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Member Briefing April 9, 2025

Date postedApril 9, 2025
Posted By: Harold King Daily Briefing,

Top Story

NFIB: Small Business Optimism Slips in March

The NFIB Small Business Optimism Index declined by 3.3 points in March to 97.4, falling just below the 51-year average of 98. The Uncertainty Index decreased eight points from February’s second highest reading to 96. “The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months.” said NFIB Chief Economist Bill Dunkelberg.  “Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them.” Key findings include:

  • The percent of small business owners reporting taxes as their single most important problem rose two points from February to 18%. The number of owners reporting “Taxes” as their top small business issue has not been this high since November 2021.
  • The net percent of owners expecting better business conditions fell 16 points from February to a net 21% (seasonally adjusted). This is the third consecutive monthly decline and the largest monthly decline since December 2020.
  • The percent of small business owners reporting labor quality as the single most important problem for their business was unchanged from February at 19%, remaining the top issue, with taxes one point behind.
  • The net percent of owners expecting higher real sales volumes fell 11 points from February to a net 3% (seasonally adjusted). This is the third consecutive month real sales expectations declined after surging from recession levels after the election.
  • Sixteen percent of owners reported that inflation was their single most important problem in operating their business (higher input costs), unchanged from February and falling from its rank as the second top issue.
  • A net 6% reported their last loan was harder to get than in previous attempts, up four points from February and the largest monthly increase since September 2023.
  • Twenty-eight percent of all owners reported borrowing on a regular basis, up four points from February’s lowest reading since May 2022.

Read more at The NFIB

Wells Fargo: Tariffs Likely Will Cause a Modest Stagflationary Shock to the U.S. Economy

The tariffs that President Trump announced on April 2 have led Wells Fargo Economists to make some meaningful reductions to their GDP growth forecast for this year, while inducing them to raise our inflation projection. We now see more Fed easing in 2025 than we did previously. According to the bank:

  • The import levies that President Trump announced on April 2 will cause the effective tariff rate to jump from about 2% last year to more than 20% this year, the highest rate in more than a century.
  • If tariffs were to remain at their current levels, then our model simulation shows that inflation would shoot higher in the coming months, leading to a downturn in the U.S. economy.
  • Assuming that tariffs rates remain at current levels strikes us as a bit extreme. The Trump administration very well could reduce tariffs, at least partially, if it is able to strike deals with other countries. But the 10% minimum tariff that the president has put into effect leads us to believe that a return to the 2.3% effective tariff rate of last year in not in the cards, at least not in the foreseeable future.
  • We assume the effective tariff rate will recede to about 15% and remain there through the end of our forecast period in Q4-2026. This assumed 15% effective tariff rate strikes us as a reasonable balance between the current lofty level of levies and a return to pre-April 2 rates.
  • We look for inflation to move higher in the coming months, eroding real income growth and causing growth in real consumer spending and overall real GDP growth to dip into negative territory beginning in Q3-2025.
  • As growth weakens and the unemployment rate moves higher, we look for the FOMC to restart its easing cycle. Specifically, we forecast 125 bps of rate cuts between the June FOMC meeting and the end of 2025.
  • We readily acknowledge that uncertainty around our economic outlook remains greater than normal. We expect the Fed to "look through" the price level increase caused by tariffs as long-term measures of inflation expectations remain anchored. However, if inflation were to show signs of becoming more entrenched, then the FOMC likely will not cut rates as much as we currently envision, if at all.

Read more at Wells Fargo

US Easter Spending To Rise As Holiday Cheer Defies Economic Gloom, NRF Says

U.S. consumer spending for Easter is expected to rise about 5% this year as Americans snap up candy and gifts to celebrate despite concerns around high inflation and economic uncertainty, a National Retail Federation report showed on Tuesday. Shoppers are expected to spend around $23.6 billion this year, compared with $22.4 billion estimated last year, the trade body's survey showed, with discount stores once again poised to be the top destination for Easter shopping.

President Donald Trump's sweeping tariffs on several trade partners have also raised fears of a recession, casting a pall on consumer sentiment in the United States. However, retailers such as Target and dollar stores that enjoyed an upbeat December quarter thanks to robust Christmas spending have said consumers are expected to shop for Easter with similar interest.

Read more at Reuters

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Policy and Politics

Hochul Proposes Change So N.Y. Governors, Lieutenant Governors Run Together In Primaries

As state budget negotiations drag a week past the deadline in Albany, Gov. Kathy Hochul threw a dark horse issue into the talks with a proposal to change election procedures so candidates for governor and lieutenant governor run together in the primary rather than separately, Spectrum News 1 confirmed Monday. First reported by Politico, it’s a change that would benefit Hochul as she has grappled with challenges with multiple lieutenant governors. Her first pick was indicted on corruption charges just two months before a primary election that would decide her running mate and she was able to strongarm the Legislature to quickly change state law to allow candidates to be dropped from the ballot in such circumstances. The charges were later dropped.

