Unless you’ve been under a rock for the past twenty-four hours, I’m sure you know that our President signed an order to begin reciprocal tariffs against most of our trading partners last night. The tariffs won’t actually be instituted until a week from now.
In response, the S&P 500 lost 1.6% today. Amazon was down as much as 9% in mid-day trading.
Earlier this week, the Fed decided to keep interest rates where they were, but the vote wasn’t unanimous. Two of the Fed Governors actually wanted to decrease rates.
This happened over a backdrop of unemployment holding almost steady at 4.1% and a housing market that’s one of the worst in history. Taking all of these factors into account, there’s one conclusion to be made.
We’re at one of those strange tipping points in economic history.
Let me leave you with this…
The first clue is the that Federal Reserve Governor votes usually don’t have dissenters. This is a result of the economy flashing mixed signals.
The unemployment rate has steadied at 4.1%. Normally this would be a good thing because inflationary economies that lead to recessions see unemployment rates that skyrocket.
Our labor market problems include…
1 – More people are out of the workforce than is typical for an economy with such a low unemployment rate.
2 – A large number of workers are seeing no or minimal wage growth.
3 – Barely half of all industries are adding jobs.
Consumer spending issues are trending down as well. Retail consumers are pulling back on discretionary categories like dining and travel.
The Housing Market is another factor to consider. Residential investment in real estate is declining as housing inventories grow. There’s only so many buyers who are willing to pay over 6.5% for money.
And the President just signed an order that will make most of what we buy more expensive. The next two months will tell us whether or not the Fed’s Decision to not lower interest rates was the correct one.
Their worry is being too aggressive too soon.
They don’t want to lower interest rates, then have inflation go crazy again so that they’re forced to increase them all over again. That happened back in the seventies and it was a nightmare.
No matter what happens in the coming months one this is certain. It’s a time for Conservative Decision Making.
Don’t put yourself or your business out on a limb. The music could stop without much notice.
If you have questions, you know my number. We wait, watch, and monitor…
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
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