Econ reports and stock market shows people already losing faith in Trump 2.0

Friday was a rough day for those of us that follow data on the US economy. Let's start with the housing market, which showed a drop in sales for January.

Newsletter: Existing-Home Sales Decreased to 4.08 million SAAR in January calculatedrisk.substack.com/p/nar-existi... It is likely sales will be down year-over-year in February with a combination of slightly higher mortgage rates, and due to a bump up in sales last year in February 2024.

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— Bill McBride (@calculatedrisk.bsky.social) February 21, 2025 at 10:06 AM

And the 30-year mortgage is still around 7%, keeping housing unaffordable for a lot of Americans. Not good there, either.

We also got a monthly checkin for the overall economy on Friday. And that showed a change in direction....downward.

That’s the first contraction in Services PMI since January 2023. @cnbc.com

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— Carl Quintanilla (@carlquintanilla.bsky.social) February 21, 2025 at 9:03 AM

Ugh. Although if you want a positive on it, at least the manufacturing index wasn't contracting like it was for the 2nd half of 2024! Maybe.

Oh, we also got an update on how US consumers are feeling? Well given that consumer spending was strong to end 2024, and wage growth is continuing, that'll give us a lift, right?

US consumer sentiment plunges over tariff and inflation fears:

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— CNN (@cnn.com) February 21, 2025 at 11:44 AM

The University of Michigan’s latest survey, released Friday, showed that US consumer sentiment declined in February for the second consecutive month, according to a final reading, down by a steep 10% from January. That was double the decline initially reported earlier this month. It’s a stunning about-face after American consumers and businesses grew hopeful (briefly) about the economy’s future following Trump’s election in November. The latest decline in consumer sentiment was driven by worries over Trump’s tariffs potentially jacking up prices.

A new CNN poll released Thursday similarly showed pessimism on the rise because of prices: Nearly two thirds of US adults nationwide, 62%, said they feel Trump’s isn’t doing enough to address inflation. The Michigan survey showed that Americans are now fearful of higher inflation on the horizon.

On the campaign trail, Trump promised to “bring down prices, starting on Day One.” Clearly, that didn’t happen. In January, consumer prices climbed at the fastest monthly pace since August 2023, increasing 0.5% from December.

And that was despite delusional Republicans not having their consumer sentiment fall at all. So imagine how bad it looks in the 60% of America that isn't in a Bubble of BS?

How did the stock market react to all this? Like it was realizing that things are already getting bad under Trump/GOP, and wasn't going to get better any time soon.

Why is the stock market down today? S&P 500 and Dow slide in worst day of 2025. #news #worldnews

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— News HQ (@newshq.bsky.social) February 21, 2025 at 9:55 PM

Stocks tumbled on Friday after weaker-than-expected economic reports suggested that President Trump's policies could be impacting U.S. business activity, while consumer sentiment dropped to a 15-month low.

Both the S&P 500 and the Dow Jones Industrial Average slumped 1.7% on Friday, marking their worst one-day declines since December 18, according to financial data firm FactSet. The tech-heavy Nasdaq composite index dropped 2.2%.

A preliminary report from S&P Global found U.S. business activity is nearing stall-speed, with growth decelerating to a 17-month low. Activity for U.S. services businesses unexpectedly shrank, and many businesses in the survey reported slumping optimism because of worries about policies from the Trump administration, including the potential for new tariffs and domestic spending cuts.

And that loss of nearly 750 points in the DOW came after a drop of more than 430 points on Thursday. Although to be fair, the S&P 500 is basically unchanged in the 1 month since Trump took office, so what happened at the end of the last week doesn't show a longer-term trend AT THIS POINT.

But if there's another month of disappointing retail sales, and if Elon Musk and Donald Trump's chainsawing of federal agencies starts showing up in higher unemployment numbers? And if we get a bad report at the end of this week on US consumer spending and incomes? Then the recession may well be in motion, and you'll see more people realizing that having a bunch of bro-ligarchs and Fox News talking heads in charge isn't a way to run an economy. Or a country.