Her second, current Lt. Gov. Antonio Delgado, split with her on multiple issues and recently announced he wouldn’t run again in 2026 alongside her. Hochul has not minced words about their division, saying in February “it is clear to me that he’s not happy being in the role of lieutenant governor.” In New York, lieutenant governors run separately in primary elections before joining with their running mates on the ballot in the general election, a practice shared by Pennsylvania, Massachusetts, Connecticut, Wisconsin and New Mexico. Gubernatorial candidates often have their preferred running mates and they usually win their individual primary, but it can cloud and complicate the electoral process. It also leaves open the possibility that two non-like-minded candidates could be forced to run on the same ticket in a general election.

Read more at NY State of Politics

Trump, Hegseth Promise Record $1 Trillion Pentagon Budget

President Donald Trump and Defense Secretary Pete Hegseth pledged a first ever $1 trillion defense budget proposal on Monday, a record sum for the military. Trump, during a press event with Israeli Prime Minister Benjamin Netanyahu, said the upcoming budget would be “in the vicinity” of $1 trillion. Hegseth went further in an X post on Monday evening, saying Trump “is rebuilding our military — and FAST.” “COMING SOON: the first TRILLION dollar @DeptofDefense budget,” Hegseth posted from his personal account. “(PS: we intend to spend every taxpayer dollar wisely — on lethality and readiness).”

The number would be a significant increase from the $892 billion funding Congress allocated for national defense programs this year, which includes the Pentagon, nuclear weapons development and security programs at other agencies. It also comes as the armed services seeks to cut 8 percent of their individual budgets and reinvest the money in modernization efforts. Hegseth is also planning to slash tens of thousands of department civilian employees across the globe as the Pentagon starts work on what is expected to include consolidation of domestic and overseas bases.

Read more at Politico

House Speaker Mike Johnson Says House Will Give Trump Space On Tariffs

House Speaker Mike Johnson, R-La., said Monday the House will give President Donald Trump “the runway to do what it is he was elected to do,” doubling down on his previous comments that the House will support Trump on tariffs and not get involved in the escalating trade war—despite the economic situation in the U.S. markets worsening. Johnson’s support for Trump’s tariff authority comes after fellow Rep. Don Bacon, R-Neb., said he was planning to introduce legislation in the House on Monday similar to what has been introduced in the Senate that would restrict Trump’s tariffs.

It’s not clear how much Republican support Bacon’s bill will have in the House, which is led by Johnson who has stood by Trump’s policies, though he told CBS’ “Face the Nation” on Sunday he had “beginning support.” On Sunday, Johnson reportedly told his colleagues to “hold the line” on the tariffs and not oppose them, saying they should trust Trump and give the tariffs “time” to play out.

Read more at Forbes

Trump’s First 100 Days

This longitudinal observational study followed the same group over time and studied self-reported habits and health outcomes. Researchers asked study participants for their nutrition habits over up to three decades, until they reached age 70. Participants regularly and extensively documented their food consumption, reporting how often they ate more than 130 different foods. The study team then classified the food consumption by measuring how close the consumption pattern was to eight types of healthy diets and to the consumption of unhealthy ultraprocessed food. At the end of the study period three decades later, researchers found that 9,771 out of 105,015 participants, or about 9.3%, achieved what they defined as healthy aging, which is living to 70 years of age free of chronic diseases such as diabetes, hypertension and heart disease, and not having cognitive, physical or mental health impairments. The study team found that for each of the eight healthy diets, higher adherence was associated with greater likelihood of healthy aging.

Read more at CNN

Industry News

Trade War Updates

8 Charts Show The Dramatic Fallout From Trump’s 'Liberation Day' Announcement

It's been one of the most chaotic stretches for US markets in recent memory. The S&P 500 (^GSPC) fell more than 10% in just three days. The three-day collapse in stocks following President Trump's tariff announcement sits just below the top 10 worst sell-offs since World War II, per Yahoo Finance data. US stocks rebounded on Tuesday morning after the idea of tariff negotiations gained momentum. The only three-day periods that brought stocks lower came in 1987, 1998, 2008, 2011, and 2020.

Here are 8 charts from Yahoo Finance to help you visualize the data from the past week.

Read More at Yahoo Finance

Will Mortgage Rates Ever Be 3% Again?

In 2020 and 2021, Americans witnessed record-low mortgage rates. The lowest 30-year fixed rate was 2.65% in January 2021, but rates hovered at or below 3% for roughly a couple of years. However, home loan rates probably won’t drop back down to 3% — at least not anytime soon. Many experts expect 30-year mortgage rates to stay between 6% and 7% in 2025, anticipating a slight drop if they fall at all. Rates may decrease more in 2026, but economists still expect them to stay above 6% next year. Whether we see lower rates depends on several economic factors. Here are just a few:

  • Inflation: Higher inflation can lead to higher mortgage rates if the Federal Reserve responds with a rate hike or even by keeping the fed funds rate unchanged.
  • Unemployment: High unemployment can cause demand for homes to fall, which could lead to lower mortgage rates.
  • 10-year Treasury yield: Mortgage rates tend to follow the direction of the 10-year Treasury yield. Unlike the fed funds rate, the 10-year yield is a greater indicator of rates on longer-term loans — like home loans. Generally, investors buy more Treasury bonds as a safety net during economic uncertainty, which lowers yields and, ultimately, mortgage rates.

