10 April 2025 US Monitor Stagnation still lies ahead, as the trade war narrows but deepens

• Uncertainty remains high even after Mr. Trump’s blink; for now, the tariffs imply a 1% uplift to consumer prices.
• …That’s a slightly smaller boost than we previously factored in, but the outlook for exports has darkened.
• China’s 84% tariffs will inflict a 0.3% blow to US GDP; we still expect the economy to slow to a near-standstill.

9 April 2025 US Monitor Using tariff revenue to cut taxes would offset little of the wider damage

• Tariff-funded tax cuts would simply give with one hand while taking more with the other.
• The net federal revenue available is likely to be just $200B, after accounting for the weaker economy.
• We look for a below-consensus 0.2% rise in the March core CPI; it’s too soon to see impact of China tariffs

8 April 2025 US Monitor Rules of thumb to navigate through the tariff crisis

• Recent falls in oil prices and shipping costs will offset about one quarter of the tariff boost to inflation.
• The $10 fall in WTI oil prices, however, also points to a 0.1% hit to GDP via lower business investment.
• The fall in financial wealth is consistent with households’ spending undershooting its trend by 0.7%.

PM Datanote: US Employment, March

Healthcare driving payroll growth again; ongoing support will offset some tariff damage.

7 April 2025 US Monitor Payroll growth will slow, but it's too strong for the Fed to ease in May

• The stock price drawdown is historically consistent with a 1% fall in payrolls, but slow gains are more likely.
• Most services firms have little exposure to tariffs; leading indicators of hiring are weak, not on the floor.
• The healthcare sector will remain a jobs juggernaut; falling manufacturing payrolls will drag modestly.

4 April 2025 US Monitor Stagnation in GDP is now our base case, after the tariff shock

• The average effective tariff rate will jump to 22%, from 3%, if Mr. Trump follows through on his plans.
• We now look for a tariff uplift to the core PCE deflator of about 1¼%, half a point more than our prior assumption.
• The outlook for capex and exports is worse too, but fiscal and monetary policy can offset some damage.

3 April 2025 US Monitor Break-even payroll growth likely has stepped down, but only modestly

• Border Patrol encounters have fallen to zero, but unauthorized immigration likely will rebound soon.
• ICE arrests have risen only slightly; the hit to labor force growth so far is modest.
• A shrinking wage growth premium for job switchers suggests lower core services inflation ahead.