NEWS
What Happened Last Week
A US trade court ruled on Wednesday that President Trump did not have the authority to impose sweeping tariffs under an emergency powers law; however, this ruling is on hold while the Administration makes its appeal.
The US effective tariff rate hovers around 17.8%, highest since 1934.
Consumer debt appears to be in moderate condition, with credit card and auto debt balances shrinking in Q1; however, credit card and student loan delinquency rates have increased.
Jobless claims still remain within what’s considered a normal range at 240,000.
A recently released survey of the economic well-being of US households in 2024 also reveals that US households started 2025 relatively healthy financially relative to the previous two years (though still down from 2021 before inflation spiked).
Gigs and odd jobs have become regular ways that individuals are making ends meet (more than 20% of survey respondents), and evidence exists that demand for labor may be weakening.
How I See It
The US economy remains in a state of great uncertainty as the rules of trade seem to change, or be questioned, by the day.
And that is illustrated in the conflict between feelings and actions of investors: the Fear and Greed Index indicates greed (usually associated with optimism) making a comeback, while the AAII Investor Sentiment Survey indicates pessimism and fear.
Yet despite the uncertainty and the negative sentiment, the US economy remains resilient by a number of important measures.
And that’s a very powerful signal.
President Trump obviously is significantly impacting market movement by his actions, down as well as up, but the tariff policies are likely the biggest impactor of global markets that he’s planning to employ.
Other surprises could crop up: new legislation regarding accounting rules, regulation of tech companies, geopolitical tensions, or monetary policy blunders being just a few examples.
But with what we know now, markets have had essentially three months to scrutinize the possible impacts of this new global economy, and forward-looking stock prices seem to indicate that things may not be quite as bad or scary as they seem.
Uncertainty is very high right now, well above average, and could easily be at one of the highest points it will be during President Trump’s term. He’s had about four months to lay out his plans, and while he will surely implement more surprises, none are likely so impactful to global GDP as tariffs across the board.
If markets stomach this (and it appears they will), it’s my opinion that they have room to grow from here.
As I’ve said before, the key to success is for Trump and the Fed to inspire confidence in future economic stability, because sentiment and expectations often create self-fulfilling prophecies if sustained over time.
The Fed still has monetary policy in its pocket to implement, and Trump’s intentions toward economic prosperity, are likely enough to keep low sentiment from leading us into recession this year.