Trump tariffs tank the market today, and manufacturing set to tank in near future

So what's going on in the US financial news today?

Seems like it'll be quite an adjustment for people. For no good reason beyond...they can?

While there was a minor decline in the trade deficit in February compared to January, it's still a massive jump compared to where we were at the start of 2024.

February exports were $278.5 billion, $8.0 billion more than January exports. February imports were $401.1 billion, less than $0.1 billion less than January imports.

The February decrease in the goods and services deficit reflected a decrease in the goods deficit of $8.8 billion to $147.0 billion and a decrease in the services surplus of $0.8 billion to $24.3 billion.

Year-to-date, the goods and services deficit increased $117.1 billion, or 86.0 percent, from the same period in 2024. Exports increased $24.0 billion or 4.6 percent. Imports increased $141.2 billion or 21.4 percent.

This is a clear example of businesses trying to get imports into the country before any Trump tariffs would raise the costs of those products. And in addition to that big jump in imports, new orders and shipments for manufacturing went up in February.

New orders for manufactured durable goods in February, up two consecutive months, increased $2.8 billion or 1.0 percent to $289.4 billion, up from the previously published 0.9 percent increase. This followed a 3.4 percent January increase. Transportation equipment, also up two consecutive months, led the increase, $1.5 billion or 1.5 percent to $98.4 billion. New orders for manufactured nondurable goods increased $0.8 billion or 0.3 percent to $304.5 billion.

Shipments of manufactured durable goods in February, up three consecutive months, increased $3.4 billion or 1.2 percent to $292.3 billion, unchanged from the previously published increase. This followed a 0.7 percent January increase. Transportation equipment, also up three consecutive months, led the increase, $2.0 billion or 2.1 percent to $96.7 billion. Shipments of manufactured nondurable goods, up five consecutive months, increased $0.8 billion or 0.3 percent to $304.5 billion. This followed a 0.3 percent January increase. Chemical products, up twelve of the last thirteen months, led the increase, $0.6 billion or 0.8 percent to $83.7 billion.

Let’s remember that these new orders and imports happened before the main tariffs hit, so they shouldn’t cost as much for consumers vs orders and imports that happen after the tariffs hit. But I bet that won’t stop those businesses from raising prices in the coming weeks and blaming the tariffs, while pocketing large profits on the excuse.

If we had an administration that really wanted to improve things for American workers and consumers with these tariffs, they’d include this announcement with an added emphasis on going after price-gouging companies in the coming months. But does anyone believe an administration that is defunding the CFPB and the SEC to allow companies to avoid consequences for defrauding consumers and investors is going to do anything legit to stop price-gouging? Me neither.

All of this would indicate a growth scenario in manufacturing, and we did see a rush to buy cars last month, even as consumer sentiment collapsed. But given that the economy is (to be kind) in an uncertain place, I’d be surprised if a lot of people want to run out and buy vehicles and other goods in big numbers in the near future, especially if they've already pulled some purchases forward.

That means there won't be buyers for the added orders in manufacturing, so there won't be any need to keep this level of production going. Businesses can try to pass on the higher costs from tariffs to consumers, but I doubt consumers will go along with it if they have any choice. So you’ve got a collision of several factors that lead to further declines in manufacturing in the coming months.

Now combine those cutbacks in manufacturing and consumer spending, and do you see a scenario to keep the economy growing in 2-3 months? I sure don't, and then compound it with major job losses imposed by the Trump/Musk Administration, the latest coming from the US Department of Health and Human Services.

But hey, this will bring back manufacturing jobs to the US, so it's worth it, right? Isn't that the headline on factory jobs that I saw today?

Just hours after the latest tariffs went into effect, Stellantis has announced it would idle plants and begin layoffs.

President Donald Trump’s 25% tariff on imported vehicles was put into action at midnight, Thursday, April 3. The White House has also said it plans to place tariffs on key auto parts and components.

In a letter sent out Thursday morning, Stellantis’ North American COO Antonio Filosa said that despite seeing market growth since January, the company would idle its Windsor Assembly Plant for two weeks and its Toluca Assembly Plant for April and temporarily lay off 900 workers.

