate earnings providing meaningful insights into both current market and economic conditions.
We’ll note much of the data reported this week can be considered “pre-tariff” as the reporting periods were before Trump’s April 2 tariff announcements. Nevertheless, the data gives us a good perspective of how the economy has performed before entering what should be an eventful summer season.
Everything but Tariffs
April Jobs ReportWe’ll start with this morning’s April jobs report—the first hard data point since April 2. It was a strong report, with 177,000 jobs added in the month of April, higher than consensus estimates of 133,000. The unemployment rate remains at 4.2%.
Q1 GDP
Perhaps the most significant report this week was first-quarter GDP, which came in at -0.3%, marking the first negative reading since Q1 2022. This was below expectations of +0.4%, following a 2.4% gain in Q4 2024.
A closer examination suggests the headline number may be misleading. Imports surged 41%—the largest non-Covid increase since 1974—as businesses accelerated orders ahead of anticipated tariffs. This front-loading subtracted nearly 5 percentage points from the GDP calculation.
More concerning was the slowdown in consumer spending, with personal consumption expenditure increasing only 1.8%, the lowest read since Q2 2023 and down from 4% in Q4 2024. Federal government spending also declined, likely tied to recent cuts in contracts and jobs by the Department of Government Efficiency.
Source: Yahoo! Finance
Q1 Earnings Season
We are currently at the heart of Q1 earnings season, and results so far have been strong. According to FactSet, the blended earnings growth rate stands at 12.4%.
The caveat: forward guidance has grown notably cautious. A Wall Street Journal survey of 300 corporate executives found that 84% are “somewhat concerned” or “very concerned” about the political and legal landscape. Major companies including GM, JetBlue and Volvo have withdrawn 2025 guidance, citing the high degree of uncertainty in the business environment.
Personal Consumption Expenditures (PCE)
On Wednesday, we received the latest data on Personal Consumption Expenditures (PCE), the Fed’s preferred inflation gauge. Year-over-year inflation rose 2.3%, slightly above expectations of 2.2%, but also representing the slowest pace since September.
Conclusion
Altogether, this week’s data presented a mixed bag: some encouraging signs, several caution flags and a fair bit of “wait and see.”
Investors will be closely watching next week’s Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. While a rate cut is unlikely, Chair Jay Powell’s remarks on Wednesday will be crucial in gauging the Fed’s outlook on growth, inflation and policy direction.
Pay attention.
