May 2025: Existing Home Sales Saw The Largest Month-To-Month Decline Since November 2022. According to NPR, “The spring housing market was supposed to boom. Instead, it’s whimpering. Existing home sales in March slumped 5.9% from February — the largest month-to-month decline since November 2022 when seasonally adjusted. Compared to a year ago, sales in March were down 2.4% from March 2024.” [NPR, 2025-04-24]
Despite The Slowdown In Sales, Home Prices And Mortgage Rates Have Both Increased. According to NPR, “The average rate for a 30-year fixed-rate mortgage was 6.81% over the last week, according to data from Freddie Mac. In March and early April, rates were closer to 6.6%. Meanwhile, home prices are also still climbing — though more slowly than before. The median existing home sales price for March was $403,700. That’s up from up $392,900 from one year ago, and from $398,400 in February.” [NPR, 2025-04-24]
April 2025: PulteGroup CEO Ryan Marshall Said Trump’s Tariffs Would Add About $5,000 To The Price Of A New Home. According to the Financial Times, “At builder PulteGroup, chief executive Ryan Marshall said tariffs would add about $5,000 on average to the sale price of new homes.” [Financial Times, 2025-04-24]
Context: The Housing Market and American Wealth
One of the most pernicious aspects of the housing shortage we face is that so many Americans’ wealth is tied up in home equity, making policy choices that bring down housing prices disadvantageous for the 66 percent of Americans who are homeowners. Roughly [$35 Trillion](https://www.wsj.com/economy/housing/american-home-equity-wealth-costs-982e79a4) dollars of wealth are tied up in home equity. Furthermore, the lower down the wealth spectrum you go, the higher a percentage of wealth is held in real estate.
That means that while increases in housing prices squeeze the disposable income of renters, declines in housing prices destroy the wealth of the most vulnerable Americans. From a policy perspective, that does not invalidate the value of building more housing, because that economic activity is more than sufficent to offset the losses in home equity, especially if, in a growing economy, housing merely grows at a rate slower than incomes, rather than falling outright.
What it does mean, however, is that in an economic downturn, a decline in housing prices can be a salient political issue, but it may be hard to use without incurring the wrath of those who have been locked out of the housing market.
Furthermore, in an environment of capital flight, as we have seen recently, things get even more complicated. The cost of housing is largely determined by mortgage rates, and mortgage rates are (at least as long as the Trump administration keeps a credible government backstop to that market) determined by medium to long run borrowing costs for the government. Higher government borrowing costs can push up mortgage rates, which make it harder to sell a house for two reasons: buyers have to pay more for their mortgage, and sellers taking out a mortgage for their new house have higher costs.
If housing activity grinds to a halt, that makes it harder for people to move around the country, which is a problem as drivers of economic growth appear in different places at different times, and without the ability of agglomeration effects to supercharge them, things get bad.
Consumer Sentiment
April 2025: Consumer Sentiment Continued Its Decline, Falling By 8 Percent Month Over Month, As Expectations Plunged By 10 Percent. According to the University of Michigan Survey of Consumers, “Consumer sentiment fell for the fourth straight month, plunging 8% from March. While the April decline in current conditions was modest, the expectations index plummeted with drop-offs in personal finances as well as business conditions.” [University of Michigan Survey of Consumers, 2025-04-25]
Since Trump’s Inauguration, Consumer Expectations Have Plummeted 32 Percent. The Steepest Three Month Decline Since The 1990 Recession. According to the University of Michigan Survey of Consumers, “Expectations have fallen a precipitous 32% since January, the steepest three-month percentage decline seen since the 1990 recession. While this month’s deterioration was particularly strong for middle-income families, expectations worsened for vast swaths of the population across age, education, income, and political affiliation. Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead. Labor market expectations remained bleak. Even more concerning for the path of the economy, consumers anticipated weaker income growth for themselves in the year ahead. Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warnings signs perceived by consumers.” [University of Michigan Survey of Consumers, 2025-04-25]
April 2025: Consumer Sentiment Fell To Its Fourth Lowest Level Ever Recorded. According to Bloomberg, “The final April sentiment index fell to 52.2 from 57 a month earlier, according to the University of Michigan. While a slight improvement from the preliminary gauge of 50.8, the latest figure is the fourth-lowest in data back to the late 1970s.” [Bloomberg, 2025-04-25]