"With the new automotive sector tariffs now in effect, it will take our collective resilience and discipline to push through this challenging time,“ Filosa wrote. ”But we will quickly adapt to these policy changes and will protect our company, maintain our competitive edge and continue delivering great products to our customers."

I don't think this is the “winning” that low-info voters imagined they were going to get with a Businessman in the White House. But it sure looks like the type of careless idiocy that a lot of us tried to remind these low-info dipshits about, and instead those folks decided to follow what the algo told them was "expertise" instead, and now we are all going to be paying the price.

What to look for in Tuesday's election - trends and turnouts

You may have heard there's a big statewide election here in Wisconsin on Tuesday. God knows it's hard to avoid in these parts if you watch any TV with commericals (outside of Brewers games on the FanDuel TV app, which is a nice respite), or if you're reading any Wisconsin-based newspaper.

I wanted to examine the results some previous statewide races for both Supreme Court and in statewide races that Republicans won by 1% in November 2022 and 2024, so we can get an idea what benchmarks to look for as the votes come in on Tuesday night. These races include:

The last 3 Wisconsin Supreme Court races. These races were held in April of 2019, 2020 and 2023. Conservative Brian Hagedorn won the 2019 race by less than 1%, while Dem-backed Jill Karofsky and Janet Protasiewicz won the 2020 and 2023 races by double digits each. I will also look at WisGOP Ron Johnson's win in 2022 by 1% in the US Senate race, and Donald Trump's 0.9% win in the 2024 presidential race here.

As usual, I will look at two dimensions of the election results - the amount of Wisconsin's vote share based on where votes are cast, and how much better or worse Dems or Republicans did in those areas across the various elections.

I'll start with voter turnout, which was larger in each of the last 3 Supreme Court elections, with 2023's election to decide the balance of power having total votes go up by more than 50% compared to 2019's election.

Total votes Wisconsin Supreme Court elections

2019 Wis Supreme Court 1,207,569 total votes
2020 Wis Supreme Court 1,549,697 total votes
2023 Wis Supreme Court 1,843,480 total votes

Are we making it to 2 million total votes this time? More?

Obviously who votes, and where the votes are coming from are important when analyzing things. I tend to break down Wisconsin into 7 different regions when it comes to voting results.

1. The City of Milwaukee
2. Milwaukee County outside of the City of Milwaukee
3. The WOW Counties of Waukesha, Ozaukee and Washington in the Milwaukee suburbs
4. Dane County (Madison and surrounding suburbs)
5. The BOW Counties of Brown, Outagamie and Winnebago in northeastern Wisconsin
6. The combined totals from Racine and Kenosha Counties in the SE corner of the state
7. Everywhere else in Wisconsin

As you will see, in all of these statewide elections, slightly more than half of the state's votes come from the first 6 mostly urban areas, and somewhere between 45-47% votes tend to come from the rest of the state.

You'll see that the outstate votes take up a bit more of a share of the November electorate than it has in the last 3 April elections, and so does the City of Milwaukee, while the higher-turnout areas of Dane County and the WOW Counties combine for 26-28% of the Wisconsin electorate in April, but only have made up 23-24% of the electorate in November.

This may not seem like a big difference to you, but in a state where the last 2 presidential races and the last 2 US Senate races have been decided by 1% or less, any movement of 1-2% could be a deciding factor. For example, if people in these areas voted Dem vs GOP in the same rates that they did in November 2024, but the turnout shares were the same as April 2023, Kamala Harris would have beaten Donald Trump 49.33% to 49.03% in Wisconsin, instead of Trump winning the state 49.60% to 48.74%.

This helps explain why Brad Schimel is allowing Elon Musk and the rest of the GOPs that want to flip the Court to be as bro-ey and as awful as they've acted. They need the votes of low-info and mis-info'd dipshits low-propensity voters that have voted for Trump and Johnson in November elections, but aren't as likely to vote in an April election.