Read more at Yahoo Finance

Boeing Deliveries Rise 63% In February From A Year Earlier

Boeing said on Tuesday it delivered 44 aircraft in February, up from 27 in the same month a year ago, as it works to stabilize and then increase production of its 737 MAX and 787 models. It was only slightly behind January when the planemaker’s 45 deliveries were the company’s best for a single month since 2023. In February, Boeing’s deliveries included 32 of its best-selling 737 MAX single-aisle jets and five 787 widebody planes.

Aircraft deliveries are closely watched by Wall Street because planemakers collect the majority of their payment when they hand over jets to customers. Through the first two months of the year, Boeing booked 41 net orders, compared to 65 net orders for its European rival Airbus

Read more at CNBC

Most Automakers To Stay Put In Mexico, President Says

Mexican President Claudia Sheinbaum said on Tuesday that the majority of automobile executives with plants in Mexico have said that, as of now, they have no plans to move their factories. "I have personally spoken with many of the CEOs and global managers of several of the auto companies to find out what they are thinking about the future...Most of them have told us that they do not plan to change anything at this time," the president said during her regular morning news conference.

Mexico, which ships nearly 80% of its exports to the United States, was not included on Trump's list of global, across-the-board tariffs announced on nations last week. But Mexico is still subject to Trump's previously imposed tariffs of 25% on steel, aluminum and automobiles, as well as on goods that do not comply with the regional USMCA trade pact. Sheinbaum has said that her government would like to avoid imposing reciprocal tariffs, but they cannot be ruled out.

Read More at SCMP

Caterpillar Contesting OSHA Citations, Fines

Caterpillar Inc. is contesting two citations plus penalties of more than $32,000 issued by the federal Occupational Health and Safety Administration in December, resulting from its inspection of a fatal accident in June 2024 at the manufacturer’s foundry in Mapleton, IL. The manufacturer has not commented on the matter, and OSHA lists it as open case. The incident happened June 6, 2024, when employee Daulton Simmers died from injuries suffered in a molten metal spill.

According to OSHA’s December 2 report: “The employer did not furnish employment and a place of employment which were free from recognized hazards that were causing or likely to cause death or serious physical harm to employees, in that employees were exposed to fire hazards”. Both violations are classified as “serious,” which in OSHA terminology identifies a violation from which death or serious physical harm may result, and about which an employer knew or should have known exists.

Read more at Foundry Management & Technology

Boeing Settles Lawsuits With Families Of 737 MAX Crash Victims Ahead Of Chicago Trial

Boeing reached pre-trial settlements with family members of two Americans killed in the March 2019 crash of an Ethiopian Airlines Boeing 737 MAX jet, according to the plaintiffs’ attorneys. The trial had been scheduled to begin on Monday, April 7. The Ethiopian Airlines crash was the second of two involving Boeing’s 737 MAX jets, which precipitated a 19-month shutdown of the program during 2019-2020 as the causes were determined and corrected. Together with the October 2018 crash of a Lion Air 737 MAX, the number passengers and crew members killed was 346.

Boeing made a $2.5-billion settlement with the U.S. Dept. of Justice in 2021, including $500 million for crash victim beneficiaries and $1.77 billion in compensation for 737 MAX airline customers. The deal also included a $243.6 million criminal penalty. But in that deal Boeing avoided prosecution over fraud charges resulting from the investigation into the 737 MAX certification, in 2017. Last year the DOJ charged Boeing with violating the settlement, a result of the investigation into the mid-air failure of a door plug on an Alaska Airlines 787 MAX. The 2021 agreement was tossed aside by a federal court when Boeing accepted fraud charges and a penalty of up to $487.2 million.

Read more at American Machinist

CI to Host Online Tariff Impact Discussion for Manufacturing Member Execs

With the recent announcement of sweeping tariffs by the Trump Administration — including a 10% tariff on nearly all imported goods and targeted increases for key trading partners — uncertainty is again rippling through the manufacturing sector.  Recognizing that one of the greatest values the Council of Industry brings to its members is the collective experience and wisdom of its members, we will host an Executive Roundtable on Friday, April 11th, 8:00 – 9:30 AM, for manufacturing member executives to share perspectives on:

  • How developments are affecting your business today
  • What you are forecasting for the months ahead
  • What strategies you are considering in response

We’ll also provide a brief update on what we’re hearing at the national and regional levels, however, this session is primarily to hear from our members.

Please note this discussion is open to manufacturing employers only.

For more information or to register please email info@councilofindustry.org

 

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