Macro & Market Musings are weekly insights on Growth, Inflation, Policy and Looking Ahead from Annex Wealth Management’s Chief Economist, Brian Jacobsen. Brian, a frequent contributor on CNBC and Fox Business News, hosts regular updates on the economy and markets. Check our events page for Brian’s next live event.
Comments based on information available as of 7:15am CT on 5/2/2025
Growth: From Pull-Forward To Fall-Off
First quarter gross domestic product (GDP) fell 0.3%. That’s an annualized pace, meaning the quarterly fall was closer to 0.07%. So, basically flat. There was a surge in imports as businesses and households pulled forward as much spending as possible on things that could be subject to tariffs. Now that people are stocked-up, there will likely be a large fall-off in spending. Tariffs don’t just shift spending from the future to the present, higher prices means lower quantities, fewer funds available for investment, and lower real incomes. Instead of an economy firing on all cylinders, there’s some tariff-sand in the gears.
Inflation: Inflation Is A Choice
There’s nothing mechanical about how or when tariffs will affect inflation. It will come down to how businesses can adapt to tariffs and how brave they are in trying to push prices higher. It also depends on how willing and able consumers are to accept price increases. Over the next few months we will likely see lots of trial-and-error in seeing who eventually bears the cost of tariffs.
Policy: Calculating Instead Of Speculating
On Tuesday, markets reacted positively to Commerce Secretary Lutnik’s statement that a trade deal had been reached with an undisclosed country. US Trade Representative Greer said deals could be announced in a matter of weeks, not months. That would be good so analysts can start calculating instead of speculating about the cash flow impacts of the new trade environment.
Looking Ahead: Haves And Have Nots
The outlook is cloudy. Companies are unable to provide visibility, so many are providing scenarios. Scenarios aren’t necessarily the guidance investors want, but it’s the guidance they need. There are those who have a plan and those who don’t. Quality of management matters more than usual these days.
