Economy and the Market?
Last week’s economic data was reported as anticipated. According to the Wall Street Journal, the United States added 177K jobs with the unemployment rate holding steady at 4.2%. Jobs were added to health care, transportation, and financial services.
The first quarter Gross Domestic Product (GDP) contracted (.3%). A surge in imports subtracted from growth. Companies and consumers both purchased goods ahead of anticipated price tariff hikes, which was the reason for the negative GDP print.
Corporate profits: according to Factset.com, 72% of S&P 500 companies reported 1st quarter results with 76% reporting upward profit surprises and 62% higher revenue than anticipated. Earnings growth is coming in at a robust 12.8%.
The 12-month forward PE ratio is 20.2%. The five-year average is 19.9 and the ten-year 18.3%.
In last week’s blog, I mentioned looking forward to hearing May’s economic reports next month, as we should start to feel impact from our tariff situation. Seems as if we may be playing that old game, “chicken.”
In the meantime, markets are attempting to play catch-up. For the week, the Dow rose 2.94%, the S&P 500 2.86%, Nasdaq 3.56% and the Russell 2000 3.29%.
Over the pond, markets are continuing their upward trend with foreign stocks higher by 2.29% and emerging markets up 3.62%.
Tariff Time or Not?
We anticipate costs on imported goods will now move higher. We still do not know how much, how it will work, or if companies will absorb part/all in lieu of passing it to you and me. Of course, the big question is: what will truly be the impact on the economy and the markets?
Depending on where you obtain information, opinions are all over the place. So much bias on both the right and left sides. Enough to make your head spin.
Journalists, the media, and economists can all sound convincing. Please take the time to explore the author’s natural bias before accepting their facts as your facts.
Tax Package?
In addition to tariffs, we anticipate hearing more on the budget and tax policy. The perpetual debate regarding who does or does not pay their fair share is exhausting.
Thoughts: if we can develop a responsible Federal budget this debate would not be so galvanizing.
Many believe the United States debt situation is not an issue and others believe its critically important. Interest payments on US debt topped one trillion dollars last year and are projected to increase annually. The more interest we pay annually, the more taxpayer dollars are required, leaving less money for other government spending programs and less in our pockets.
Do we have a revenue problem, or do we have a spending problem? Both or neither? My answer is both!!
All data sourced from Wall Street Journal, May 2, 2025.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested directly. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.
