Not much inflation yet from tariffs other than coffee

After Donald Trump announced widespread tariffs in early April, this week's inflation reports would tell us if prices were rising as a result. Well, Tuesday's CPI report seemed pretty good. And interestingly, what kept the CPI down in April was a sizable expense that had been rising in previous months – groceries.

Food at home declined by 0.4% after a 0.5% increase in March, and leading the way down was a product that had risen by nearly 1/6 in the 2 months prior to April.

…Five of the six major grocery store food group indexes decreased in April. Driven primarily by a 12.7-percent decrease in the index for eggs, the index for meats, poultry, fish, and eggs fell 1.6 percent in April after rising in recent months. The fruits and vegetables index decreased 0.4 percent over the month and the cereals and bakery products index declined 0.5 percent. The index for other food at home decreased 0.1 percent in April and the index for dairy and related products fell 0.2 percent. In contrast, the nonalcoholic beverages index increased 0.7 percent over the month.

Yes, eggs are still up nearly 50% in the last 12 months, but at least we got a month of declines to retrace what we’d been seeing at the start of 2025.

The biggest notable increase in grocery prices for April came with another product that often gets consumed in the morning. Coffee went up 2.4% last month, and has gone up more than 5% in the last 3 months. Some of this is due to droughts and floods in coffee-producing countries that has caused a shortage of supply, but we are also likely starting to see the effects of Trump tariffs, as most coffee in America has to be imported from other places.

The tariff hit is even coming to coffee places in Wisconsin, as shown in this Wisconsin Public Radio article from this week.

TJ Semanchin is a co-owner of Wonderstate Coffee, a Viroqua-based company with four locations throughout Wisconsin. He told WPR’s “Wisconsin Today” that recently-imposed tariffs from the Trump administration could spike the price the company pays for beans from countries like Nicaragua by as much as 28 percent.

The Trump administration has currently imposed 10 percent tariffs on goods from most countries. As part of a package of “reciprocal tariffs,” it also proposed a range of different tariffs on individual countries, including an 18 percent tariff on Nicaragua…

Coffee can only be grown in tropical environments, limiting the ability for farmers to grow coffee beans at scale in the United States. More than 99 percent of coffee consumed in America is imported, according to the National Coffee Association of USA.

Wonderstate Coffee purchases beans from Peru, Colombia, Guatemala and Mexico among other countries. Semanchin said even a 10 percent tariff is a significant dollar figure for his business to pay.

“For us, a container of coffee might cost around $200,000. So that tariff tax, if it stays at 10 percent, will be $20,000. That’s an additional $20,000 that we need to come up with. I’m literally borrowing that money from our bank to pay that tax,” Semanchin said. “We get hit with that upfront, and then as we absorb those costs, eventually we are going to have to look at increasing prices again.”

But I awaited Thursday’s report on the Producer Price Index to see if the tariffs were boosting prices for other businesses. And that was certainly NOT the case.

The Producer Price Index for final demand fell 0.5 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in March and increased 0.2 percent in February. On an unadjusted basis, the index for final demand rose 2.4 percent for the 12 months ended in April.

The April decline in the index for final demand is attributable to prices for final demand services, which decreased 0.7 percent. The index for final demand goods was unchanged.

Prices for final demand less foods, energy, and trade services edged down 0.1 percent in April, the first decline since falling 0.8 percent in April 2020. For the 12 months ended April 2025, the index for final demand less foods, energy, and trade services advanced 2.9 percent.

Now a lot of the drop in services is due to a drop in margins for wholesalers and retailers, and maybe that’s a tariff effect due to an inability to pass on higher costs. But I’ll also note that there was a second straight month of declines in the PPI’s index of food prices, which has unwound increases in producer costs of food for the first 2 months of 2025.

Eggs led the way in the decline, with a drop of more than 39%, and the added spike in egg prices that we had at the start of 2025 has now faded, at least for producers.

However, I’ll note that PPI for coffee went up another 1.9% in April after rising 2.0% in March, and coffee is up more than 20% for producers in the last 12 months. So don’t be expecting any relief from higher coffee prices at the store or in restaurants any time soon.

