Economic data tracker
Despite tariff reprieve, policy hopscotch adding to uncertainty

Trend watch

In terms of spring break season, roughly halftime, which is also a soft spot in the calendar. Weekly air passenger counts were basically flat in the past week to 16.3 million, though continues to run ahead of 2024 and 2019 on a year-to-date basis. Hotel occupancy climbed to 62.8%, a 15-week high, but they are on a one-week lag. 

Our take

The U.S. economy had been incredibly solid in the face of repeated punches from extreme weather, including hurricanes and union strikes during the autumn months, and winter storms, frigid temperatures, and the wildfires more recently. This was evident in the February jobs report, as U.S. payrolls increased by 151,000. The six-month average rose to 190,700, climbing back above the pre-COVID three-year average of 177,000. Those aren’t the markings of a weak economy.

But, if those aren’t enough to cause noise in the economic data, the uncertainty from the changes emanating from the new administration definitely have been – from tariffs and trade deals to Ukraine and DOGE.

Each of these has added to uncertainty and clouds decision making for businesses. Indeed, based on our conversations, businesses desperately want these trade issues to be resolved quickly. In fact, a sizable portion basically said, “even if tariffs are increasing – just tell us, but don’t hopscotch from one day to the next,” which would allow them to adjust and move forward.

Much like the Federal Reserve (Fed), many businesses are taking a ‘wait & see’ approach, which seems prudent. However, wait & see isn’t pro-growth either for the economy or for business profits. At the very least, it delays action that some businesses would have taken, while others may eventually choose to cancel plans all together due to the uncertainty.

Additionally, there are knock-on effects and unintended consequences. For instance, many big-name brands sell their products and services around the globe and are closely associated with the U.S. More than 40% of revenue for S&P 500 companies is generated from outside the United States.

Alas, American companies could feel the blowback as unfriendly attitudes at home such as aggressive tariffs and trade policies could negatively impact the international sales of some U.S. companies.

Thus, the game of chicken with the economy makes for a much bumpier path forward, particularly in the near term, as the threat of tariffs remains an overhang – for consumers, businesses, investors, policymakers, trading partners, etc. Ultimately, we believe that the U.S. economy should be able to power through the uncertainty, but it will take several months to reach the other side.

With respect to the Fed, which meets on March 18–19, we see them maintaining the ‘wait & see’ approach to additional rate cuts at the March meeting.

Bottom line

The U.S. economy remains resilient, and we believe solid growth will endure; however, it’s in a holding pattern awaiting resolution on the tariffs. Additionally, uncertainty regarding the impacts of policy shifts by the new presidential administration and Congress remain a further headwind for the economy in the near term. That has contributed to the recent bouts of volatility in financial markets, which we expect will continue for the foreseeable future.