The outstate voting results in Wisconsin are interesting to look at for another reason, as the Dem-supported candidates have done better there in the Wisconsin Supreme Court races (including 2019 loser Lisa Neubauer, who got 45.5% of outstate votes) than the 41-42% numbers that Mandela Barnes and Kamala Harris pulled in the last two November elections. Maybe race factors in here (Crawford is a white woman, like Neubauer, Karofsky and Protasiewicz are, and Harris and Barnes are not white), or maybe it's an April-November thing, but it's an interesting difference.

However, Neubauer did not better than Barns and Harris in Racine/Kenosha and the BOW Counties in her 2019 loss to Hagedorn, while Karofsky and Protasiewicz exceeded 50% in both of those areas in their double-digit victories.

So on Election Night, if Susan Crawford is winning in the BOW Counties and is at or near 50% in Racine and Kenosha, she's not just likely to win, but the race may be called rather early for her. Likewise, if Schimel is comfortably ahead in the BOW and Racine/Kenosha, and he is rolling up sizable margins outstate, that would put him in a strong position.

There's also been a noticeable trend in the state's 2 largest metro areas - Milwaukee and Madison. Dane County and the City of Milwaukee are strongly blue, giving between 75% and 81% of their votes for the Democratic-supported candidates in these 5 elections. But Trump did make some percentage gains in Dane County in November 2024, mostly with college bros, and that kept him from getting as destroyed in Dane like other GOP candidates had in recent elections (although Dane County's larger vote share still gave Harris a larger margin than Biden had vs Trump in 2020).

That Dane County shift for 2024 also helps explain this report that I've seen.

(Side note - If you know of anyone that's trying this, feel free to drop Wisconsin AG Josh Kaul and the Wisconsin DOJ a line at 608-266-1221, and give the local DA a jingle as well.)

We'll see if the "bro strategy" works like it did last November for WisGOP. But if abortion is a central issue to voter turnout on UW campuses in both Madison and statewide, that's advantage Crawford, as I can attest that around 3/4 of the votes at the Madison campus location I worked at in the April election came from college-aged women, and Judge Janet dominated there as well as the rest of the Madison area. You'll also see that Protasiewicz did extremely well in the Milwaukee County suburbs, grabbing nearly 65% of the vote. And as we saw above, the Milwaukee County burbs usually account for more votes than the City does in April elections, so that's a double boost for Dems if they can rebund at or near that 65% level on Tuesday.

Maybe that strong result in the Milwaukee County burbs was related to now-Justice Janet being a Milwaukee County judge at the time, or because it was less than a year after the Dobbs decision, and a more-educated people in the burbs weren't going to let Wisconsin's 1849 abortion ban stay around. Will the same suburban swing hold in April 2025, especially after Trump used trans rights as a wedge issue (and Schimel and his allies are trying some similar "you vs them" BS today)? Good question.

Lastly, we have the vote-rich WOW Counties, where Republicans used to run up the score in November elections until the Trump era, and even did so in state elections through the end of the 2010s, as the main reason Hagedorn snuck out a win over Neubauer in the 2019 Supreme Court election was because he pulled nearly 70% from WOW. But while Republicans still get the majority of the votes from the WOW Counties these days, Dems have made steady progress in shrinking the deficits.

As noted on the turnout part, WOW tends to have a larger share of the statewide vote in April elections than in November ones, and Schimel being from Waukesha County makes for an interesting wild card here. If he gets some kind of hometown boost, that could have a significant payoff in the final results.

The flip side of that is a lot of the Trump 2.0 Resistance seems to be coming from the burbs, and the WOW Counties have been slanting towards Dems in the Trump era. In fact, it was the one area of the state that Harris did better in 2024 than Biden did in 2020. Schimel tying himself to Musk and Trump could be a loser here, especially as Trump's approval rating deteriorates and more people would rather see the state Supreme Court protect Wisconsinites from Trump and Musk instead of acting as a protection racket for those 2 and their donors.

I'm not in the mood for predictions here, not after last November and not when there is a different electorate than what we have in November elections. But I do hope this helps you ID the trends and the numbers to look for, to see if Schimel or Crawford are hitting their marks, and if we get a result that is more like the Dem blowouts of 2020 and 2023, or the down-to-the-wire close GOP wins of April 2019, and November 2022 and November 2024.