The only other places I’m seeing significant jumps in Producer Prices is for steel mill products (up 5.9% in April and 16.5% in the last 3 months), and various other types of metals (several have had price increased between 7-10% in the last 3 months). But the bigger economic concern I draw from the PPI may be the fact that the prices of several unprocessed farm products are dropping, and the declines are speeding up.

That’s an awful lot like when Trump had his last trade war in 2018 and 2019, which led to large increases in farm bankruptcies due to lower prices and an inability to sell to other countries. And likely helps explain why Trump/GOP are trying to sneak through $60 billion in farm subsidies in their “big, beautiful” scam of a tax bill.

Maybe it’ll be tomorrow’s release of the import/export prices that definitely show an effect on product prices after Trump announced his tariffs. But at least for April, prices seemed to remain in check for many parts of the economy, even if the expectation of price increases was there.

Fed keeps rates the same, and Trumpian idiocy keeps them from making moves

No surprise that the Federal Reserve Open Markets Committee kept interest rates at the same level today. The underlying economy hasn't gone into recession as far as we can tell, and the full effect of inflationary tariffs hasn't hit store shelves. But what was worth looking at was if the Fed statement would give clues about what they thought might happen with the economy in the near future.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

Mostly a non-statement, although "higher uncertainty" is not something Wall Streeters usually like to hear from central bankers. So there was a post-meeting wobble in the stock market after the 2pm Eastern release of the Fed statement, but it mostly recovered to the pre-2pm level by the time the market closed.

And Fed Chair Jerome Powell repeated that theme when he met with the media a 1/2 hour after the rate decision.

Fed Chair Jerome Powell knocked down any notion of taking preemptive rate cuts as inflation is still running above target. “It’s not a situation where we can be preemptive, because we actually don’t know what the right responses to the data will be until we see more data,” Powell said.

The Fed has been on hold since its last cut in December as it waits to evaluate the tariff impact....

“What looks likely — given the scope and scale of the tariffs — is that we will see certainly the risks to higher inflation, higher unemployment have increased. And if that’s what we do see — if the tariffs are ultimately put in place at those levels, which we don’t know — then we won’t see further progress toward our goals,” he said. “We might see a delay in that.”

Powell specified that this could delay the Fed’s timeline for the next year or so.

“In our thinking, we would never do anything but keep achieving those goals. But we would at least for the next, let’s say year, we would not be making progress toward those goals — again, if that’s the way the tariffs shake out,” he added. “The thing is, we don’t know that. There’s so much uncertainty about the scale, scope, timing and persistence of the tariffs.”

And let's be honest, if Powell took longer than he should have to lower rates from 23-year highs when inflation was lower than it is now, why would he drop rates and encourage more speculation and higher prices in other areas of the economy? I believe in jobs >>>> inflation, but there's no way we can tell at this time whether inflation or unemployment (or both!) will be heading toward 5% in the coming months, so no changes can or should be done today, and likely for a few months.

Which means that the fault in keeping rates elevated (by 2000s standards, anyway) lies entirely with Donald Trump's big mouth and the GOP Congress that won't reign him in. And I don't think we get this resolved when the Fed next meets in 6 weeks.

The only side that now wants to cut property taxes in Wisconsin? Gov Evers and Dems!

Every budget cycle, the Legislative Fiscal Bureau releases an analysis of what would happen to property taxes on a median-priced Wisconsin home if the Governor’s budget would go through. The 2025-27 budget’s version on that breakdown of property tax bills was recently released by the LFB, and it goes over the main factors in the budget that would affect how much Wisconsin homeowners would pay.

For school districts, the Governor's budget bill (SB 45/AB 50) would make several changes that would affect statewide school levies, including: (a) indexing the current law $325 per pupil adjustment under revenue limits to inflation starting in 2025-26 (estimated by the Administration at $334 in 2025-26 and $345 in 2026-27); (b) increasing the low revenue adjustment under revenue limits from $11,000 per pupil in 2024-25 to $12,000 per pupil in 2025-26 and $12,400 per pupil in 2026-27; and (c) providing $494 million in 2025-26 and $700 million in 2026-27 for state aid under general school aids. SB 45/AB 50 would also make a modification to the definition of revenue limits so that the personal property aid payment associated with the 2023 full exemption of all personal property from taxation would be under revenue limits, which would decrease school district levies by an estimated $57.4 million annually…..

