Comments based on information available as of 9:30am CT on 4/17/2025
Growth: A Sprint Before The Stumble
U.S. retail sale leapt 1.4% in March, powered by motor‑vehicle purchases (+5.3%) and broad front‑loading ahead of 25% auto tariffs and higher levies on other goods. Core retail sales (excluding autos, building materials, food) rose a more muted 0.4%, signaling that the headline strength may not fully trickle through the broader consumer sector . Meanwhile, manufacturing production eked out only moderate gains as factories grapple with tariff‑induced input cost pressures and fading global demand. Together, these data suggest Q2 GDP growth could be propped-up with front‑loading, but only for a drop-off in Q3 absent a tariff reprieve.
Inflation: So Far So Good
In its March Survey of Consumer Expectations, the New York Fed found that the median one-year inflation expectation jumped half a percentage point to 3.6%. However, the five-year inflation expectation fell to 2.9%. This is good as it shows that consumers–for now–believe tariff-induced price increases will cause only a temporary increase in inflation. If there’s one thing that would tilt the Fed to a more hawkish stance it would be signs of those longer-term expectations becoming unhinged.
Policy: The Fed Put’s Expiration
Chair Powell said there is no “Fed put.” You’d expect him to say that, though. The “Fed put” is the idea that the Fed will swoop in to catch a fainting market. After failing to foresee how sticky inflation would be coming out of COVID, Chair Powell may genuinely believe that a little tough love for the market is worth it if it means the Fed can tamp-down inflation expectations and help rebuild the Fed’s credibility as an inflation fighter.
Looking Ahead: Keep Your Bearings
When macro surprises come from all directions, a well‑constructed financial plan is your best risk‑management tool. By aligning portfolio allocations with your time horizon, liquidity needs, and risk tolerance, you give yourself the option—not the obligation—to rebalance or add to conviction holdings when markets wobble. In choppy seas, a disciplined plan doesn’t eliminate volatility, but it allow you to keep your bearings.
