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Miami Herald
3 days ago
- Business
- Miami Herald
Homebuyer survey: How Americans are budgeting, saving, and getting to the close
Homebuyer survey: How Americans are budgeting, saving, and getting to the close The process of buying a home is thrilling … and complicated. And in today's housing market, where home prices ascended steeply after mid-2020, would-be homeowners can sometimes feel like housing costs and interest rates are conspiring against them achieving their dream. After hitting a historic high at the end of 2022, the median price of a home sold at the end of 2024 was $419,200, according to Federal Reserve Economic Data (FRED) compiled by the Federal Reserve Bank of St. Louis. So how are homebuyers coping with the quest? To find out, SoFi surveyed 500 U.S. adults looking to buy a home.* Roughly half of respondents (55%) were in the market for their first home, while the rest (45%) were repeat purchasers. What SoFi learned: Finding a home that's affordable and financing the purchase are the biggest concerns, with more than 2 in 5 buyers saying their top challenge is home prices, and over a third saying that understanding different mortgage options is a chief concern. Read on for the lowdown on what buyers are wondering about-and what they are doing to master the home-buying process. Note: SoFi rounded percentages to the nearest whole number, so some data sets may not add up exactly to 100%. *The survey was completed in April 2024 and was conducted using a general U.S. population data set of 500 adults 18 and older. Key Findings Finding an affordable home and understanding mortgage options are the top challenges for are saving by cutting expenses, increasing savings, and finding additional income is widely used, with 65% using online listing platforms and 41% using online advice is sought, with 36% consulting financial advisors and 42% seeking real estate attorney challenges, 81% of homebuyers are optimistic about buying within budget in six months. Top home-buying challenges The number of active home listings in the U.S. took a dive during the COVID-19 pandemic, as homeowners hunkered down, complicating the buying-a-home process further. And although the market has recovered somewhat, available listings, which numbered around 829,000 at the start of 2025 according to FRED, are still well off the more than 1,033,000 active listings recorded in December 2019. This is just one of the factors that has contributed to upward pressure on home prices in many markets. Not surprising, then, that 42% of home-seekers say finding a home in their price range is their greatest challenge, according to SoFi's survey. And even if they find a place to buy, 14% of shoppers are struggling with inadequate savings for a down payment. If you're worried you need 20% for a down payment, you might be pleasantly surprised to learn that in late 2024, the median down payment was 15%, according to data from the National Association of Realtors (NAR), and the typical down payment for first-time buyers was 8%. In SoFi's buying-a-home survey, among those who were challenged to come up with a down payment, 49% hadn't explored down payment assistance programs-meaning they could be leaving money on the table. More than 1 in 10 respondents (11%) said an insufficient credit score was their greatest home-buying challenge. The same proportion said difficulty securing a mortgage is their main concern-and, of course, the two issues are interrelated. Mortgage lenders use credit scores to help determine eligibility and home loan interest rates. Ten percent of respondents said a lack of certainty about their job and future income was making home buying difficult. Navigating the process of buying a home A home is the biggest purchase most people will ever make, so it's no surprise that when asked which parts of the home-buying process were most confusing to them, the greatest number of respondents (41%) ranked finding the right property as their top issue. Thirty-eight percent were confused by mortgage options. True, there are many different types of mortgage loans and endless jargon (APR? FHA? DTI? The acronyms alone could short-circuit a homebuyer's brain.) Home inspection reports are confusing for 32% of people, while 31% are stymied by paperwork. Negotiating with sellers is a point of confusion for 31%, while 26% struggle with finding a real estate agent. Technology has been a help to many home shoppers. Almost two-thirds (65%) have used an online property listing platform such as Zillow or Redfin. Online lenders have helped 41% of respondents. And 39% have used virtual or augmented reality for property viewing, with 27% using drone photography. Virtual home tours are especially helpful to those who are buying a home without visiting it in person. Forty percent of respondents were willing to buy a home sight unseen if it meets their criteria and budget, but 39% are not (and 21% were iffy). Among those who were willing to shop from afar, most shoppers were savvy and planned to use one or more methods to mitigate risk: 55% would request additional info from the seller/real estate agent.49% would thoroughly research the property and neighborhood online.46% would hire a local pro to inspect the property.43% would explore virtual or augmented reality technology for property viewing.42% would seek advice from a real estate attorney about contracts and contingencies. Budgeting challenges and strategies Notwithstanding concerns about high home prices and inadequate down payment savings, fully 81% of homebuyers were very or somewhat optimistic that they would be able to purchase a home within their budget in the next six months. Sadly, about one in five buyers weren't feeling so hopeful. Creating a home-buying budget How much do homebuyers plan to spend on their new abode? With home prices already averaging over $400,000 and forecast to continue to rise moderately in 2025, more than 1 in 4 survey respondents (29%) were budgeting between $250,000 and $499,999. Fifteen percent of survey takers were looking for a bargain, planning less than $100,000. Another 23% thought they would spend between $100,000 and $249,999. A quarter of shoppers thought they would spend between $500,000 and $999,999, with 7% budgeting more than $1 million. Interestingly, more than half of respondents whose home budget was $500K or higher have a household income of less than $100,000 per year. Some of these people could be relying on the sale of a first home to fund a second home and may even make a cash purchase. For the rest, an annual income of $100,000 typically equates to a home-buying budget in the neighborhood of $300,000. Would-be homeowners were using several methods to establish their budget. Forty-eight percent were assessing their current budget, while 37% used an online home affordability calculator. Consulting a financial advisor was also popular: 36% of people used this method. Reviewing credit scores and reports was a popular step for 36% as well. A third of shoppers (33%) assessed their debt-to-income (DTI) ratio. Twenty-seven percent got preapproved by a lender as a way of determining their budget. Down payments: Doing the math The largest up-front expense associated with buying a home is usually the down payment. Here's what shoppers were planning to spend. 7% of respondents were exploring zero-down-payment options.10% planned to put down less than 5%.19% planned to put down 6%-10%.30% planned to put down 11%-20%.23% planned to put down 21% or more.10% of respondents weren't sure how much they would put down. Buying a home with a small down payment is possible with planning, and some government-backed loans, such as VA loans (backed by the U.S. Department of Veterans Affairs), don't require a down payment. Lenders may also offer a low-down-payment option for qualified first-time homebuyers. Money-saving tips from homebuyers An overwhelming majority of homebuyers-92%-have made changes in their money habits in order to save money for their home purchase. About half (49%) have trimmed nonessential expenditures and almost the same number (45%) have increased contributions to their savings. A significant number (41%) have found a side hustle to earn more income, while 26% have downsized their current living situation. About one-fourth have sought help from family or friends. The survey suggests that buyers will continue to employ saving strategies after they close on a property, as ongoing homeownership costs were a significant concern for many respondents. Top worries included maintenance and repairs (a concern for 47%), followed by property taxes (46%), making mortgage payments (45%), affording home insurance (39%), and covering utilities costs (30%). One in four people said homeowners association costs were a concern. In fact, about 30% of U.S. housing stock is in a community governed by an