….Beginning in 2026, counties and municipalities would be eligible to receive an aid payment from this newly-created program if their property tax levies in the year of the payment are less than or equal to their levies in the prior year (for the first year of payments, 2025(26) tax levies would be compared to 2024(25) levies). The amount of the payment would be equal to 3% of the county or municipality's payment year levy. After the first year of the program, if the county or municipality had received a payment in the prior year, the amount of its payment would be equal to 3% of its payment year tax levy, plus 1.03 multiplied by the payment it received in the prior year. The Administration estimates that this program would distribute $111.8 million in 2025-26 and $227.0 million in 2026-27. This aid program would be expected to reduce statewide county and municipal levies by an estimated $49.4 million in 2025(26) and by $108.5 million in 2026(27), compared to estimates of those levies under current law….

In addition to the changes that may affect the gross levies for local taxing jurisdictions, SB 45/AB 50 includes additional funding for the school levy tax credit. The bill would provide an additional $125.3 million in 2025-26 and $249.7 million in 2026-27, resulting in total funding for the credit of $1,400.3 million in 2025-26 and $1,524.7 million in 2026-27. Compared to current law, this would decrease net statewide property tax levies by the amount of the additional funding for the credit in each year.

So put it together with some relatively minor adjustments, and what do we get?

Total equalized values are expected to increase faster than the statewide median home value in both 2025(26) and 2026(27). As a result, the estimated property tax on a median-valued home will increase by less than the rate of change in overall levies in both years. Under the bills, statewide net property tax levies are estimated to increase by 1.3% in 2025(26) and by 2.4% in 2026(27). In comparison, the estimated net tax bill on a median-valued home is estimated to increase by 0.1% in 2025(26) and by 1.3% in 2026(27). Net tax bills are estimated at $3,421 for 2025(26) and $3,467 for 2026(27) under SB 45/AB 50, compared to $3,600 for 2025(26) and $3,761 for 2026(27) under current law.

And given that the LFB projects the median Wisconsin home value to go up by 6.5% this year and 3.0% in 2026, this means that the tax rates would continue to fall if Governor Evers’ property tax-related plans would be adopted.

The school funding plans aren't among the items that will be removed from Gov Evers' budget by Republicans on the Joint Finance Committee later this week (click here for the list) , but the incentive program for communities to freeze their taxes is on the chopping block.

Another item on that removal list is Evers; proposal to expand the state's Homestead Credit to catch up to inflation and higher Social Security incomes. The Homestead Credit offsets property taxes, and the income limits for it have not been increased since the Republicans took power in the State Legislature in 2011. Not surprisingly, this has cut the number of Homestead Credit recipients by nearly 2/3 in the state since then, and the LFB says that the amount of Homestead Credit paid out has gone down by an estimated $87.5 million.

So if Wisconsin Republicans want to keep property taxes from rising by another $344 in the next 2 years, keep tax rates from going up, and allow more Wisconsinites to get back some of their property tax payments with the Homestead Credit, they can go along with Governor Evers’ plans in the state budget. The GOPs should vote to increase resources for our community schools while limiting the taxes that pay for those K-12 schools, and can go along with Evers’ incentive payment for local governments that don’t raise property taxes.

Increasing state funding and reducing the burden of property taxes on Wisconsinites seems like a great way to use some of the $4 billion we have in the bank, and a much better idea than using those funds to cut income taxes for the rich. If the GOPs don’t go along with limiting property taxes while maintaining investments, every Dem across the state should directly blame Republicans next Winter if/when those tax bills go out to Wisconsin households.

April jobs report - not losing yet, but the danger is far from over

While the Trump Administration has ignited panic and fears of recession due to its arbitrary, punitive and often outright stupid economic policies, we have yet to see much that indicates the underlying economy has indeed started to retract. Yes, we had 1st Quarter GDP come in at -0.3%, but that was due to a surge in imports to get ahead of Trump-imposed tariffs, a surge that caused GDP itself to go down by 5%, and inventories to rise (and add to GDP) by more than 2%.

But while we keep getting news of announced layoffs in the federal government and layoffs starting to be announced in manufacturing as a reaction to the tariffs, we still have not seen much change in US unemployment. And the April jobs report released on Friday indicated that we were still in the same steady job growth trend as Q2 2025 began.

