The US Economy in the 4th Quarter of 2024 and the 1st Quarter of 2025 was stable. The indices of economic growth: Gross Domestic Product, Labor Markets, Inflation rate, Consumer Spending, and Trade were good.

The economic impact of Trump’s threats of a Tariff War in the first two weeks of April, sent the stock market and the bond yields into a frenzy that created a very volatile condition for these indices for the remainder of 2025. The on-again, off-again status of the actual tariffs made it impossible to make predictions even for the short term. People are concerned about what to do with their retirement funds, and that impacts consumer spending.

Given the nominal international tariffs last year of about 1 – 2 % in actual imbalances, tariffs had minimal impact. More significant was the balance of trade between the US and other markets. The primary ones are China, Mexico, and Canada. Insulting the Canadians by declaring their country to be a prospective 51st state made trade negotiations even more difficult.

Virtually all products involve some import of parts into the country. Seasonal agricultural products are particularly volatile. While tariffs may provide some short-term benefits to domestic producers, they also result in restrictions on exports that harm domestic producers. The potential impact of tariffs may include inflation, reduced trade and economic growth, volatility of financial markets, and damage to international relations. We are in a stand-off with China that seems to offer no solution to an out-right trade war.

At this point, the primary concern is to establish some stability to the stock and bond markets that have swung more widely than in decades. While the fundamentals of most large companies seem stable, the volatility of small companies and consumer spending are highly sensitive. We have a consumer-driven economic that provides the potential for growth or decline. The stability of world trade already has been severely impacted. The Federal Reserve can’t predict what to do with interest rates since the economy seems to be going sideways.

Clearly the decisions of the President will continue to have a significant impact on the economy. His volatility is notorious, almost like a whim rather than a result of study and reflection. Numerous lawsuits have restrained some of his impulses, particularly regarding immigration. His allies have been pressuring him lately, but they can only do so much. The decimation of the federal workforce also has had a significant impact on the economy, and there appears to be no end in sight of how entire departments may be eliminated and others moved out-of-town.

So, fasten your seatbelts, renew your subscriptions to the Wall St. Journal and Barrons, and set your video recorder to CNBC. This would be a good time to take up a meditation practice also.

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