Macro Monday – April 28, 2025

Last week, the U.S. economy faced a confluence of challenges that are beginning to reshape the financial landscape.

The International Monetary Fund (IMF) revised its U.S. GDP growth forecast for 2025 down to 1.8%, citing escalating trade tensions and policy uncertainties as the primary factors behind the downgrade.

Inflation expectations have surged again, with one-year household forecasts reaching 6.7%, the highest reading since 1981.
Markets responded with increased volatility:

                  •               The S&P 500 (SPY) closed at $550.85,
                  •               The Nasdaq-100 (QQQ) at $472.41, and
                  •               The Dow Jones Industrial Average (DIA) at $402.27.

In the housing market, homeownership rates fell to 64.5% in Q1 2025, down from 65.8% at the end of 2024.  This cooling suggests that higher borrowing costs and growing uncertainty are beginning to weigh on consumer confidence and big-ticket purchases.

These developments reflect a fragile economic environment where high inflation expectations could further erode purchasing power, cool consumer spending, and strain corporate margins. A slowdown in GDP growth alongside a weakening housing sector points to rising risks of an economic deceleration. If trade tensions escalate further or inflation expectations become entrenched, the Federal Reserve could face even tougher decisions ahead—balancing the fight against inflation with the risk of tipping the economy into recession.

Looking ahead, investors should watch closely for two key releases this week: the April jobs report and the Federal Reserve’s next rate decision. Both will be critical in assessing whether the U.S. economy can maintain its footing or if more turbulence lies ahead.

We’ll continue to monitor these developments to help you navigate what’s next.