HOA, according to NAR. Choosing a lender As homebuyers save money and search for a property, they're also carefully weighing the second most critical decision in the home-buying process: selecting a lender for their mortgage loan. Roughly 1 in 4 homebuyers is paying all-cash for their purchase, an all-time high, according to the NAR. But among those who must borrow, SoFi's survey found that interest rates were the top factor when comparing mortgage lenders. They were most important to 64% of respondents. Half of survey-takers said closing costs were a key factor, while 48% had their eye on closing costs when comparing lenders. Special programs and incentives were an important comparison point for 40%. Reputation and customer satisfaction were important to 39% of buyers. Getting to the loan approval Just over half of survey respondents (53%) had completed a full loan application in their current home-buying process. One in 4 (26%) had applied for a conventional loan, while slightly more (28%) had applied for an FHA loan, backed by the Federal Housing Administration. (Use of FHA loans by first-time homebuyers has declined significantly, from 55% in 2009 to 24% in 2024 according to NAR.) Twenty-three percent had applied for a loan backed by the United States Department of Agriculture (USDA), while 12% had applied for a VA loan. Some, of course, had applied for more than one type of loan, and a small percentage (5%) applied for a type of financing not listed here. Awareness of government-backed loan options was fairly strong, with almost half of homebuyers (49%) having heard of FHA loans, 41% being aware of USDA loans, and 38% having some knowledge of VA loans. Almost half (49%) were also aware of rent-to-own agreements, a less common form of financing. About a third (34%) were aware of interest-only mortgages. The takeaway Today's homebuyers are most concerned with the financial aspects of the home-buying process, with finding an affordable property, saving for the home purchase, and comparing lenders' interest rates topping their list of important factors. The good news is that, despite high home prices and stubborn interest rates, more than 4 in 5 buyers were optimistic about completing the home-buying process and making their purchase within the next six months. FAQ What is the process of buying a home? The process of buying a home starts with determining what you can afford and planning for a down payment, if you can afford one. Seeking mortgage preapproval can help you understand how much you might be able to borrow. Once you have a sense of your budget, working with a real estate agent can help you locate properties. If you find your sweet spot, you'll make an offer, finalize your home loan, negotiate with the seller and, ultimately, close the deal. What are the 5 stages of buying a home? The five stages of buying a home are planning (setting your budget, determining your down payment), preapproval (getting preapproved for financing), searching (you'll find a real estate agent and identify a property), negotiating (you'll get an inspection and go back and forth with the seller), and finalizing (you'll solidify your financing and go to the closing table). Can I move in on closing day? You can move in immediately once you close on a house, as long as your contract doesn't stipulate a different occupancy date. What are closing cost fees? Closing costs are fees paid to the team that helps get you into your new home. These can include fees for the appraiser and title company, lender fees, and more. As a general rule, closing costs average 3% to 6% of your mortgage loan principal. What are the 4 C's when buying a home? The 4 C's of home buying are the things that a lender will consider when deciding whether to approve your home loan application and determining what interest rate and terms you qualify for. They are Capacity (ability to repay the loan), Capital (funds available to you in the form of savings and other assets), Collateral (the value of the property that will be the collateral for the loan), and Credit (your credit scores and history). This story was produced by SoFi and reviewed and distributed by Stacker. © Stacker Media, LLC.
Miami Herald
21-05-2025
- Business
- Miami Herald
Can Trump's Tariffs Help Create a ‘Golden Age' of US Manufacturing?
President Donald Trump has said he wants to return the United States to a "golden age" of manufacturing and is trying to force the issue for many industries by slapping high tariffs on foreign products. However, their implementation, marked by abrupt shifts, pauses and fluctuations in levies, has sparked instability across the U.S. economy, as well as rattled global markets and longstanding partnerships. To some, like former Trump White House adviser Steve Bannon, the initial disruption is the path to a "robust," "hegemon-like," "reindustrialized" America—one that promises to put tens of thousands back to work in well-paying manufacturing jobs. Others, like Colin Grabow, associate director at the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies, argue the entire premise of reshoring and reindustrialization is flawed, as American manufacturing isn't on the decline, just manufacturing employment. Total industrial production in the U.S. is on the rise, rebounding from a sharp dip in April 2020 during the COVID-19 pandemic and returning to around 2018 levels, according to Federal Reserve Economic Data, or FRED. Industrial output now surpasses the heyday of American factories—thanks largely to efficiency gains and technological innovation. In the 1950s, manufacturing made up almost 30 percent of America's GDP, according to the Federal Reserve Bank of St. Louis, although that has since dropped to about 10 percent. Yet the U.S. remains the world's second-largest manufacturer, behind only China and well ahead of the third- and fourth-place contenders, Japan and Germany. Despite the recent rebound in output, manufacturing employment has steadily declined over the past few decades—a core concern for Trump supporters rallying around the promise of reshoring, which promises to bring tens of thousands of jobs back stateside. Manufacturing jobs in the U.S. hit a peak in 1979, with over 19 million people employed in the sector, according to the U.S. Bureau of Labor Statistics. Forty years later, manufacturing jobs accounted for less than 13 million in the U.S. Manufacturing's falling share of employment over this time has coincided with job growth in service-providing industries, including professional and business services, education and health services, and leisure and hospitality, BLS data shows. Some experts, like Andrew Yang, a former presidential candidate and founder of the Forward Party, point to automation for the major manufacturing job losses. Others acknowledge that automation played a role but also point to China's entry into the World Trade Organization in 2001, arguing that access to cheaper foreign labor markets has siphoned off American jobs. Abe Eshkenazi, CEO of the Association for Supply Chain Management, called it "extremely fickle" to bring back manufacturing for certain industries, specifically apparel and textiles, due to the labor costs. Even laptops, semiconductors and other electronics could be tough to make in the U.S. "We really like to get started young with [potential workers], letting them see that perhaps their next career move is here in Macomb County. Even if they go off to college they can come back here," Rowinski added. "We have seen an uptick in the number of international businesses that are looking for a footprint here in Macomb County." The majority of plans for U.S. manufacturing is focused on , their batteries and semiconductors. In Arizona, Taiwan Semiconductor Manufacturing Company is expanding its U.S. manufacturing investment by an additional $100 billion. The company announced in March that it has plans for three new fabrication plants, two packaging facilities and an R&D team center. It is the largest single foreign direct investment in U.S. history and is expected to create tens of thousands of jobs, according to the company. Nearby, in Texas, Samsung made a $17 billion investment in manufacturing in 2021, which the company said would create 1,800 jobs over the next decade. Tesla is also planning to invest nearly $200 million to open a plant near Houston and county officials estimate the plant could employ up to 1,500 people, with salaries ranging between $50,000 and $150,000. But the real winners in the manufacturing renaissance in the U.S. are southern states, which accounted for nearly two-thirds of the increase in manufacturing facility construction in the two years to April 2024, data released last year showed. Playing in the South's favor is the number of "right to work" states, meaning people can't be obligated to join a union even if their employer has one. It has the potential to keep labor costs