Trump’s erratic trade war has already unsettled consumers and taken a toll on economic growth — mostly due to American businesses rushing to stock up on imports. And his “big, beautiful” tax bill currently moving through Congress, which is expected to dramatically widen the country’s deficit, has roiled the bond market.
But what matters for the underlying health of the broader economy is whether demand — for goods, services and homes — continues to chug along or fall off a cliff in the face of persistently elevated uncertainty, rising borrowing costs and higher prices.
New data due this week should give Wall Street and the Federal Reserve a better sense of the unfolding fallout of Trump’s policies, including two new consumer surveys, a revised estimate of economic growth in the first quarter and fresh figures on consumer spending. Market observers will also get some clues on what it all means for the Fed, with several officials slated to give public remarks throughout the week.
Last week, Trump reignited trade tensions by threatening a 50% tariff on the European Union and a 25% duty on Apple and other smartphone makers like Samsung. (He delayed the EU tariffs on Sunday.) The US House of Representatives also passed Trump’s tax bill, sending it to the Senate, which is expected to make some changes.
Fresh soft and hard data
Fresh figures this week will show how Americans have been feeling recently, known as soft data, and how consumers and businesses have been spending, referred to as hard data.
On Tuesday, the Conference Board releases its consumer survey for May, a closely watched measure of people’s attitudes toward the economy. In April, consumer confidence tumbled 7.9 points to a reading of 86, the business group said, the lowest level since May 2020. Economists polled by data firm FactSet project consumer confidence to have improved slightly this month.
Then later on Friday, the University of Michigan releases a revised version of its consumer survey for May. A preliminary reading released earlier this month showed that consumer sentiment sank in May to the second-lowest level on records going back to 1952.
On Thursday, the Commerce Department releases its second estimate of gross domestic product, the broadest measure of economic output, for the first quarter. An initial estimate showed that GDP declined at an annualized rate of 0.3% in the first three months of the year, the worst quarter since 2022, driven by a higher trade deficit as Americans rushed to beat Trump’s tariffs.
On Friday, the department also releases April data on household spending, income and the Fed’s preferred inflation gauge. In March, consumer spending soared 0.7% as Americans pulled forward their purchases, particularly of cars, to avoid the sticker shock from Trump’s tariffs.
The US housing market
Persistently elevated mortgage rates, concerns over the economy, volatility in financial markets and home prices that continue to climb are clouding the outlook for America’s housing market.
That’s led to an underwhelming spring home shopping season so far. New data this week will show if buyers will get squeezed even more.
On Tuesday, S&P Global releases its S&P Global CoreLogic Case-Shiller National Home Price Index for March. Home-price growth in February continued to climb, rising at an annual pace of 3.9%, as lingering housing shortages continued to push up prices.
On Thursday, the National Association of Realtors reports home sales based on contract signings in April. Pending home sales surged 6.1% in March from the prior month, the strongest monthly gain since December 2023, which NAR’s chief economist, Lawrence Yun, said was “fueled by ongoing job growth.”
That same day, Freddie Mac reports on the average rate of a standard, 30-year fixed mortgage in the week ending May 29. Mortgage rates last week averaged 6.86%, the highest level since mid-February, as bond investors fretted over what Trump’s tax bill means for the national debt.
Demand for bonds dropped last week, which cratered prices and sent yields rising. The yield on the 10-year US Treasury note, which largely influences mortgage rates, went above 4.61% last week, as the 30-year eclipsed 5.14%, its highest level since October 2023.
The Fed’s view
Market observers regularly pore over Fed officials’ latest public comments and minutes from their latest policy meeting because they give a clue on what to expect for interest rates in the coming months.
So far, Fed officials have signaled in their recent speeches that they prefer to stand pat as they wait for further clarity on Trump’s policies and how the US economy is responding to the administration’s massive changes. The job market’s resilience has also allowed the Fed to stay on hold, since it means the central bank doesn’t need to provide any urgent relief through a rate cut.