The US economy added a surprisingly strong 177,000 jobs in April, a slight slowdown from March’s downwardly revised 185,000 gains, according to Bureau of Labor Statistics data released Friday. April’s gain was stronger than the average pace of monthly job growth in the prior three months.

Meanwhile, the unemployment rate was unchanged at 4.2%, a historically low level....

April’s jobs report marks another solid month of employment gains and a continuation of a historic expansion of the labor market, but that’s on the backdrop of growing recession fears. And the April jobs report released on Friday indicated that we were still in a job growth trend as Q2 2025 began. It might have downshifted from the big finish to 2024 and start of 2025, but it's in line with what we were doing a year ago, and beating the lower gains we were seeing last Spring and Summer.

As usual, it was health care leading the way in job growth, with just over 50,000 jobs added in April. That takes the overall gains for 2025 in that sector to 195,000, and over 2.1 million Health Care jobs have been added in America since January 2022.

Seems like quite the growth industry. Why would we ever do something stupid like cut billions in medical research and treatment initiatives?

The White House on Friday revealed President Trump’s budget request for fiscal 2026, which includes cutting a quarter of the discretionary funding designated to the Department of Health and Human Services (HHS)....

The 2026 proposal is seeking to cut $33.3 billion in discretionary funding for HHS, representing a 26.2 percent reduction compared to the fiscal 2025 budget.

This includes a $3.6 billion reduction in discretionary funding for the Centers for Disease Control and Prevention (CDC), an $18 billion reduction for the National Institutes of Health (NIH), a $674 million reduction for the Centers for Medicare and Medicaid Services (CMS) Program Management and a $240 million reduction for Administration for Strategic Preparedness and Response (ASPR) Hospital Preparedness Program.

The only health program that gains discretionary funding in the proposal is HHS Secretary Robert F. Kennedy Jr.’s Make America Healthy Again (MAHA) Commission, for which the budget provides $500 million.

The budget claims these funds would “allow the Secretary to tackle nutrition, physical activity, healthy lifestyles, over-reliance on medication and treatments, the effects of new technological habits, environmental impacts, and food and drug quality and safety across HHS.”

Hey, why rely on data and invest in the biggest job growth sector in America when we can rely on feelings and quack remedies we made up to grift money on heard about on the Internet?

Back on the jobs report, UW-Madison's Menzie Chinn looked into the numbers underneath the jobs report, and found some strange items that aren't going to hold up in future months.

What about taking out transportation and warehousing employment, presumably booming relative to what post-tariff levels will be, look to be on a lower trajectory. Taking into account the fact that Federal workers on leave/furloughed and taking buyouts will eventually be counted as not employed suggests a lackluster employment growth rate since January.

The low estimate from CNN is 121K, while the high estimate of Federal government workers on leave, furloughed, fired or took buyouts is 280K. Some portion of the workers are probably not counted as jobs, so the red square is a guess.

Taken literally, using the red square, underlying net job creation is on the order of 100K — rather than 155K — over the last three months.

Those transportation and warehousing jobs went up by 29,000 in April, and include the trucking, rail, and air travel and transport industries. Given the collapse in foreign travel to the US and the major falloff in traffic and orders to US ports, you'd think those job gains reverse rather quickly. And as Prof. Chinn notes, at some point soon, we will see the amount of federal government and fed funding-related layoffs hit the jobs numbers full force.

In addition, the jobs numbers of February and March were revised down by a total of 58,000, which means that with the April report, we really were only up 119,000 compared to what was reported before that report. Which makes me wonder why the Wall Street traders have been jumping back into this market in the last 2 weeks, including a 564 point gain in the DOW Jones yesterday. It's like these coked-up fools don't understand that the tariff effects are mostly yet to come, along with the slowdowns in consumer spending, higher prices and possible shortages of some products, and the piling up of inventories in some others.

I'll also note that there is a lot of post-"Liberation (from your wallet) Day" economic data to be released, and if we started to see a consumer reaction as the stock market tanked in the first half of April. Just because the jobs report that reflects how things looked 3 weeks ago didn't have a lot of people newly out of work, it doesn't mean that it's all good and clear for the rest of Q2, or for that matter, 2025.

