Tariff Uncertainty Shakes Up Builders, Retailers, and the Fed: What It Means for You
🏗️ Tariff Uncertainty Shakes Up Builders, Retailers, and the Fed: What It Means for You
If you've been wondering what's happening with the economy lately, you’re not alone. Between new tariffs, shifts in consumer spending, and rising questions about interest rates, there's a lot to unpack. Here's a quick update on what's happening behind the scenes - and what you should be watching if you're thinking about buying, selling, or investing in real estate.
📈 Powell Puts Inflation First - Even Over Jobs
In a recent speech to the Economic Club of Chicago, Fed Chair Jerome Powell made it clear: while both low inflation and strong employment matter, inflation is winning the battle for now.
If inflation rises (and tariffs could certainly fuel that), the Fed typically keeps interest rates higher to slow things down. Meanwhile, slowdowns usually call for lower rates to stimulate growth. It's a balancing act, and Powell emphasized that “without price stability, we cannot achieve long periods of strong labor markets that benefit all Americans.”
👉 Bottom Line: The Fed will likely hold tight on rates until they get more clarity from upcoming inflation and jobs reports.
🛒 Retail Sales Jump - But Is It Just a Rush Before Tariffs?
Retail sales surged 1.4% in March, the biggest monthly jump in over two years. A lot of that was fueled by consumers rushing to make big purchases - especially cars - before new tariffs kicked in.
However, the “control group” (which filters out volatile items like gas and food) rose only 0.4%, which suggests a little less underlying strength than the headlines suggest.
👉 Bottom Line: While March looked strong, it may just be a case of consumers "buying ahead," which could slow future retail reports. Consumer spending drives the economy, so the Fed will be watching closely.
🏘️ Home Builder Confidence Still Feeling the Pressure
Home builders are hanging in there - but just barely. Builder confidence nudged up slightly to 40 in April (from 39 in March), but that’s still well below the 50 mark that separates expansion from contraction.
Future sales expectations dropped sharply, signaling that builders are bracing for a tougher road ahead - especially with tariffs increasing building material costs.
👉 Bottom Line: Builders are cautious, and with material prices staying high, we could continue to see slower construction. That keeps inventory tight, which supports home values even in a challenging market.
🚧 Housing Starts Take a Big Hit
Housing starts fell 11.4% in March - the largest drop in a year.
Single-family home construction was hit even harder, down 14.2% from February.
On a more positive note, building permits ticked up slightly, but higher costs may keep many projects from breaking ground.
👉 Bottom Line: We're still not building enough homes to meet demand. As long as that's the case, home values should stay strong over the long run, even if new construction slows.
👷♂️ Jobless Claims: Good News, With a Catch
Initial jobless claims dropped to 215,000 - the lowest since February. That’s good news in the short term.
However, continuing claims (people still collecting unemployment) rose again to 1.885 million.
👉 Bottom Line: Companies aren't laying off huge numbers of workers yet - but they're cautious about hiring. Longer job searches hint at some underlying softness in the labor market.
🗣️ Final Thought: Stay Informed and Stay Ahead
Markets are always shifting, and right now we're seeing a tug-of-war between inflation, interest rates, and consumer confidence.
If you’re thinking about buying, selling, refinancing, or investing, let’s connect. A good strategy today could make a big difference for your future.
And remember - if any of your friends, family, or co-workers are thinking about buying, selling, or refinancing, can I count on you to introduce us via text or email?
You'll be giving them the gift of having an expert in their corner.
Make it a Successful Week,
Steve McNeal
📞 209-522-7100
📨 Steve@FirstCapitalMortgageInc.com
🌐 www.promlo.com/mcneal
🔗 Schedule a Strategy Call