down, and North Carolina, South Carolina and Georgia, where manufacturing is rising, has some of the lowest union membership rates in the country. Electricity in the South also tends to run lower than other areas of the country, reducing overhead costs for a factory. Even if there is a rise in manufacturing jobs and people wanted to fill them, Port of Los Angeles Executive Director Gene Seroka noted that it probably won't be very big and the industry certainly won't look like it did decades ago. A recurring theme in Trump's manufacturing push is what Grabow calls "a kind of politics of nostalgia"—a "romanticized," rose-colored-glasses vision of the assembly line days where union jobs provided for the family. This account does not fully acknowledge the realities then or the automated, high-tech reality of today's industry, which Yang said is factories filled with "robot arms as far as the eye can see." "What you're not seeing is investment and reshoring among American firms," Yang told Newsweek in response to Trump's tariff rollout. "What you're disinvesting." Yang warned that these blanket tariffs trigger "tougher pricing on all of [manufacturers'] components," followed by "tougher markets when they try and sell," because if they sell abroad "their margins will be lower." The result, he argued, isn't a manufacturing hiring boom, but instead a wave of layoffs and disinvestment in the industrial sector. "The tariffs as a reindustrialization policy are really boneheaded, and destructive," Yang said. Compounding the issue is the reality that reshoring a supply chain isn't an overnight shift; it's a yearslong process that hinges on long-term confidence in economic policy, several experts told Newsweek. Without that stability and predictable trade policy, many companies will be hesitant to commit to any expensive, long-term plans, leading to less investment into American supply chains. With such a deep investment needing to be made, it's unclear if America could surpass China's production in a manufacturing war. China did not become a manufacturing powerhouse by chance. Chinese leader Deng Xiaoping's reforms, beginning when he came to power in 1978, were aggressive and targeted and required Beijing to relinquish a level of state control. Experimental special economic zones in southern China, large industrial parks where logistics and supply chains became centralized, were key to the transition into a relatively freer market. Foreign investment arrived slowly at first, then all at once, drawn by tax breaks, favorable regulatory environments and the availability of manpower and machinery. Vertically integrated supply chains, as well as rail and port infrastructure that sprang from hubs like Dongguan and Shenzhen, on the border with Hong Kong, facilitated the rise of players like telecoms giant Huawei and EV titan BYD. By 1998, China's population had reached 1.25 billion. Its then leader, Jiang Zemin, declared that the newly established World Trade Organization "would be incomplete without China," a position backed by the United States under the conviction that its formal entry into global supply chains would benefit the U.S. In 2001, with U.S. manufacturing employment in decline, China joined the WTO with a labor surplus and a myriad of future entrepreneurs among its ranks. "In the 1990s, China couldn't provide enough jobs through the state sector alone. There was a push to get folks off the 'iron rice bowl' and into the private sector. Beijing supported this effort by supplying facilities and equipment, and favorable policies helped further pave the way. Many Chinese interpreted these official initiatives as a broader green light for entrepreneurial activity," Paul Midler, author of Poorly Made in China, told Newsweek. In the early 2000s, factory owners worked together to drive China's rise to the top of the manufacturing world, Midler said. They shared supplier leads and traded technical knowledge and production shortcuts. "Information flowed fast and the network effects were powerful, creating a momentum that outsiders rarely saw and still don't fully understand," Midler said. Chinese manufacturing today accounts for roughly one-third of global output, the United Nations Industrial Development Organization estimates, a higher share than North America and Europe. China positioned itself at the center of global manufacturing by partially opening up to the rest of the world at the right time, incentivizing companies to move their manufacturing abroad. A sizable portion of its society still shares the characteristics of manual labor, toiling for long hours and sleeping in dormitories, sometimes 10 to a room. Last year, nearly 300 million Chinese people—over one-fifth of the population—were classified as migrant workers who made a living in cities where they did not officially reside, according to government data. But China's rising middle class and the emergence of high-value sectors like IT have also forced its leaders to reckon with cultural shifts associated with a much richer and smarter society. In recent years, the Chinese tech industry has rebelled against the expectation of grueling and illegal "996" schedules—9 a.m. to 9 p.m., six days a week. For years, the economic trend lines looked favorable to Beijing, which had spent decades shaping industrial policy. Made in China 2025, a 10-year blueprint to upgrade Chinese manufacturing in 10 strategic sectors, was perhaps the clearest articulation of the grand plan to dominate old and new industries including IT, robotics and green tech, by not only becoming self-reliant but by enlarging the critical dependencies of others on China, too. In automation, where successful integration can free up valuable human capital in every field, China has a commanding foothold. In 2023, China ranked third in the world for robot density in the manufacturing industry, behind South Korea and Singapore, according to the International Federation of Robotics. The United States was 10th. China pushed its risky model for globalization to the limit. As it chipped away at strategic industries overseas, including in the Global South, it expected the world to accept the same dependencies that Beijing itself would never countenance. "It's a model based on the wrong assumption that China is not big enough for the world. It's the other way around—China is too big for the world. China could produce for the moon if it were populated, but it isn't, so until we find another planet, China's model is wrong," said Alicia García-Herrero, chief economist for Asia-Pacific at the investment bank Natixis. "It's not just the U.S.—everybody is going to say: 'Wait a minute. Balance your model. This cannot be that you produce everything for everybody, everywhere.' China would not like to be deindustrialized either." The U.S. has little to gain by copying the Chinese model, even in part, García-Herrero told Newsweek. America's strengths lie in innovation, university and industry linkages, and access to other free markets. It will need the help of allies near and far—Mexico and especially India can build robots, too—and their cooperation in friendly supply chains ought to be won with carrots rather than sticks, she said, because "the U.S. cannot become self-reliant on its own." China's state-run media has largely dismissed Trump's pledge to revitalize American manufacturing as a means of addressing economic security concerns, but the derision appears to miss the point. While the U.S.'s market-oriented economy will not let it produce everything it needs, for everything else, non-Chinese alternatives will emerge. Chinese goods may continue to flow into the U.S. market via existing transshipment routes or by way of Chinese-owned manufacturing plants in third countries. But on the whole, the world seems to be headed toward a two-way split. Although many still see full divestment from China as high unlikely, especially for critical materials like rare earth metals, markets have a way of recalibrating themselves after a major shock, such as in the pandemic. It took China 15 years to become the world's factory and it could take half that time to establish new supply chains with multiple countries, García-Herrero said. Liu Pengyu, a spokesperson for China's embassy in Washington, D.C., said: "The achievements of industries such as automobiles and shipbuilding in China are the result of enterprises' technological innovation and active participation in market competition." "Economic and trade cooperation between China and the United States is mutually beneficial. Forceful decoupling will not only undermine the normal trade and investment but also hurt the stability of production and supply chains between the two countries and globally. This is not in the interests of any party, including the United States," Liu told Newsweek. Recent years may not have been branded as a reshoring revolution quite like Trump's