Page 16 - June-July 2025

TRAILERTALK
U.S. Economy Holds Steady in May: PMI Signals

Growth Amid Tariff Pressures, Inflation Ticks Up,

Retail and Housing Slump

Gross Domestic Product Services PMI

The U.S. GDP is currently estimated to be growing at a slower pace in Concurrent upturns in U.S. service sector activity and new business
the first quarter of 2025, with some sources suggesting a significant growth were signaled in May. Confidence in the outlook also
slowdown. The decrease in real GDP in the first quarter primarily strengthened, while firms took on additional staff to a greater degree.
reflected an increase in imports, which are a subtraction in the However, growth in employment was insufficient to prevent a solid
calculation of GDP, and a decrease in government spending. These rise in work outstanding. Rising backlogs in part reflected delays in the
movements were partly offset by increases in investment and delivery of ordered equipment due to tariffs, which also drove up cost
consumer spending. inflation to its highest in nearly two years. Increased costs were passed
on to clients via the steepest increase in output charges since August
Trading Economics reports that the first quarter growth rate is expected 2022.
to be around 0.4%, a sharp decline from 2.4% in the previous quarter,
and the Federal Reserve Bank of Atlanta’s “GDPNow” model indicates a Manufacturing PMI
3.8% growth rate for the second quarter of 2025.
The S&P Global U.S. Manufacturing PMI was revised lower to 52 in May
• Q1 2025: Real GDP decreased at an annual rate of 0.5%, according 2025 from a preliminary of 52.3 but remained well above 50.2 in each
to the third estimate released by the U.S. Bureau of Economic of the previous two months. According to Trading Economics, tariffs
Analysis (BEA). and trade policy continued to dominate the manufacturing landscape.
Amid evidence of client efforts to front-run tariff related price increases
• Q4 2024: Real GDP increased 2.4%.
and supply chain disruption, new orders to U.S. manufacturers
• 2024 (Full Year): Real GDP increased 2.8%. The size of the economy increased. Similar factors led to a survey record increase in stocks of
in current price terms was estimated to be $28.487 Trillion at the inputs, while higher input prices due to tariffs were signaled and output
end of 2024, with a projection of $29.256 Trillion for 2025. charge inflation was the highest since November 2022. Delivery delays
were at their most acute since October 2022. Hopes of a stabilization
• GDPNow (Atlanta Fed): The latest estimate for real GDP growth in trade policies ensured that confidence in the outlook improved to a
(seasonally adjusted annual rate) in the second quarter of 2025 is three-month high.
2.9%.
Inflation
The S&P Global issued its Flash report for both its Services and
Manufacturing PMI’s, and it came in pretty stable. The services PMI The current annual U.S. inflation rate, as measured by the Consumer
came in at 53.1, down just slightly from 53.7 but it remained in a Price Index (CPI), is 2.4% for the 12 months ending in May, according
strong growth environment. The manufacturing sector came in at 52.0, to the Bureau of Labor Statistics. This figure represents a slight increase
unchanged from the prior month and still in the expansion phase. from the previous month’s rate of 2.3%, but generally aligns with recent
CPI levels. While still above the Federal Reserve’s target of 2%, it is lower
than many economists had previously forecast, according to U.S. Bank.

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