The Week in Review: March 3, 2025
A Whiff of Uncertainty
There are times when the economic data is strong, and when considered together, the economic reports surpass expectations. Such cycles run their course, and the economic reports turn softer. That overperform/underperform cycle can repeat itself multiple times during an economic expansion until the economy finally rolls over, and we land in a recession.
Currently, economic growth appears to be moderating, but more data is needed before we can draw a definitive conclusion. Let’s review one key metric for the economy: consumer spending.
The graphic below illustrates the monthly change in real (adjusted for inflation) consumer spending. Spending in January tumbled 0.5%, the worst reading in nearly four years.
Following eight straight increases, one month’s decline isn’t unusual. Occasional declines are to be expected. Sales may have been hurt by cold weather across much of the country in January.
Yet, in February, consumer confidence took a hit amid concerns over tariffs and higher prices. In February, consumer sentiment fell 7 points to 64.7.
However, shifts in consumer sentiment do not always lead to immediate changes in behavior. A couple of years ago, the survey reached a record low, yet a recession did not ensue. High prices darkened the mood—considerably darkened the mood—but most people kept on spending.
Nevertheless, some economic uncertainty has crept into the picture.
The president says he will enact new tariffs against China, Mexico, and Canada this week, and the market is experiencing some volatility.
Major market indexes are near their all-time highs, and it is unsurprising that volatility surfaces occasionally. Recent economic uncertainty may be temporary, but the current economic situation bears watching.
Market Summary
Please do not hesitate to contact me with any questions or concerns.
I hope you have a great week!
Bill Stordahl, CFP®
Managing Director
Stordahl Capital Management
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1. The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
2. The NASDAQ Composite is an unmanaged index of companies which cannot be invested into directly. Past performance does not guarantee future results.
3. The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.
4. The Global Dow is an unmanaged index composed of stocks of 150 top companies. It cannot be invested into directly. Past performance does not guarantee future results.
5. CME Group front-month contract; Prices can and do vary; past performance does not guarantee future results.
6. CME Group continuous contract; Prices can and do vary; past performance does not guarantee future results.