April 2025: For The Fourth Consecutive Month, Consumer Expectations Of Inflation Increased By More Than 0.5 Percentage Points, Reaching The Highest Level Since 1981. According to the University of Michigan Survey of Consumers, “Year-ahead inflation expectations surged from 5.0% last month to 6.5% this month, the highest reading since 1981 and marking four consecutive months of unusually large increases of 0.5 percentage points or more. This month’s rise was seen across all three political affiliations.” [University of Michigan Survey of Consumers, 2025-04-25]
Code
include("../scripts/oxocarbon-plot.jl")theme(:oxocarbon)usingFredData, DataFrames, Dateskey =ENV["FRED_API_KEY"]f =Fred(key)ch1 =get_data(f, "MICH"; observation_start="2022-11-01", units="ch1").dataval =get_data(f, "MICH"; observation_start="2022-11-01").datadf =DataFrame(; date = ch1.date, reading=val.value, ch1=ch1.value, )# Mannually add the data for 2025-03-01 and 2025-04-01unsaved_dates = [Date(2025,3,1), Date(2025,4,1)]unsaved_values = [5.0, 6.5]unsaved_ch1 = [0.7, 1.5]unsaved_df =DataFrame(; date = unsaved_dates, reading = unsaved_values, ch1 = unsaved_ch1, )df =vcat(df, unsaved_df)plot(df.date, df.reading, label="Expectations", title="Consumer Expectations of Inflation (1 Year Ahead)", xlabel ="Date", ylabel ="Percent", legend=:top)bar!(df.date, df.ch1, label="Change MoM")vline!([Date(2025,1,1)], label="Inauguration", linestyle=:dash)hline!([2.0], label="Fed Target", linestyle=:dash)
Trade War
April 2025 Bloomberg Survey Of Economists: Economic Growth For 2025 And 2026 Forecasts Dropped By 0.6 And 0.4 Percent Respectively, While The Chance Of A Recession Jumped By 15 Percent. According to Blooomberg, “Forecasters anticipate President Donald Trump’s trade war will hit economic growth this year and next as tariffs push prices higher and put a dent in consumer spending. The US economy is set to expand 1.4% in 2025 and 1.5% in 2026, according to the latest Bloomberg survey of economists, compared with 2% and 1.9% in last month’s poll. The median respondent now sees a 45% chance of a downturn in the next 12 months, up from 30% in March.” [Blooomberg, 2025-04-25]
Trump’s Claims Of Deescilation
April 2025: Trump Claimed To Have Negotiated 200 Trade Deals. According to Politico, “The United States has already struck 200 trade deals, President Donald Trump said in an interview this week — but he refused to say with whom. Trump’s comments come just two weeks after he announced a 90-day pause on most of the sweeping global tariffs he imposed earlier this month to allow time for trade negotiations with hundreds of countries slugged by the punishing levies. Only China was exempted from the 90-day pause. ‘I”ve made 200 deals,’ Trump told Time Magazine in a wide-ranging interview published Friday, ‘100%.’” [Politico, 2025-04-25]
Trump’s Tariffs Were Announced On 182 Entities. [the BBC, 2025-04-10]
Market Breakdown
Dow Jones Market Data: As Of April 23, April 2025 Was On Pace To Be The Most Volitile Month Since 2020. According to the Wall Street Journal, “The trade war’s swings—both higher and lower—have left many investors on edge. The S&P 500 has gained or lost at least 1% in seven of the past 10 sessions, and April is poised to be the most-volatile calendar month since the Covid crash in 2020, according to Dow Jones Market Data.” [Wall Street Journal, 2025-04-23]
April 2025: Options Traders Bets Implied High Volatility Extending For At Least Another Month. According to the Wall Street Journal, “Still, options traders are betting on a move of 1% or more, higher or lower, in the S&P 500 index for every session through at least May 23, according to a Monday note from Citigroup strategists. Those moves are expected to be higher on days of economic importance: Options are pricing in a swing of 1.8% in the benchmark index when the April jobs report is released, and a move of 1.7% the day of Powell’s postmeeting press conference in May. ‘We”d expect to see further violent upside rips as investors anchor and extrapolate from the latest data point,’ wrote Wolfe Research analysts in a note to clients.” [Wall Street Journal, 2025-04-23]
Q4 2024 - Q1 2025: Mentions Of The Word “Recession” On Blue-Chip Company Earnings Called Jumped From Less Than 3 Percent To 44 Percent. According to the Financial Times, “While fewer than a fifth of the blue-chip stocks in the S&P 500 index had held first-quarter earnings calls by Tuesday, tariffs were cited on more than 90 per cent of them, according to FactSet. The term “recession” was mentioned on 44 per cent of calls, compared with less than 3 per cent on those covering the fourth quarter of 2024.” [Financial Times, 2025-04-24]
Capital Flight
