Consumers & Macro Economy Executive Summary
Positive Trends
- Total nonfarm payroll employment rose by 228,000 (+1.2%) in March, the unemployment rate remained stable at 4.2%.
- Both hourly and weekly wage rate increases continue to exceed the change in inflation.
- CPI showed a cooling of inflation compared to the previous month, with the first monthly decrease in nearly five years. The annual inflation rate also saw a slight moderation. Declines in energy and some transportation costs contributed to this slowdown, and core inflation showed the smallest annual increase in two years.
Key Headwinds
- Consumer sentiment is a significant red flag as it reached its lowest level since June 2022. This pessimism, fueled by concerns about trade wars and the broader economic outlook, can translate into reduced consumer spending, which is a major driver of the U.S. economy, potentially leading to a slowdown or even recessionary pressures.
- Ongoing trade disputes and anticipated tariffs are a major concern, as they distort markets, increase costs (evident in March 2025's vehicle sales surge), and risk retaliatory actions, harming economic activity and trade.
Concerns
- ontinue to strain household budgets, potentially leading to decreased consumer spending and impacting overall economic growth.
- Uncertainty among businesses and consumers re: economic impacts from added tariffs.
- U.S. GDP grew at an annualized rate of 2.3%, marking the slowest growth in three quarters, based on 3rd estimate from the Bureau of Economic Analysis.
- The Fed remains committed to approach rate cuts cautiously in 2025 due to continued inflation concerns.
Key U.S. Economic Indicators
Gross Domestic Product
In the fourth quarter of 2024, the U.S. real GDP grew at an annualized rate of 2.4%, according to the third estimate from the Bureau of Economic Analysis (BEA).
Real gross domestic product increased at an annual rate of 2.4 percent in the fourth quarter of 2024, according to the third estimate released by the U.S. Bureau of Economic Analysis. The increase in real GDP in the fourth quarter primarily reflected increases in consumer spending and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased.
Source: U.S. Bureau of Economic Analysis
Federal Funds Rate
Economic uncertainty has led Fed policymakers to advocate a cautious stance on additional monetary policy changes – the Federal Funds rate showed no change month-over-month.
Mortgage Rates
Mortgage rates through early April remain slightly below 7%.
Source: Federal Reserve Economic Data, Federal Reserve Bank of St. Louis
Mortgage Rates
Mortgage rates through early April remain slightly below 7%.
* Source: FreddieMac Mortgage Market Survey
U.S. Labor, Employment, Wages
Labor – U.S. Employment
Total nonfarm payroll employment rose by 228,000 (+1.2%) in March, and the unemployment rate rose slightly to 4.2%.
Source: U.S. Bureau of Labor Statistics
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