Incomes, spending OK for February, but a lot bad signs for the future

We’d seen several economic reports that indicated February wasn’t going to have the bad overall numbers that we saw in January. And that continued on Friday with February’s release of the US's income and spending figures.

Personal income increased $194.7 billion (0.8 percent at a monthly rate) in February, according to estimates released by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)— personal income less personal current taxes—increased $191.6 billion (0.9 percent) and personal consumption expenditures (PCE) increased $87.8 billion (0.4 percent).

Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $118.4 billion in February. Personal saving was $1.02 trillion in February and the personal saving rate—personal saving as a percentage of disposable personal income—was 4.6 percent.

That sounds like an impressive jump in incomes, which you’d think would indicate a strong economy. But look further into the report, and you’ll see that more than half of the increase in February’s incomes were in the category of “personal transfer receipts”, and not wages and salaries.

So what kind of income is that?

• The increase in personal current transfer receipts was led by government social benefits to persons and other current transfer receipts.

o Within government social benefits, the increase primarily reflected premium tax credits for health insurance purchased through the Health Insurance Marketplace.

o The increase in other current transfer receipts was led by business payments to persons, reflecting settlements from a domestic medical device manufacturer and a social media company.

It’s one-time stuff from Obamacare tax credits and class-action settlements. Not something that was widespread among a large number of Americans.

Take out that “personal transfer receipts” figure, and incomes only went up by 0.46%. Still beating inflation, but not by much, as PCE inflation was up 0.32% in February and 0.36% in the core measure that excludes food and energy.

That PCE figure is what grabbed the attention on Wall Street, which began a decline that got worse throughout the day, ending up with a loss in the DOW Jones Industrial Average of more than 700 points.

US stocks opened the day lower and began to slide as data from the Commerce Department showed inflation in February remained slightly sticky.

The Personal Consumption Expenditures index rose 2.5% year-over-year in February, unchanged from January and matching expectations. Yet the core PCE index, which strips out volatile categories like food and energy, ticked up to 2.8% year-over-year from 2.7% in January. That hotter-than-expected rise signals that inflation, while broadly cooling, remains above the Fed’s target of 2%.

Meanwhile, consumer sentiment tanked 12% this month, according to the University of Michigan’s latest survey released Friday.

The selloff gradually turned into a rout as investors dumped stocks in industries including technology, autos and airlines. Google slid 4.9%, Stellantis slid 4% and Delta Air Lines slid 5%.

The Atlanta Fed sure didn’t like the data it was getting on Thursday and Friday, as it dropped its GDP Now estimates to -2.8%, and even its “adjusted for the huge amount of gold imports in January” figure went negative.

What's remarkable is that the largest tariffs haven’t even hit yet, but inflation was already on rising in Trump 2.0’s first full month in office. In addition, another report from late this week showed the large increase in the trade deficit for goods that we saw in January didn’t go down much in February, and was nearly $148 billion for the month.

That’s a clear front-running of the tariffs, and without a big pick up in spending on those goods, you have a recipe for serious cutbacks in the coming months. Those cutbacks might not affect Q1’s employment and growth numbers, but it sure could after that.

So does it look like we’re winning with the “businessman president” and his South African billionaire sidekick/owner in charge?

Upon further review - less manufacturing and more service gigs in Wisconsin

Wanted to catch up with the Wisconsin jobs report from last week, which gave the numbers for January 2025. On the surface, not bad, but also nothing extraordinary.

Place of Residence Data: Wisconsin's unemployment rate was 3.2% in January, 0.8 percentage points below the national rate of 4.0%. Wisconsin's labor force decreased by 1,200 over the month but is up 20,700 over the year. The number of people employed decreased 3,800 over the month to 3,082,900 employed, but up 10,600 over the year.
• Place of Work Data: Total nonfarm jobs increased 5,700 over the month and increased 20,900 over the year to 3,053,300 jobs, a new high.

But as I have mentioned before, these January state jobs reports are a bigger deal to me for what the revisions of prior years show us vs what they tell us about how the new year began. And it looks like job growth in 2023 ended up being faster than we knew, and 2024 leveled off a bit more than what was previously reported.