but they've quietly fueled a boom in U.S. factory construction. For Democratic Senator Tammy Baldwin, the push for increased American manufacturing stems from national security concerns, telling Newsweek "our national security is in jeopardy when we cannot make things here because we have lost the capacity to do so." She noted that the CHIPS Act, which was passed under former President Joe Biden with bipartisan support, created incentives to bring back semiconductor manufacturing to the U.S. as a matter of national security. "What we're spending building factories, adjusted for inflation, in 2024 was twice what it was in 2019," Dean Baker, economist and co-founder of the Center for Economic and Policy Research, said. "We've never seen a boom like that" in the postwar era, he added. According to FRED, total manufacturing construction spending topped $234 billion as of March 2025—a dramatic rise over the past decade. While the focus of U.S. manufacturing conversations is on semiconductors and cars, when it comes to what America is making, food, beverage and tobacco products are highest on the list. They account for about 17 percent of gross output in dollars—the highest of any subsector—according to the Department of Commerce. Chemical products plus petroleum and coal products are tied for second at 13 percent, followed by cars at about 10 percent. Bannon, a self-described populist and prominent figure in crafting the Make America Great Again movement, called out American manufacturing as little more than "final assembly" work—especially in the auto industry, where factories often import all the parts and simply put them together in the U.S. Instead, he argued, Trump's focus is on "bringing high value-added manufacturing jobs back." In addition to those jobs, Bannon described an "entire ecosystem" to be developed around the factories, from small supporting services and businesses like coffee shops, restaurants and stores for factory workers to go to nearby, to larger-scale operations such as consulting and engineering design firms that support the industry more broadly. Indeed, manufacturing can have a trickle-down effect. For every $1 spent in manufacturing, there's a $2.64 impact to the overall U.S. economy. And for every one worker in manufacturing, another 4.8 workers are added to other sectors. You need construction workers to build factories, people to supply the materials and truckers to move the product. And if a manufacturing boom hits an area and leads to an increase in people moving there, that area will need to offer more places to eat and shop, among other services, leading to more job creation. "That one manufacturing job is going to crowd in jobs in non-traded goods and services that help that manufacturing job to exist. So reshoring manufacturing would lead to expansion in other lines of business," Gordon Hanson, a Professor of Economics, Harvard Kennedy School, told Newsweek. The service business is "very much a gig economy, but here in manufacturing you have a chance to get a skill set that you can use over a long period of time and actually have a high paying job," Bannon said. He maintained there's a strong appetite for these roles, as did Baldwin, who described them as "very attractive," noting that the plants are "not your grandfather's factory." However, it's possible that even if there is a rise in manufacturing, workers won't be the ones benefiting the most. Or, at least not in the traditional sense. Factories will be driven by artificial intelligence and it's possible those jobs will go to college graduates who know how to program the technology. Yang warns that automation is going to slash what may be thought of as the typical factory role. "The industries that are most likely to need human workers tend to be the dirtiest, the least appealing, and the cheapest," he said. Related Articles Americans' View of the Economy Reverses Four-Year Trend in New PollChina's Next-Level AI Could Overtake US: New ReportChina Pauses Sanctions on US Companies in Trade War ClimbdownAutomakers Change Production, Sales Plans Based on Trump TariffsUS Economic Outlook Darkens as Major Forecast Records Steep DropGM Ends US Vehicle Exports to China Amid Trade Tensions 2025 NEWSWEEK DIGITAL LLC.
Newsweek
21-05-2025
- Business
- Newsweek
Can Trump's Tariffs Help Create a 'Golden Age' of US Manufacturing?
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. President Donald Trump has said he wants to return the United States to a "golden age" of manufacturing and is trying to force the issue for many industries by slapping high tariffs on foreign products. However, their implementation, marked by abrupt shifts, pauses and fluctuations in levies, has sparked instability across the U.S. economy, as well as rattled global markets and longstanding partnerships. To some, like former Trump White House adviser Steve Bannon, the initial disruption is the path to a "robust," "hegemon-like," "reindustrialized" America—one that promises to put tens of thousands back to work in well-paying manufacturing jobs. Others, like Colin Grabow, associate director at the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies, argue the entire premise of reshoring and reindustrialization is flawed, as American manufacturing isn't on the decline, just manufacturing employment. Factory located in Carson City, CA. Factory located in Carson City, CA. Alexandre Oliveira/Getty Total industrial production in the U.S. is on the rise, rebounding from a sharp dip in April 2020 during the COVID-19 pandemic and returning to around 2018 levels, according to Federal Reserve Economic Data, or FRED. Industrial output now surpasses the heyday of American factories—thanks largely to efficiency gains and technological innovation. In the 1950s, manufacturing made up almost 30 percent of America's GDP, according to the Federal Reserve Bank of St. Louis, although that has since dropped to about 10 percent. Yet the U.S. remains the world's second-largest manufacturer, behind only China and well ahead of the third- and fourth-place contenders, Japan and Germany. Despite the recent rebound in output, manufacturing employment has steadily declined over the past few decades—a core concern for Trump supporters rallying around the promise of reshoring, which promises to bring tens of thousands of jobs back stateside. Manufacturing jobs in the U.S. hit a peak in 1979, with over 19 million people employed in the sector, according to the U.S. Bureau of Labor Statistics. Forty years later, manufacturing jobs accounted for less than 13 million in the U.S. U.S. President Donald Trump displays a signed executive order imposing tariffs on imported goods during a 'Make America Wealthy Again' trade announcement event in the Rose Garden at the White House on April 2, 2025... U.S. President Donald Trump displays a signed executive order imposing tariffs on imported goods during a 'Make America Wealthy Again' trade announcement event in the Rose Garden at the White House on April 2, 2025 in Washington, DC. More Andrew Harnik/Getty Manufacturing's falling share of employment over this time has coincided with job growth in service-providing industries, including professional and business services, education and health services, and leisure and hospitality, BLS data shows. Some experts, like Andrew Yang, a former presidential candidate and founder of the Forward Party, point to automation for the major manufacturing job losses. Others acknowledge that automation played a role but also point to China's entry into the World Trade Organization in 2001, arguing that access to cheaper foreign labor markets has siphoned off American jobs. Abe Eshkenazi, CEO of the Association for Supply Chain Management, called it "extremely fickle" to bring back manufacturing for certain industries, specifically apparel and textiles, due to the labor costs. Even laptops, semiconductors and other electronics could be tough to make in the U.S. Employees at hotdog maker Kahn's & Company working the production line, Cincinnati, Ohio, 1950. Employees at hotdog maker Kahn's & Company working the production line, Cincinnati, Ohio, 1950. Marsh Photographers/Cincinnati Museum Center/Getty Finding that workforce is also a huge hurdle for companies to get around, and Eshkenazi said younger people aren't as interested in doing manual jobs. Some companies have even brought workers to the U.S. from Taiwan to solve labor shortage problems. "We will have those individuals, but the labor is just not there right now," he said. "The domestic supplier ecosystem, transportation, rail warehousing, talent development, all need to be developed. The infrastructure just isn't there in the short term, but we're already experiencing challenges in terms of warehousing and in terms of truck drivers and in terms of rail." A Manufacturing Mecca Macomb County, the third-smallest county in Michigan by size but the