Strategy in TECH...
Last week, business group The Conference Board released the results for its November Consumer Confidence Index, a survey to gauge how consumers are feeling about the current and near-term future economy. The group reported a significant decline of 6.8 points in consumer confidence, a result that tends to support a similar finding by the University of Michigan Index of Consumer Sentiment, as I previously reported earlier in November.
Late last week, the University of Michigan released its widely respected Index of Consumer Sentiment for an initial reading of how consumers were feeling about the state of the economy. It showed a marked drop from both the previous month’s (October) reading and last year’s November 2024 reading. Why the downward dive in sentiment? Most likely, this was due, at least in part, to the ongoing government shutdown (which may be resolved by the time you read this).
It’s a bit of a mixed bag in new residential construction data published today, generally known as housing starts. In June, the seasonally adjusted annual rate (SAAR) of the start of new home construction jumped 4.6% over the revised May rate. However, this rate remains 0.5% lower than the rate of construction starts in June of 2024, one year ago.
A new survey of U.S. companies by KPMG reports that they are already feeling the pain of the Administration’s new tariff program, which is still under negotiation with countries around the world. Even at current levels, U.S. businesses have been impacted, reporting they are experiencing declining gross margins…will be forced to further raise prices…are already being impacted by consumer pushback…have suffered sales declines from retaliatory tariff increases in other countries, and more.
Overall, it’s a pretty sobering look at the impact of tariffs on companies now, and a scary foretelling of what they anticipate in a darkened future.
The latest government data on sales of newly built residential homes in May showed a significant drop of 13.7% as compared with revised sales in April. This data is a sign of continuing struggles for the housing industry, which is grappling with material cost increases and hesitant buyers concerned about still-high mortgage rates and the future of the economy.
Surprising news on Wednesday as we learn that the latest residential construction data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development show that overall housing starts in May dropped a substantial 9.8% compared to the reading in April, and ranks below May 2024 starts by 4.6%. This is the slowest pace in housing starts in the last five years.
Thanks to the administration’s continued postponement of higher tariffs in international trade, consumer sentiment rebounded in a preliminary June reading. This is the first such improvement in six months as diminished tariff pressure resulted in a more positive consumer outlook.
However, the improved reading is still well below the reading in December 2024.
**7/11/25 – New program adjustments. See below** The reality is beginning to set in. Most industry manufacturers have updated their pricing with tariff-driven price increases…some as high as 50+%. Two weeks ago, on a day I call T-Day (for tariff day), the Trump Administration announced a new “reciprocal” tariff program on America’s top 100 trading partners that is bigger and more impactful than anything he ever toyed with during his first term. Even though most of that plan has been put on a 90-day hold (except for China), anywhere from 10%…to 10%+20% is now implemented. The impact of that is starting to hit economies around the world.
And the reality and impact of that is also beginning to hit individual businesses and consumers.
According to the latest Chinese customs data, outbound shipments in March increased by 12.4% year-over-year (YoY) far exceeding all previous estimates. In addition to that, first quarter GDP lept 5.4% in China, a huge increase over recent historical moves. It appears that exporters are seeking to beat the newly aggressive U.S. tariff policy by front-loading their needs.
The University of Michigan (U of M) has released a preliminary reading of its Index of Consumer Sentiment (ICS) for April and it shows a continuing and startling slide in consumer sentiment, dropping another double-digit percentage from last month’s reading. In fact, this preliminary reading for April is the second-lowest reading in consumer sentiment in the entire 73-year history of the survey!