Put it together, and Wisconsin had 5,500 more total jobs at the end of 2024 than what we knew before, but 500 fewer jobs in the private sector.

Not much of a change within the overall picture. But it should be a big concern to see that manufacturing jobs in Wisconsin did not recover last year, as was originally reported, but instead continued to lose jobs in late 2023 and all of 2024.

The lower revisions in manufacturing were made up for with higher amounts of jobs in several sectors, including: professional services (+7,500), private educational services (+3,300), health care and social assistance (+4,200), accommodation and food services (+7,400), and local government (+5,500).

These revisions are heavily influenced by the recently released update to the Quarterly Census of Employment and Wages (QCEW), which runs through September 2024, and you’ll find that Wisconsin wasn’t alone when it came to Midwestern states having subpar job numbers. Both overall and especially in manufacturing.

It's a small consolation that Wisconsin ended up 2nd for job growth in the Midwest between September 2023 and September 2024 in that QCEW survey (+0.44%, only trailing Minnesota). It again illustrates that while job growth kept continuing in 2024, it wasn’t at the same strong pace we saw in the first 2 years of the Biden tenure in the White House. And maybe that was a hidden thing that a lot of us didn’t account for ahead of the November election.

Despite the slower job growth, the overall picture in Wisconsin still seemed good for January. The state’s unemployment rate was still low at 3.2%, well below the US rate of 4.0%. While above the state’s lows of 2.6% at the end of 2022 and start of 2023, we also saw the state’s labor force grow by nearly 78,600 over the last 2 years, and the number of working Wisconsinites went up by more than 62,000 in the same time period. And the revisions show that even more Wisconsinites were in the labor force and in jobs than we knew before.

I’ll take that, but it also underscores the real challenge in keeping the growth in the labor force and jobs going for 2025. And with headwinds like tariffs and job cuts for federal workers and researchers, what’s happening in DC is going to be a serious barrier to things getting better in Wisconsin in the near future.

A tale of 2 tax plans

2 recent releases spell it out well, both at the state and federal level, when it comes to tax plans.

On the national side, here's what Yale University got when they looked at spending cuts and tax changes in the Trump/GOP budget outline.

Back here in Wisconsin, the Legislative Fiscal Bureau has just released its distributional analysis of Governor Evers' tax initiatives in his 2025-27 budget. And it shows that nearly 3/4 of Wisconsinites will pay lower income taxes under Evers' plan, and just over 1% (which are almost all 1%ers) will pay more.

In addition, Evers includes property tax cuts as a method of giving more state funding to schools and municipalities, along with a sizable increase in spending that generally assists more lower-income Wisconsinites than higher income ones (although a lot of the Evers initiatives are universal in nature).

WisGOPs are likely to remove most if not all of these items, and push a tax cut that will undoubtably give the highest benefits to the richest Wisconsinites.

Choose you tax plan accordingly, folks!

Lots of imports, no tariff consistency, and few orders to match? Not a good combo

The country's manufacturing situation was already struggling before Donald Trump took office, with over 100,000 jobs lost in the sector in 2024, and America now has 135,000 fewer jobs in manufacturing than they did in its February 2023 peak.

There was a growth in new orders for manufacturing in January following 2 months of declines to round out 2024. But as I have mentioned before, the boost in new manufactured orders for January was almost entirely due to a one-month increase of $9.8 billion in non-defense aircraft. The dollar amount for the other 97% of manufactured goods was basically unchanged, with new orders for auto bodies actually dropping by 1.5%, and construction machinery orders down 2.2% for January, and down 6.4% year-over-year.

Then turn around to another report from last week which showed a massive increase in imports for January, in order to front-run possible Trump tariffs. This was especially true with “finished metal shapes”, which went from $13.75 billion of imports in December to $34.23 billion in January. These are basically pre-made structural beams and tubes that require little to no further manufacturing once it gets to America.

Given today's events, you can see why manufacturers of metal items were trying to stockpile their imports. Look at this routine from our Dear Leader, which helped prompt another losing day on Wall Street.

President Donald Trump is reversing course and no longer doubling tariffs on steel and aluminum imports from Canada, Peter Navarro, the White House’s senior counselor for trade and manufacturing, said Tuesday.

