Reports may show if economy is toughing out tariffs
May 26, 2025
An observation one hears regularly from everyone from Federal Reserve Chairman Jerome Powell to stock market bulls goes like this: "Gee, this economy is doing pretty well. What's everyone worried about?"
This week may well see many economic analysts offering a one-word answer: "Plenty."
And maybe we will see soft data and hard data start to converge.
The soft data — which gauges how people look at things — will come from the Conference Board Tuesday morning with its Consumer Confidence report.
In April, the business-research group said consumer expectations for the future dropped to its lowest level since October 2011. The opinion on present conditions was down only a little.
Boos for the tariff plan
The report took survey responses until April 21 — not long after the stock market greeted President Trump's tariff plan with a huge Bronx cheer. The Standard & Poor's 500 Index fell 12.1% over the first four days after release of the plan; it was off as much as 14% at one point.
So, one can understand if opinions were, shall we say, frayed.
The index is up 12.5% since April 21 — and 16% from the post-tariff announcement low. However, thanks to President Trump's threat on Friday to slap Apple
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and the European Union with big tariffs, it is still off 1.3% for the year.
(On Sunday, the president said he would suspend the EU tariff increases until July 9. Stock index futures promptly rallied.)
A second bit of soft data will come Friday from the University of Michigan's revised Consumer Sentiment Index for May. Like the Conference Board, this survey looks at current and future expectations. The index has been trending lower for some time, with worries about tariffs and the economy top of mind.
At the end of April, a report from Oxford Economics forecast that U.S. industrial output would shrink by 0.8% between 2025 and 2026 as a direct result of the tariffs.
Will the hard data catch up?
The hard data that should shed light on the issue comes Thursday with the weekly report on jobless claims. Any kind of a jump will be worrisome. (Hard data is based on government and related reports.)
So, too will the National Association of Home Builders' pending home sales report, also due Thursday. (The survey measures contracts signed but not yet closed.)
The April report showed gains, but that may have been due to winter weather easing. This one won't have weather as a factor. The street estimate is for a 1% decline.
The report will list interest rates as a worry. Mortgage rates were hovering right around 7% on Friday, up from 6.6% at the end of March.
Affordability is a big-time issue for many buyers — a function of price and financing.
Mortgage rates have been troublesome this year. Big home builders have been forced to subsidize mortgage rates to get sales to close.
But, in many cases, sales have fallen apart. One in seven home sales — about 56,000 deals — fell through in April, online real-estate company Redfin reported last week. That was the highest cancellation Redfin
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had seen since since the Covid-19 pandemic erupted in 2020. Redfin has been collecting data on the topic since 2017.
One more housing report to watch: the Case-Shiller National Home Price Index for March, released by Standard & Poor's Core Logic. The February report showed 4.5% home-price inflation with the New York area seeing 7.5% year or year gains. Tampa saw a 1.5% decline.
Why care about home sales?
Because the act of buying a home generates a large amount of ancillary spending: appliances, power tools, lawn mowers, curtains, paint, furniture.
Economies in states like Florida, Texas and Arizona depend on housing growth.
Housing has had a weak year. You can see it in the iShares U.S. Home Construction exchange-traded fund
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. It tracks homebuilding and home-improvement stocks and was down 0.5% on Friday. It's down 13.2% in 2025.
The ETF's include Lowe's Companies
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, paint maker Sherwin-Williams
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, and home builders Lennar
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and PulteGroup
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.
More Economic Analysis:
Also on tap next week:
Durable goods orders from the Commerce Department.
Orders jumped 7.5% in March as businesses bought equipment and to get ahead of tariffs. Look for a decline in April.
Due Tuesday
.
The Personal Consumption Expenditures Index from the Commerce Department
— and the Fed's preferred inflation measure. The Street estimate is 2.3% year over year and 2.6% once food and energy are stripped out. The numbers would confirm the likelihood the Fed leaves its key federal funds rate at 4.25% to 4.5% until at least July.
Due Friday.
Gross Domestic Product
— the government's snapshot of economic activity. The Street estimate is for a 0.3% decline in its first revision.
Due Thursday.
Chicago Business Barometer. From the Institute of Supply Management.
This is seen as a leading indicator the domestic economy. The April index was 44.6%, meaning business was declining. The report also suggested that businesses were adding temporary surcharges to cope with tariffs.
Due Friday.