March was good for incomes, and tariffs sped up spending. But it's worse for now and the future

It got swallowed up by news of the decline in GDP, but yesterday also had strong spending figures in March, to try to front-run what was to come.

A car-buying frenzy, stoked by tariff fears, drove US consumer spending in March to its biggest monthly gain in more than two years, new data showed Wednesday.

Consumer spending leapt 0.7% from February, according to a Commerce Department report released Wednesday that showed Americans shelled out last month for durable goods, particularly automobiles.

The Commerce Department’s Personal Income and Outlays report — which provides the most comprehensive federal data on spending, income as well as the Federal Reserve’s preferred inflation gauge — further reinforced what the recent retail sales data and anecdotal evidence have been indicating: Americans picked up their spending and likely pulled forward some purchases out of fear that President Donald Trump’s tariffs will raise prices in the months to come.

You can see the big jump in autos leading the $134.5 billion (annualized) increase in spending from March.

On the other hand, the drop in gasoline prices for March cut into the spending increases, and overall I’d say it was a pretty good month for spending.

On top of the strong numbers, January’s decline in Personal Consumption Expenditures wasn’t as bad as originally reported, revised to a drop of just over $1 billion (annualized) instead of a decline of $56.6 billion. And February’s increase in spending was revised up, increasing by more than $112 billion instead of the originally reported increase of less than $88 billion. It would indicate that consumption in GDP might be revised up as well, when we see the 2nd release of those numbers at the end of May.

On the other side, incomes were revised down by $14 billion for January and $6.5 billion for February. That downward revision was driven by a lower-than-originally estimated amount of Medicaid benefit payments, while income from wage and salaries didn't change much at all, and continued with decent growth of 0.5% for March and 1.1% for Q1.

For the inflation part of that report, the positive news is that March’s figures flattened out, with total PCE inflation going down by 0.04% and “core” (non-food and energy) inflation rising by a puny 0.03%. The jumps in the previous 2 months meant that the Q1 rate of inflation was up by 3.6% overall and 3.5% of core, and it makes the Federal Reserve have to make a tough call as to whether inflation is picking up in 2025 because companies were trying to grab profits ahead of tariffs, and the underlying situation was stable (as flat March inflation would indicate).

Conversely, if the higher inflation of January or February meant overall prices were heading up even before the tariffs hit, and that the economy is going to slow down even further to avoid an inflationary cycle of 5-6% or higher – which would set the stage for ongoing stagflation and discourage rate cuts in the short term.

The income and spending report reiterates that if it wasn’t for all the distortions brought on by Tariff Man, we’d probably have seen the 2024 trend of decent economic and income growth continuing in Q1 2025. But because of the randomness and general idiocy coming from the White House, it led to a surge of imports throughout the first 3 months of the year, and likely pulled forward some purchases of autos and other large items into March that would have happened at a later time.

It tells me that when the imports stop coming here and the prices go up from the tariffs, we will likely have a larger cutback in spending for April and future months than we’d otherwise would have had. And that’s before we account for the lack of new orders that’ll be coming due to so much inventory piling up, and the job losses pick up.

And the verdict is...a slight drop in GDP

Well, we got the numbers on the GDP for the first quarter of Trump 2.0. And they were as wacky as we thought they might be.

So our final sales were even stronger than expected, but we had a drop in GDP? How does this happen?

Mostly because there was a lot of front-running of Trump's "Liberation Day" tariffs of April 2. Both in the surge of imports to avoid the cost of tariffs on the business side (which subtracts from GDP), and in a surge of non-residential business investment and inventories.

Imports dropped GDP by more than 5% but nearly half of that loss was recovered due to a large increase in inventories, likely related to that surge of imports not yet being sold. But what's the "non-residential investment" growth?

All computer/tech-related stuff.

Change in non-residential business investment, Q1 2025 (annualized)
Information processing equipment +$73.6 billion
Software +$16.1 billion
All other sectors -$8.8 billion

That could well be a tariff effect with technology components and foreign-made products in those 2 sectors, and it also likely includes purchases and investments for AI development (in a Bubble that's going to pop sooner than later) . Doesn't seem like an amount of growth that's going to be repeated for the future.

