Are There Clouds Looming Over the US Economy?

While I studied economics in college I look at economic data through the eyes if a trader. To put it simply, is data under or over performing expectations and how is the market reacting to the report?

In this regard, recent US data has been surprising to the downside. This has seen stock markets pause/correct and bond yields fall sharply.

Clouds over the U.S. Economy

Taken at face value the data suggests the U.S. economy may be hitting a road bump. Logic says weaker consumer sentiment, housing, Walmart forward guidance warnings, sticky inflation, government upheaval in the first 5 weeks of the Trump presidency, geopolitics, threat of tariffs and a trade war, etc are enough clouds to raise concerns over the economy. Yet, the jobs data remains solid and this is the area that bears watching for any cracks in the foundation.

With that said, is the economy turning softer?

It remains to be seen whether some brutal winter storms and the effects of the devastating LA fires along with the high price, for example, of eggs are exaggerating signs of a weaker economy.

Well, we can’t control the weather or natural disasters so will have to see what future data shows to get a better feel.

In the meantime, a focus will be on whether President Trump follows through on his threats to impose tariffs.

This is the major storm cloud hanging over both the US and global markets.

So let’s take a look at the tariff deadlines

March 4, 2025: A 25% tariff to be levied on all exports from Mexico and on Canadian exports (excluding energy products, which are subject to a 10% tariff)

March 12, 2025: A 25% tariff on all steel and aluminum imports into the U.S., aimed at protecting domestic manufacturers.

As of February 24, 2025, President Donald Trump has outlined a series of reciprocal tariffs targeting various U.S. trading partners. These measures are designed to address perceived trade imbalances and protect domestic industries.

April 2, 2025: More tariffs are planned, including a 25% tariff on lumber and forest products.

Details on the threat to impose 25% tariff on imports of automobiles, semiconductor chips, and pharmaceuticals are expected to be disclosed on April 2, 2025.

Should Traders Take President Trump at His Word?

To sum up, while there are som3 clouds hovering over the economy, it is the battle on n the tariff front that has the greatest potential to impact markets. How this plays out will depend on whether Trump’s threats are more bark than bite keeping in mind when playing high stakes geopolitical poker, there is always the risk on unintended consequences.

Are There Clouds Looming Over the US Economy?