Unpacking a big week for US economic data
Charts and takeaways from Tuesday’s jobs report and Wednesday’s GDP print, as the economy digests the tariff war
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This week is one of the biggest we’ve had in a while for economic data releases.
In the spirit of all this data, let’s run through some charts and takeaways.
JOLTS report
On Tuesday we received the Job Openings and Labor Turnover Survey (JOLTS) report. It was a mixed one.
On one side, we saw job openings miss to the downside and begin to roll over after a few months of positive surprises:
On the other side, we saw the quits rate actually increase, hinting at increased confidence in the jobs market by individuals willing to quit their jobs and find something better elsewhere:
It’s pretty rare to see these two prints diverge. I think we’ll need to see the jobs report on Friday to get a cleaner read on the direction of the labor market, which is a key driver of the Fed’s reaction function.
GDP print
As mentioned in yesterday’s newsletter, we received the first look at Q1’s GDP print, which was also quite mixed. The topline number of -0.3% quarter over quarter hid some interesting insights:
The big driver was net exports crashing lower, primarily due to a huge increase in imports. That mechanically lowers GDP growth.
However, looking at the more important components of GDP, consumption held up decently, and investment actually surged!
This hints at something I’ve been thinking a lot about recently, which is that tariffs could be creating a mirage in the hard data. This mirage creates the appearance of a strong economy because of all the tariff frontrunning that occurs from both consumers and businesses trying to buy goods before the tariffs truly begin.
Core PCE print
We also got the Core Personal Consumption Expenditures (PCE) print, which came in at 0% month over month (vs. consensus expectations of 0.1%)!
This kind of data shines a light on how, if it weren’t for the fear of tariff-induced inflation, inflation would be on a fast track back to target and the Fed would be cutting interest rates like mad.
ISM survey
Finally, today saw the ISM Manufacturing PMI survey results, which provide a leading look into how the economy is digesting the tariff war.
Overall, we’re seeing it hold strong, and I think this validates the notion that a lot of manufacturing activity has been frontloaded due to tariffs:
Out of the subcomponents, the aspect that continues to be of more interest to me is the prices-paid component, which continues to surge:
As one of the most leading indicators of inflation, this kind of uptick in prices paid does not bode well for the trajectory of rate cuts expected from the Fed.
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