state's third most populous, has been a manufacturing mecca of sorts for decades—known primarily for factories associated with the "big three" automakers, General Motors, Ford and Stellantis (formerly Chrysler), in addition to building aircraft, spacecraft, ground vehicles, weapon systems and other equipment for U.S. defense. "We look at the opportunity to really kind of embed more of that workforce training and upskilling to make sure that our manufacturers are able to actually produce and use some of this technology to be very efficient," Vicky Rowinski, Macomb County planning and economic development director, told Newsweek. Chief Strategist to the President Steve Bannon speaks during the Semafor World Economy Summit 2025 at Conrad Washington on April 23, 2025 in Washington, DC. Chief Strategist to the President Steve Bannon speaks during the Semafor World Economy Summit 2025 at Conrad Washington on April 23, 2025 in Washington, DC. Kayla Bartkowski/Getty "We really like to get started young with [potential workers], letting them see that perhaps their next career move is here in Macomb County. Even if they go off to college they can come back here," Rowinski added. "We have seen an uptick in the number of international businesses that are looking for a footprint here in Macomb County." The majority of plans for U.S. manufacturing is focused on , their batteries and semiconductors. In Arizona, Taiwan Semiconductor Manufacturing Company is expanding its U.S. manufacturing investment by an additional $100 billion. The company announced in March that it has plans for three new fabrication plants, two packaging facilities and an R&D team center. It is the largest single foreign direct investment in U.S. history and is expected to create tens of thousands of jobs, according to the company. This aerial photo taken on August 10, 2022 shows the view of a Taiwan Semiconductor Manufacturing Company (TSMC) factory in Nanjing, in China's eastern Jiangsu province. This aerial photo taken on August 10, 2022 shows the view of a Taiwan Semiconductor Manufacturing Company (TSMC) factory in Nanjing, in China's eastern Jiangsu province. STR/AFP/via Getty Nearby, in Texas, Samsung made a $17 billion investment in manufacturing in 2021, which the company said would create 1,800 jobs over the next decade. Tesla is also planning to invest nearly $200 million to open a plant near Houston and county officials estimate the plant could employ up to 1,500 people, with salaries ranging between $50,000 and $150,000. But the real winners in the manufacturing renaissance in the U.S. are southern states, which accounted for nearly two-thirds of the increase in manufacturing facility construction in the two years to April 2024, data released last year showed. Playing in the South's favor is the number of "right to work" states, meaning people can't be obligated to join a union even if their employer has one. It has the potential to keep labor costs down, and North Carolina, South Carolina and Georgia, where manufacturing is rising, has some of the lowest union membership rates in the country. Electricity in the South also tends to run lower than other areas of the country, reducing overhead costs for a factory. Even if there is a rise in manufacturing jobs and people wanted to fill them, Port of Los Angeles Executive Director Gene Seroka noted that it probably won't be very big and the industry certainly won't look like it did decades ago. A truck driver passes stacked cargo containers at the Port of Baltimore in Baltimore, Maryland, on October 14, 2021. Closed factories, clogged ports, no truck drivers -- up and down the global supply chain there... A truck driver passes stacked cargo containers at the Port of Baltimore in Baltimore, Maryland, on October 14, 2021. Closed factories, clogged ports, no truck drivers -- up and down the global supply chain there are problems, raising concerns that it could disrupt the global economic recovery. More Jim Watson/AFP/via Getty A recurring theme in Trump's manufacturing push is what Grabow calls "a kind of politics of nostalgia"—a "romanticized," rose-colored-glasses vision of the assembly line days where union jobs provided for the family. This account does not fully acknowledge the realities then or the automated, high-tech reality of today's industry, which Yang said is factories filled with "robot arms as far as the eye can see." "What you're not seeing is investment and reshoring among American firms," Yang told Newsweek in response to Trump's tariff rollout. "What you're disinvesting." Yang warned that these blanket tariffs trigger "tougher pricing on all of [manufacturers'] components," followed by "tougher markets when they try and sell," because if they sell abroad "their margins will be lower." The photo taken on April 26, 2025 shows an employee working on a lithium battery production line at a factory in Huaibei, in eastern China's Anhui province. The photo taken on April 26, 2025 shows an employee working on a lithium battery production line at a factory in Huaibei, in eastern China's Anhui province. AFP/via Getty The result, he argued, isn't a manufacturing hiring boom, but instead a wave of layoffs and disinvestment in the industrial sector. "The tariffs as a reindustrialization policy are really boneheaded, and destructive," Yang said. Compounding the issue is the reality that reshoring a supply chain isn't an overnight shift; it's a yearslong process that hinges on long-term confidence in economic policy, several experts told Newsweek. Without that stability and predictable trade policy, many companies will be hesitant to commit to any expensive, long-term plans, leading to less investment into American supply chains. With such a deep investment needing to be made, it's unclear if America could surpass China's production in a manufacturing war. China's Rise to Power China did not become a manufacturing powerhouse by chance. Chinese leader Deng Xiaoping's reforms, beginning when he came to power in 1978, were aggressive and targeted and required Beijing to relinquish a level of state control. Experimental special economic zones in southern China, large industrial parks where logistics and supply chains became centralized, were key to the transition into a relatively freer market. Foreign investment arrived slowly at first, then all at once, drawn by tax breaks, favorable regulatory environments and the availability of manpower and machinery. Vertically integrated supply chains, as well as rail and port infrastructure that sprang from hubs like Dongguan and Shenzhen, on the border with Hong Kong, facilitated the rise of players like telecoms giant Huawei and EV titan BYD. By 1998, China's population had reached 1.25 billion. Its then leader, Jiang Zemin, declared that the newly established World Trade Organization "would be incomplete without China," a position backed by the United States under the conviction that its formal entry into global supply chains would benefit the U.S. In 2001, with U.S. manufacturing employment in decline, China joined the WTO with a labor surplus and a myriad of future entrepreneurs among its ranks. A wing spar assembly robot is pictured in the Boeing factory on October 23, 2017 in Everett, Washington. Boeing began production of the 777X jetliner, which will feature many of the fuel-saving innovations and comforts... A wing spar assembly robot is pictured in the Boeing factory on October 23, 2017 in Everett, Washington. Boeing began production of the 777X jetliner, which will feature many of the fuel-saving innovations and comforts of the Boeing 787. More Stephen Brashear/Getty "In the 1990s, China couldn't provide enough jobs through the state sector alone. There was a push to get folks off the 'iron rice bowl' and into the private sector. Beijing supported this effort by supplying facilities and equipment, and favorable policies helped further pave the way. Many Chinese interpreted these official initiatives as a broader green light for entrepreneurial activity," Paul Midler, author of Poorly Made in China, told Newsweek. In the early 2000s, factory owners worked together to drive China's rise to the top of the manufacturing world, Midler said. They shared supplier leads and traded technical knowledge and production shortcuts. "Information flowed fast and the network effects were powerful, creating a momentum that outsiders rarely saw and still don't fully understand," Midler said. Chinese manufacturing today accounts for roughly one-third of global output, the United Nations Industrial Development Organization estimates, a higher share than North America and Europe. China positioned itself at the center of global manufacturing by partially opening up to the rest of the world at the right time, incentivizing companies to move their manufacturing abroad. A sizable portion of its society still shares the characteristics of manual labor, toiling