The abrupt shift comes in response to Ontario Premier Doug Ford saying he would suspend a 25% electricity surcharge on about 1.5 million U.S. energy users in New York, Michigan and Minnesota....

Trump's turnabout came after saying Tuesday morning that he would be doubling tariffs on Canadian steel and aluminum imports, set to go in effect Wednesday, from 25% to 50%. With Trump backtracking, the steel and aluminum tariff rate for Canadian imports will remain at 25%.

So who knows how much it'll cost to import these products tomorrow, or how much it'll cost to make them here? Not a recipe to keep the economy growing, that's for sure.

But all of that extra product is going to have to be sold some time soon. And if some burst of demand doesn’t appear in the coming months (and it ain't), those products might have to be dumped at a loss, without much of a need for further orders and business in future months and years. Those bad business situations would be even worse if demand goes down due to recession.

Oh, and did I mention there was an increase of more than $1 billion in passenger car imports for January at the same time that there was that January decline in orders for auto bodies, and a January increase in inventories for cars and trucks. But at the same time, tariffs seem likely to raise prices of imported cars right when there is a lack of demand from both business and consumers.

If the laws of supply and demand still exist, it sure seems like we have a recipe for falling profits and lower production in the auto industry. And likely other manufacturing industries.

Jobs report and Powell's words mask that worse numbers are likely coming soon

The monthly jobs report always get headlines and notice in both the financial and economic media. But this was especially true for the report for February that dropped on Friday, as there had been significant turmoil in Washington DC over the last month with mass firings announced at numerous federal agencies by the unelected (and unauthorized) Elon Musk and his broccoli-haired dweeby acolytes.

So here came the report on Friday and it ended up...mostly business as usual for now.

That seems odd, given all the stories we've been reading. Also, federal government jobs were only down 10,000 and not 100,000+. So what gives?

Ahh, that explains it. You'll have to wait untilnext week to see the larger drop in federal jobs...if the numbers are legit, of course.

What saved the stock market from having yet another down day were statements later on Friday from Federal Reserve Chair Jerome Powell. Powell said that the Fed would....wait and see, I guess?

"We do not need to be in a hurry and are well-positioned to wait for greater clarity."

The central bank leader added in a Q&A portion following his speech that "the cost of being cautious is very, very low. The economy is fine. It doesn't need us to do anything, really, so we can wait and we should wait."…..

"The new administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation," Powell said. "It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy."

In other words, a one-time spike in prices due to tariffs alone would not be appropriate for the central bank to react to, according to Powell, since restrictive monetary policy would reduce employment and activity at a time when it would not be needed....

Still, Powell cautioned that most economists are forecasting some inflationary effects from tariffs that will likely hit exporters, importers, retailers, and, to some extent, even consumers. If those effects are significant enough to impact longer-term inflation expectations within the context of the current environment, "that would matter," Powell said.

That doesn't seem like anything that should give you great confidence that things will stay as good as they were in 2024, or that interest rates will be going down more any time in the future. But I guess Powell and Wall Street traders aren't going to admit that reality until the DOGE job losses actually hit the jobs reports and unemployment claim numbers over the next month, and we see another month of disappointing consumer spending.

While the February jobs report seems relatively benign, there was one part in the full official release that seems to be getting ignored.

The number of people employed part time for economic reasons increased by 460,000 to 4.9 million in February. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs.

The number of people not in the labor force who currently want a job increased by 414,000 to 5.9 million in February. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.

The number of people whose hours were limited due to economic reasons were at their highest non-COVID levels since 2018, and the number of people who have held themselves out of the labor force despite wanting work is at its highest non-COVID level since 2016.

That seems like a sizable one-month increase for both of these categories, and it was a big reason why the U-6 unemployment rate jumped from 7.5% to 8.0% in February.The U-6 increase could be a weird one-month thing in a cold month, so we can see what next month's report says before panicking. But it could be a clear sign of trouble where one large-scale event of job loss and/or drop in economic activity ends any chance of growth, and tips us over into recession (HI, DOGE!) . And once that cycle starts, it takes a lot more effort to reverse the momentum of job and demand losses.