Executives At Firms Controlling Trillions Of Dollars In Assets: Trump’s Conduct Has Contributed To A Shift Of Money Out Of American Markets. According to Bloomberg, “Franklin Resources Inc. Chief Executive Officer Jenny Johnson said President Donald Trump’s tariffs are leading some large foreign investors to shift their money away from US markets. ‘You definitely see non-Americans reducing — on the institutional side — some of their exposure to US equities,’ Johnson, whose firm manages $1.6 trillion in assets, said Thursday in a Bloomberg TV interview. ‘We”ve seen that a bit.’ Johnson said Canadians, for example, ‘are so fundamentally offended’ by Trump’s reference to the country as the 51st US state. ‘A comment like that has obviously had that kind of nationalist response.’ Johnson joins executives at Janus Henderson Group Plc and Amundi SA this week in confirming that some clients are pulling away from the US because of the market upheaval from the tariffs.” [Bloomberg, 2025-04-24]
Citadel CEO And Republican Megadonor Ken Griffin: The Country “Has Become 20 Percent Poorer In Four Weeks.” According to Semafor, “US President Donald Trump is moving too fast, alienating allies, making Americans poorer, and tarnishing the sterling reputation of US assets, Citadel CEO and founder Ken Griffin said Wednesday. Though the president may have identified real problems, his methods to solve them don’t appear to be working, and are unlikely to revive American manufacturing, Griffin told Semafor’s Gina Chon at the World Economy Summit in Washington, DC. Previously, Griffin said, ‘no brand compared’ to US Treasurys, the strength of the US dollar, or the nation’s creditworthiness. But Trump’s tactics have ‘eroded’ that reputation. ‘We put that brand at risk,’ the billionaire hedge fund manager said. ‘It can be a lifetime to repair the damage that has been done.’ Investors have dumped US stocks and Treasurys in recent weeks in response to Trump’s on-again, off-again tariffs on imports to the US. While most countries have been granted a 90-day reprieve, Trump has increased duties on China and suggested he might fire Jerome Powell, the respected governor of the US Federal Reserve. (Trump walked back those comments, saying he has no plans to remove Powell.) Using the euro as a reference, the US ‘has become 20% poorer in four weeks,’ Griffin said, an environment that produces no winners or bright spots.” [Semafor, 2025-04-23]
Griffin: Trump’s Tariff Policies Will Not Lead To A Surge In Domestic Manufacturing Investment. According to Semafor, “Griffin is one of the Republican Party’s biggest donors and has previously downplayed the threat of trade duties. Still, the tariffs have been a major focus for Citadel, at a time when Griffin had expected a breather from the pressures of new regulations under the Biden administration. Griffin had been relishing ‘the idea that I have four years to focus on my business.’ But thanks to tariff turmoil, the country ‘has devolved into a nonsensical place’ where business leaders are distracted by concerns such as supply chain disruptions. Griffin said he’s skeptical that investors will build new US factories, a major Trump goal. ‘I”ll tell you what’s not going to happen is, people are not going to raise [money] to build manufacturing in America,’ he said, ‘because with the policy volatility, you actually undermine the very goal you”re trying to achieve.’” [Semafor, 2025-04-23]
Corruption
Washington Examiner Editorial: Industrial Policy for K Street. [Timothy Carney in the Washington Examiner, 2025-04-25]
Carney: “Building A Wall Of Tariffs Around The Country Has Worked Like Building Berms Around A Wetland: It’s Caused The Swamp To Fill Up.” According to Timothy Carney in the Washington Examiner, “President Donald Trump promised his tariffs would revitalize American industry. He apparently meant the lobbying industry. Had Trump’s goal been to stimulate lobbying on tariffs and trade, he could not have executed a better trade policy. As you would expect, the lobbyists who are getting the most new business are close allies of Trump and his donors. Building a wall of tariffs around the country has worked like building berms around a wetland: It’s caused the swamp to fill up.” [Timothy Carney in the Washington Examiner, 2025-04-25]
Carney: The Inconsistency Of Trump’s Tariffs Has Been A “Lobbying Magnet.” According to Timothy Carney in the Washington Examiner, “During his campaign, Trump promised all sorts of tariffs on U.S. importers. His tariff rhetoric has been pretty constant through his first hundred days, even as his tariff policy has been the opposite of constant — tariffs on Canada and Mexico, tariffs off Canada and Mexico; tariffs on everybody, tariffs paused on everybody; tariffs on just China, but maybe not. The inconstancy is not a bug in the rollout. It’s central to Trump’s tariff policy. For Trump, author of Art of the Deal, the main goal of trade policy is maximizing his own leverage. To maximize leverage one cannot stand on principal or be too firm. One must be flexible. Everything has to be negotiable. This ever-changing nature helps make the tariffs even more of a lobbying magnet. The tariffs could be on or off. They could be 10% or 145%. They could specially exempt just the product you import into the United States, or just the product your overseas affiliate sells into the U.S.” [Timothy Carney in the Washington Examiner, 2025-04-25]
