Despite growing caution among consumers, key economic indicators point to a steady and resilient U.S. economy in 2025.
In April, the U.S. labor market remained strong, with payrolls expanding by 177,000 jobs and the unemployment rate holding at a historically low 4.2%, signaling continued confidence in hiring across sectors.
Price pressures also showed signs of easing. The Consumer Price Index (CPI) increased just 0.2% last month and 2.3% over the past year, the slowest annual inflation rate since early 2021, according to the Bureau of Labor Statistics.
Retail spending, though slightly moderated, remained in positive territory with a 0.1% gain in April following a strong 1.7% rise in March, based on data from the Commerce Department. These figures suggest that consumer activity is holding up, even amid broader concerns.
While economic fundamentals appear solid, some consumers remain wary about the outlook. “There is a continued sense of caution among the public,” noted economist Joanne Hsu, reflecting on consumer sentiment.
On the trade front, recent developments have introduced both opportunities and challenges. The Trump administration recently agreed to reduce certain tariffs in partnership with the U.K. and lowered duties on imports from China to 30%, down significantly from 145%. This 90-day reprieve is designed to allow room for further negotiations and reduce cost pressures in the short term.
Nonetheless, U.S. households continue to feel the effects of existing tariffs, which now average 17.8%, the highest level since the 1930s, according to research from the Yale Budget Lab. The group estimates that these trade measures could increase consumer prices by 1.7% and add roughly $2,800 in annual costs per household.
Inflation expectations have edged up recently, with year-ahead forecasts rising among both Democrats and Republicans. Long-term inflation expectations climbed to 4.6%, a modest increase from 4.4% the month prior.
Retail giant Walmart acknowledged the potential impact of these tariffs on pricing. CEO Doug McMillon stated that the company is well-prepared to manage these cost pressures. “We’re in a strong position to adapt, but tariffs at any level are likely to affect consumer prices,” he told analysts.
Meanwhile, tariff-related concerns have become a key topic for corporate America. A record 411 companies in the S&P 500 referenced tariffs during earnings calls between March 15 and May 15, according to FactSet analyst John Butters. This surpasses the previous high of 260 mentions recorded during Q4 of 2020.