for long hours and sleeping in dormitories, sometimes 10 to a room. Last year, nearly 300 million Chinese people—over one-fifth of the population—were classified as migrant workers who made a living in cities where they did not officially reside, according to government data. But China's rising middle class and the emergence of high-value sectors like IT have also forced its leaders to reckon with cultural shifts associated with a much richer and smarter society. In recent years, the Chinese tech industry has rebelled against the expectation of grueling and illegal "996" schedules—9 a.m. to 9 p.m., six days a week. For years, the economic trend lines looked favorable to Beijing, which had spent decades shaping industrial policy. Made in China 2025, a 10-year blueprint to upgrade Chinese manufacturing in 10 strategic sectors, was perhaps the clearest articulation of the grand plan to dominate old and new industries including IT, robotics and green tech, by not only becoming self-reliant but by enlarging the critical dependencies of others on China, too. In automation, where successful integration can free up valuable human capital in every field, China has a commanding foothold. In 2023, China ranked third in the world for robot density in the manufacturing industry, behind South Korea and Singapore, according to the International Federation of Robotics. The United States was 10th. Workers build a Ford Focus on the assembly line at the Ford Motor Co.'s Michigan Assembly Plant December 14, 2011 in Wayne, Michigan. Workers build a Ford Focus on the assembly line at the Ford Motor Co.'s Michigan Assembly Plant December 14, 2011 in Wayne, Michigan. Bill Pugliano/Getty China pushed its risky model for globalization to the limit. As it chipped away at strategic industries overseas, including in the Global South, it expected the world to accept the same dependencies that Beijing itself would never countenance. "It's a model based on the wrong assumption that China is not big enough for the world. It's the other way around—China is too big for the world. China could produce for the moon if it were populated, but it isn't, so until we find another planet, China's model is wrong," said Alicia García-Herrero, chief economist for Asia-Pacific at the investment bank Natixis. "It's not just the U.S.—everybody is going to say: 'Wait a minute. Balance your model. This cannot be that you produce everything for everybody, everywhere.' China would not like to be deindustrialized either." The U.S. has little to gain by copying the Chinese model, even in part, García-Herrero told Newsweek. America's strengths lie in innovation, university and industry linkages, and access to other free markets. It will need the help of allies near and far—Mexico and especially India can build robots, too—and their cooperation in friendly supply chains ought to be won with carrots rather than sticks, she said, because "the U.S. cannot become self-reliant on its own." China's state-run media has largely dismissed Trump's pledge to revitalize American manufacturing as a means of addressing economic security concerns, but the derision appears to miss the point. While the U.S.'s market-oriented economy will not let it produce everything it needs, for everything else, non-Chinese alternatives will emerge. Chinese goods may continue to flow into the U.S. market via existing transshipment routes or by way of Chinese-owned manufacturing plants in third countries. But on the whole, the world seems to be headed toward a two-way split. Although many still see full divestment from China as high unlikely, especially for critical materials like rare earth metals, markets have a way of recalibrating themselves after a major shock, such as in the pandemic. People work at EV fast-charger manufacturer Kempower on April 23, 2024, in Durham, North Carolina. People work at EV fast-charger manufacturer Kempower on April 23, 2024, in Durham, North Carolina. Allison Joyce/AFP/via Getty It took China 15 years to become the world's factory and it could take half that time to establish new supply chains with multiple countries, García-Herrero said. Liu Pengyu, a spokesperson for China's embassy in Washington, D.C., said: "The achievements of industries such as automobiles and shipbuilding in China are the result of enterprises' technological innovation and active participation in market competition." "Economic and trade cooperation between China and the United States is mutually beneficial. Forceful decoupling will not only undermine the normal trade and investment but also hurt the stability of production and supply chains between the two countries and globally. This is not in the interests of any party, including the United States," Liu told Newsweek. The Politics of Manufacturing Recent years may not have been branded as a reshoring revolution quite like Trump's but they've quietly fueled a boom in U.S. factory construction. For Democratic Senator Tammy Baldwin, the push for increased American manufacturing stems from national security concerns, telling Newsweek "our national security is in jeopardy when we cannot make things here because we have lost the capacity to do so." She noted that the CHIPS Act, which was passed under former President Joe Biden with bipartisan support, created incentives to bring back semiconductor manufacturing to the U.S. as a matter of national security. "What we're spending building factories, adjusted for inflation, in 2024 was twice what it was in 2019," Dean Baker, economist and co-founder of the Center for Economic and Policy Research, said. "We've never seen a boom like that" in the postwar era, he added. According to FRED, total manufacturing construction spending topped $234 billion as of March 2025—a dramatic rise over the past decade. While the focus of U.S. manufacturing conversations is on semiconductors and cars, when it comes to what America is making, food, beverage and tobacco products are highest on the list. They account for about 17 percent of gross output in dollars—the highest of any subsector—according to the Department of Commerce. Chemical products plus petroleum and coal products are tied for second at 13 percent, followed by cars at about 10 percent. Construction of Amazon Mid-Atlantic Region data center in Northern Virginia, Loudoun County, USA. Construction of Amazon Mid-Atlantic Region data center in Northern Virginia, Loudoun County, USA. Getty Bannon, a self-described populist and prominent figure in crafting the Make America Great Again movement, called out American manufacturing as little more than "final assembly" work—especially in the auto industry, where factories often import all the parts and simply put them together in the U.S. Instead, he argued, Trump's focus is on "bringing high value-added manufacturing jobs back." In addition to those jobs, Bannon described an "entire ecosystem" to be developed around the factories, from small supporting services and businesses like coffee shops, restaurants and stores for factory workers to go to nearby, to larger-scale operations such as consulting and engineering design firms that support the industry more broadly. Indeed, manufacturing can have a trickle-down effect. For every $1 spent in manufacturing, there's a $2.64 impact to the overall U.S. economy. And for every one worker in manufacturing, another 4.8 workers are added to other sectors. You need construction workers to build factories, people to supply the materials and truckers to move the product. And if a manufacturing boom hits an area and leads to an increase in people moving there, that area will need to offer more places to eat and shop, among other services, leading to more job creation. "That one manufacturing job is going to crowd in jobs in non-traded goods and services that help that manufacturing job to exist. So reshoring manufacturing would lead to expansion in other lines of business," Gordon Hanson, a Professor of Economics, Harvard Kennedy School, told Newsweek. The service business is "very much a gig economy, but here in manufacturing you have a chance to get a skill set that you can use over a long period of time and actually have a high paying job," Bannon said. He maintained there's a strong appetite for these roles, as did Baldwin, who described them as "very attractive," noting that the plants are "not your grandfather's factory." However, it's possible that even if there is a rise in manufacturing, workers won't be the ones benefiting the most. Or, at least not in the traditional sense. Factories will be driven by artificial intelligence and it's possible those jobs will go to college graduates who know how to program the technology. Yang warns that automation is going to slash what may be thought of as the typical factory role. "The industries that are most likely to need human workers tend to be the dirtiest, the least appealing, and the cheapest," he said.