Charles Gasparino: The Trump Administration Has Been Sharing Information On Potential Trade Deals With “Senior Wall Street Execs W[ith] Ties To The White House.” According to Charles Gasparino, “SCOOP: People inside the Trump White House are alerting Wall Street execs they are nearing an agreement in principle on trade with India, according to my sources who are senior Wall Street execs w ties to the White House. No details on timing, and recall that we have been here before with Japan only to have the goal posts changed, and terms renegotiated. But if this holds, the India deal being envisioned will include agreed upon goals, and issues that have been addressed and resolved as well as a deadline for the fully-baked trade pact, my sources say. It could be used as a template for a deal with Japan, South Korea and Australia, my sources add. Press officials for @SecScottBessent had no comment but would not deny the matter.” [Charles Gasparino, 2025-04-24]
Carlyle Group’s Reemphisis On Washington
TD Cowen Analyst Covering Private Equity: “Today’s Washington Doesn’t Just regulate Investment Decsisions, It Drives Them.” According to Bloomberg, “The true test of whether Schwartz’s Washington campaign works will be in how Carlyle catches up, says Katz, the TD Cowen analyst. ‘The challenge he faces is how does he scale up in retail, insurance and credit relative to a number of well-established and strong brands.’ Carlyle’s shift marks a recognition across Wall Street. ‘Today’s Washington doesn’t just regulate investment decisions,” said James Maloney, managing partner of policy consulting firm Tiger Hill Partners. ’It drives them.’” [Bloomberg, 2025-04-24]
2025: Carlyle CEO Schwartz Revived Firm’s Washington Roots To Gain Competitive Edge. According to Bloomberg, “Harvey Schwartz, 61, is now betting he can turn what once prompted an identity crisis into a competitive edge for the smallest of the Big Five US alternative asset managers. ‘It was very obvious immediately: Why are we not utilizing this?’ he said.” [Bloomberg, 2025-04-24]
2025: Carlyle Shifted Annual Meetings Back To Washington Under Schwartz’s Leadership. According to Bloomberg, “He shifted all annual investor and board meetings back to Washington, where a third of staff are based.” [Bloomberg, 2024-04-24]
2025: Carlyle’s Washington Strategy Includes Lobbying And Policy Engagement. According to Bloomberg, “Schwartz hired a new top lobbyist to bolster Carlyle’s presence on the Hill. Will Kinzel, a former Republican operative who heads government affairs, has the task of navigating an increasingly strident brand of politics and decoding Trump’s policy twists.” [Bloomberg, 2025-04-24]
Worsening Fiscal Outlook
Jessica Riedl: Republicans’ Budget Framework “Is The Most Irresponsible In Modern History.” According to Jessica Riedl in the Atlantic, “Their new budget framework is the most irresponsible in modern history—and will put the American economy on a very dangerous trajectory.” [ Jessica Riedl in the Atlantic, 2025-04-24]
Congressional Republicans’ Budget Resolution Would Add More To The Deficit Than The TCJA, CARES Act, American Rescue Plan, And IIJA Combined. According to Jessica Riedl in the Atlantic, “Congressional Republicans have approved the most fiscally irresponsible budget resolution since the modern budget process began five decades ago. It allows Congress to slash taxes by $5.3 trillion and expand spending by $517 billion over the decade. This $5.8 trillion addition to the deficit (plus interest) would exceed the cost of the 2017 tax cuts, 2020 CARES Act, 2021 American Rescue Plan, and 2021 Bipartisan Infrastructure Law—combined. Tales of impending debt crises have been scaring voters since the days of Ronald Reagan, without coming true. But surviving an unhealthy diet and lifestyle until now doesn’t mean you can disregard your health forever. Washington’s debt path is so unsustainable that it ultimately endangers the United States economy. And time is running out to change course without substantial disruption.” [Jessica Riedl in the Atlantic, 2025-04-24]
Riedl: If Interest Rates Average 1 Percent Higher Than Projected Over The Next 30 Years, Interest Expenses Could Claim 80 Percent Of Federal Revenue. According to Jessica Riedl in the Atlantic, “Simply continuing today’s tax and spending policies will escalate the federal debt to 241 percent of the economy over the next three decades. And if interest rates rise even one percentage point above the government’s long-term projections, which they easily could, the debt would reach 295 percent of GDP. Interest on the debt would then consume four-fifths of all annual federal revenues.” [Jessica Riedl in the Atlantic, 2025-04-24]