Also note that consumer spending growth got cut in half from the amount of boost it gave to economic growth in the last 3 quarter of 2024. We got indications that this might happen due to the bad retail sales and spending numbers we'd seen for the first 2 months of 2025. But March had a surge of retail sales that also got reflected in strong consumer spending figures released today, driven by a jump in (pre-tariffed) car sales.

While that might cause an upward revision in consumer spending when the next look at Q1 numbers comes next month, it also makes it less likely that March's spending increase sustains through Q2. I would guess the economic data for April and beyond will show what the new post-tariff spending baseline might look like, and it won't be as good as the numbers we had in March.

To me, there's one other big item in the GDP report that is going to have an effect on future numbers and policies.

Yeah, that higher inflation in the Fed's preferred index isn't going to lead them to want rate cuts any time soon. And much of that Q1 price increase has nothing to do with tariffs, since those products were already inside of the country before Trump imposed those duties. Sure, the same PCE number indicated prices flattened in March after 2 months of 0.4% increases to start the year, but do you think things will stay flat in April and the rest of Q2 with the tariffs taking effect (and businesses more than happy to blame tariffs to raise prices for extra profit)?

To me, the GDP report tells us that Trumpian chaos has already distorted Americans' spending choices for both consumers and businesses. The stage is set for a drop in demand from both businesses and consumers at the same time that there is more inventory to sell, and I can see a scenario where we see less economic activity and final sales dropping well below the 3% growth we saw in Q1, but we might not end up with a second straight negative number because the import surge ends and goes back to pre-2025 levels.

But make no mistake, it'll probably feel a lot more like recession than what we saw in a first quarter that had -0.3% for GDP. And there isn't going to be much in the real economy to change that direction once the layoffs and consumer cutbacks pick up.

Import surge continued in March. Which drops GDP for Q1, and makes Q2 slowdown worse

Today we found out that March was yet another month with a massive amounts of imports to America, as businesses tried to beat the “Liberation Day” tariffs declared by Donald Trump on April 2.

The international trade deficit was $162.0 billion in March, up $14.1 billion from $147.8 billion in February. Exports of goods for March were $180.8 billion, $2.2 billion more than February exports. Imports of goods for March were $342.7 billion, $16.3 billion more than February imports.

That’s quite the Trump effect for the first 3 months of 2025, isn’t it?

That explosion in imports will show up in tomorrow’s first look at Q1 GDP, as imports subtract from total domestic product. Now to be fair, this decline gets recovered when a final product that results from those imports is made and/or sold in the US, plus whatever profit the businesses pull.

But for Q1, it’s likely to take away from the totals, and March’s continued surge of imports dropped more than 1% from the final projection of GDPNow from the Atlanta Fed, which came out this morning.

After this morning’s Advance Economic Indicators release from the US Census Bureau, the standard and alternative model nowcasts of the contribution of net exports to first-quarter real GDP growth declined from -4.90 percentage points and -2.85 percentage points, respectively, to -5.26 percentage points and -4.05 percentage points.

Woof. But on the flip side, take out that import surge as well as increases in government purchases and overall inventories (which add to GDP), and the underlying economy generally has held up in the first three months of the year. As UW-Madison professor Menzie Chinn notes in Econbrowser.

Lastly, I also wanted to mention this part of the Census Bureau’s release, which to me includes a warning about things going forward.

Wholesale inventories for March, adjusted for seasonal variations and trading day differences, but not for price changes, were estimated at an end-of-month level of $908.0 billion, up 0.5 percent (±0.2 percent) from February 2025, and were up 2.3 percent (±0.7 percent) from March 2024. The January 2025 to February 2025 percentage change was revised from the preliminary estimate of up 0.3 percent (±0.2 percent) to up 0.5 percent (±0.2 percent).

So that’s two straight months of 0.5% increases in the value of inventories for businesses. Combine this increase in inventory with the rush of imports, and I don’t see much of a need to have much more to order in the coming months, do you?

Which helps explain why we’ve been seeing reports like this in recent weeks.

What makes the drop in consumer confidence in 2025 so remarkable to me is that the really bad stuff of layoffs (from a lack of orders) and higher prices (from tariffs) has largely yet to happen. But Americans seem to recognize that it’s coming soon enough, and if consumers start to cut back on their spending because of those well-founded worries about the future of the economy, then the recessionary cycle that we are likely to enter in Q2 will continue and deepen over time.