Yahoo
19-05-2025
- Yahoo
New rideshare-style shuttle service launches in Vista: How to ride
VISTA, Calif. (FOX 5/KUSI) — The North County Transit District has expanded its on-demand ride service to include the city of Vista, offering residents a personalized transportation option similar to Uber or Lyft. The shuttle service, called NCTD+, officially launched on Monday in the greater Vista area. It was previously available only in the city of San Marcos. NCTD+ works like a rideshare service, allowing residents to request rides to a specific destination. Residents can use it as a convenient first and last mile connection while taking other forms of public transit, or as an affordable alternative to roam within community. The on-demand service is one of a handful launched across the county in the last few months, including one in City Heights and North Park and the city of El Cajon. They join the long-standing shuttle in downtown San Diego, Ride Circuit's Free Ride Everywhere Downtown (FRED). Community feedback needed on LOSSAN rail realignment plans Unlike some of these other options, however, the NCTD+ shuttle runs seven days a week. Rides can be requested in the app between the hours of 6 a.m. to 8 p.m. during the week and from 8 a.m. to 8 p.m. on Saturday and Sunday. Each ride costs $3 for the first passenger with an additional $1.50 charged for every extra rider on the same booking. For those just looking to get to and from Sprinter stations, the one-way fare is $1.50. Youth under the age of 18 are eligible to ride free. The price point, NCTD officials say, makes it an affordable option for large groups looking to take an alternative transit option. Rides can be requested from most places in the service zone, although some may need to walk a short distance to reach the closest pickup and drop-off spots. These spots are strategically placed near key areas, such as schools, the Boys and Girls Club, shopping centers and the library. NCTD officials note all rides must also start and end in the service zone. Interactive maps of the zones can be found on the transit district's website or in the NCTD+ mobile app. FOX 5/KUSI took a ride on the shuttle service Monday morning. The trip was smooth and professional with a friendly driver, Naomi. The vehicle is spacious with plenty of room for families or larger groups. For those looking to get started with NCTD+, the app is available for download in both the Apple App Store and Google Play. FOX 5/KUSI's Elizabeth Alvarez contributed to this report. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
18-05-2025
- Business
- Yahoo
Why you can't keep the US economy and stock market down for very long
A version of this post first appeared on One of the benefits of aging as an investor is that you accumulate invaluable experience and perspective by living through a lot of very bad economic and financial market events. These include events when, in the moment, it felt like things had permanently taken a turn for the worse. But time after time, you're reminded that you can't keep the U.S. economy and stock market down for very long. I like to reflect on those events and recall the unpleasant memories because it helps me better process current and future periods of turmoil and crisis. And the more I reflect, the more I feel like I understand why we keep bouncing back. In the late 1990s, I was just another immature high school kid without many cares in the world. I didn't really keep up with current events. But I remember the Asian Financial Crisis because it was one of the topics in prayers my dad would give at his church in Kentucky. I'll never forget hearing "IMF" come up in those Korean prayers because it was so unusual. Among other things, the Korean won collapsed by more than half against the U.S. dollar over a very short period at the time. This was a particularly big problem for immigrants closely tied to family back in Korea. I didn't quite understand it at the time, but I remember the mood being disturbingly gloomy for a while. The Asian Financial Crisis saw major currencies quickly collapse. (Source: FRED) I don't have many memories from the Dot-com Bubble bursting. Back then, I had little interest in or exposure to the stock market, and neither did the people around me. But I do remember watching 9/11 live on TV in my dorm with my roommates at Boston University. I remember not being able to get a hold of family members in New York and Kentucky because the phones were overloaded. I remember the extreme range of reactions from my friends: some fled Boston out of fear; some used it as an excuse to skip some classes; some explored joining the armed forces. Everyone was rattled. Everyone felt less safe. And for my college friends and I, it soon became clear that we would all be entering a tighter job market with an elevated unemployment rate. Things weren't great. The economy looked great when I entered college in 2000. It wasn't as great when I graduated in 2004. (Source: FRED) After graduating from college in 2004 and after months of searching, I randomly got a job as a contract paralegal where I got my first serious introduction to equity research. I quickly became hooked on learning about what made the stock market move. In 2006, I got a job at Forbes Newsletters researching and writing up stock picks. I also enrolled in the CFA program that year, which helped me develop a sophisticated understanding of things like mortgage backed securities, collateralized debt obligations, derivatives, and value-at-risk models. This education super-charged my fear and my feeling of hopelessness as the world tipped into recession in 2007 and spiraled into Global Financial Crisis (GFC) in 2008. The more I understood, the more I felt like there was no way out of it. And many pundits seemed to agree. I remember respected financial market prognosticators going on TV and proclaiming that the government's bailouts of the big banks, the automakers, and the GSEs were proof that it was "the end of capitalism." The S&P 500 fell 57% from its Oct 2007 high of 1,565 to its March 2009 low of 666. (Source: Yahoo Finance) It wasn't the end of capitalism, though many were convinced the housing market would never come back as we entered a "new normal" of slow growth. Another popular phrase in the wake of the crisis was "secular stagnation." Admittedly, I was sold on the idea that economic growth would forever be a long slog. You can't blame me. In 2010, I got laid off from my job and I re-entered a job market flooded with unemployed people with backgrounds in finance. But the post-GFC recovery helped me appreciate the resilience of the consumers and businesses propelling the economy forward. I got a great job in 2011, and over the next decade my income soared. Those years were riddled with numerous macro hiccups, but nothing could keep the economy and the stock market from accelerating again and blasting through record highs. And then came the COVID-19 pandemic. Those first 6-9 months were surreal. I remember feeling like I was living in a sci-fi horror film. At many points I thought this new strange way of life would be permanent. Meanwhile, I was constantly worried that the whole economy would collapse on itself. COVID-19 caused the economy to nearly screech to a halt. (Source: FRED) The discovery of the vaccine certainly helped things turn around. Fast forward a few years, and most things in the economy are back to normal. Notably, cruise and air travel have more than recovered as most people have gotten comfortable again with being in