ASA’s May Economic Report: Trade Pressure Still Weighs on Overall Market Activity

With July deadlines for trade negotiations and a budget bill looming, the economy was largely on autopilot for the past month with spending sluggish and many executives taking a wait-and-see attitude about spending and the second half of the year. Despite this, economic conditions remain generally good. 

From the May 2025 ASA Monthly Economic Report: Second quarter GDP is sending hot signals through June 4th. The Atlanta Fed’s reading has it growing at nearly 4.6% for the quarter. Blue Chip estimates suggest a much cooler reading of ~1% for the quarter when all of the data comes in. There is no doubt that some slowing is starting to occur, but it is slow to filter through in the economic data.

Residential construction activity is slowing (which can be as much as 16% of GDP in an average year) and other pockets of softness have started to show up. But that being said, the labor market remains resilient, consumer spending is still strong, and even corporate spending and investments are stable. This month’s outlook for GDP will likely get reversed by the June report, but for now the Fed has a lot to digest when making interest rate policy moves.

The monthly ASA Economic Report is produced by Armada Corporate Intelligence, ASA’s business intelligence partner, and is available as a free member benefit for ASA members through the MyASA portal at www.asa.net/myasa.
 

Armada also wrote that there is still a constant talk of tariffs. Regardless of a lower court ruling that made reciprocal tariffs illegal, there are too many workarounds for the administration to completely ease tariff risk while the administration appeals the lower court ruling. This is still going to be a topic for the rest of the year.

People are growing weary of the constant coverage and the constant variation in policy. Now the most common business reaction is to essentially throw one’s hands in the air while delaying as many decisions as possible. A bigger issue is that other important business and economic issues get pushed aside as everybody becomes preoccupied with the daily gyrations over tariffs and trade. There are three of these “other” issues that stand out. The first is the workforce problem, the second issue that has been ignored is infrastructure, and the third area of concern involves engagement in the technologies that are expected to dominate in the near future.

The report also answers a reader’s question of the month: Does Anybody Benefit from High Tariffs?

Again, ASA members can access the Monthly Economic Report through the MyASA portal at www.asa.net/myasa.