Macro & Market Perspectives

The Word for Q1: Exfusing. Exhausting & Confusing.

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Letter From The Editor, John Norris

If you only had one word to best explain the 1st quarter of 2025, it would probably either be exhausting or confusing. Perhaps it would be a combination of the two. Exfusing has a certain ring to it. Who knows? Exfuse could be the verb, and exfusion might work as a noun.

The only certainty after the first quarter is that it is finally over.

After a solid start to the year in January, the markets posted a lot of red ink during February and March. Global tariff threats and DOGE-driven budget cuts weighed on both consumer and business sentiment. However, it remains to be seen just how much of an impact this loss of confidence had on actual economic activity.

The initial read suggests the U.S. economy likely contracted during the 1st quarter. While consumer spending slowed, much of the decline stems from a significant deterioration in our trade deficit, as businesses rushed to stock up on their imports prior to any tariffs taking effect. Fortunately, this type of short-term decline on the Gross Domestic Product (GDP) equation tends to self-correct when imports decrease over subsequent quarters.

The question now: will the slowdown continue?

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