tight spaces with strangers — unless it's in an office for work. So despite the pain, the trauma, and even the loss of life, all these experiences eventually confirmed that we'll always bounce back. The economy and the stock market have always had an upward bias. This makes sense if you think about it. There are way more people who want things to be better, not worse. And that demand incentivizes entrepreneurs and businesses to supply better goods and services. The winners in this process get bigger as revenue grows. Some even get big enough to get listed in the stock market. As revenue grows, so do earnings. And earnings drive stock prices. I can't imagine anything changing these attitudes. Sure, there will be periods of when we feel angry and hopeless along the way. But we're never gonna wake up one day and decide we have everything we want or settle on the idea that what we've got can't be improved on. And there will always be a sense of urgency. Even during difficult periods, people understand that life won't wait. You're getting older. Your kids are getting older. Your parents are getting older. If you have the resources, you won't put your lives on hold. This is bullish as it keeps the wheels on the economy spinning. Sure, many things change after all the events I mentioned. But things are always changing. Importantly, the changes that stuck have never prevented the economy and the markets from setting new records. If you've been following the news at all over the past two months, you've probably heard at least a few folks talking about how the Trump administration's approach to trade policy is damaging the U.S. 's standing in the world while also threatening to send the global economy into recession. As the stock market tumbled, phrases like "sell America" and "end of American exceptionalism" began to trend. Popular measures of investor sentiment tanked. Barron's Big Money poll revealed historic levels of bearishness. (Source: Barron's) To be clear, I think the past two months created some damage, and we have yet to learn the extent of that damage. It's certainly possible that we're in a recession or headed for one. And it's certainly possible the stock market could take another leg lower. But I'm nowhere near convinced that we're destined for an extended, multi-year period of turmoil and pain. Our system is amazing at self-correcting. Whether it's through votes or something else, we always seem to find a way to get things back on track toward increasing prosperity and improving our standard of living. And to repeat what I said last week: There's basically three scenarios investors always have to consider: 1) Things improve from here, and the market goes up; 2) Things get worse before they get better, which means markets could fall before resuming a more firm rally; or 3) Things get worse and never get better. If we're facing scenario 3, then we may have bigger problems than stocks not recovering. But scenario 3 has never played out. Scenarios 1 and 2 favor long-term investors. Maybe things get worse before they get better. (Note: Timing market bottoms is nearly impossible.) But staying long the stock market covers you in case the low of this cycle is behind us. I'll leave you with Warren Buffett said earlier this month at Berkshire Hathaway's annual meeting: "We're always in the process of change. We'll always find all kinds of things to criticize in the country. … If you don't think the United States has changed since I was born in 1930… We've gone through all kinds of things. We've gone through great recessions. We've gone through world wars. We've gone through the development of the atomic bomb that we never dreamt of when I was born. So I would not get discouraged about the fact that it doesn't look like we've solved every problem that's come along." The 94-year-old investor has lived through everything, and he's made a fortune investing in the stock market along the way. There were several notable data points and macroeconomic developments since our last review: 🇺🇸 Moody's downgraded its rating on the U.S. from Aaa to Aa1. Like most analysts out there, I'm not too surprised or concerned by the action. You can read my thoughts on credit rating downgrades in the this 2023 TKer: 🤔 🛍️ Shopping ticks higher. Retail sales increased 0.1% in April to a record $724.1 billion. (Source: Census via FRED) For more on consumer spending, read: 😵💫 and 🛍️ 💳 Card spending data is holding up. From JPMorgan: "As of 08 May 2025, our Chase Consumer Card spending data (unadjusted) was 2.3% above the same day last year. Based on the Chase Consumer Card data through 08 May 2025, our estimate of the US Census May control measure of retail sales m/m is 0.54%." (Source: JPMorgan) From BofA: "Total card spending per HH was up 1.3% y/y in the week ending May 10, according to BAC aggregated credit & debit card data. Relative to last week, the biggest gains were in department stores & grocery while entertainment & lodging saw the biggest decline. Spending has recovered from the Easter slowdown. Overall, there has been some moderation but spending momentum remains." May spending is likely being boosted by consumers pulling forward purchases in an attempt to front-run tariffs. For more on consumer spending, read: 😵💫 and 🛍️ 👎 Consumer sentiment is tumbling. From the University of Michigan's May Surveys of Consumers: "Sentiment is now down almost 30% since January 2025. Slight increases in sentiment this month for independents were offset by a 7% decline among Republicans. While most index components were little changed, current assessments of personal finances sank nearly 10% on the basis of weakening incomes. Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers' thinking about the economy." (Source: University of Michigan) Politics clearly plays a role in peoples' perception of the economy. (Source: Michael McDonough) Notably, expectations for inflation appear to be a partisan matter. (Source: Michael McDonough) For more on the state of sentiment, read: 😵💫 and 😵💫 📦 Inventory levels fall. Total business inventories increased just 0.1% to $2.58 trillion in March. However, this lagged sales growth during the period. As a result, the inventories/sales ratio declined to 1.34 in March, down from 1.35 in February. (Source: Census) For more on why we're watching inventories, read: 🤷🏻♂️ 👍 Inflation cools. The Consumer Price Index (CPI) in April was up 2.3% from a year ago, down from the 2.4% rate in March. Adjusted for food and energy prices, core CPI was up 2.8%, unchanged from the prior month's level. (Source: Nick Timiraos) On a month-over-month basis, CPI and core CPI increased just 0.2%. If you annualize the three-month trend in the monthly figures — a reflection of the short-term trend in prices — core CPI climbed 2.1%. (Source: Nick Timiraos) For more on inflation, read: 🎈and ✂️ ⛽️ Gas prices tick higher. From AAA: "Gas prices are creeping back up just in time for the busy summer driving season. The national average for a gallon of regular is up 4 cents from last week, as the price of crude oil rises and demand goes up. Typically, the seasonal increase in gas prices starts earlier in the spring, but lower crude oil prices so far this year have kept that from happening. Now, we're starting to settle in a more typical pattern. Despite the upward trend, drivers are paying about 40 cents less compared to last year, which is good news for the record 39.4 million Americans expected to take road trips over Memorial Day weekend." (Source: AAA) For more on energy prices, read: 🛢️ 💰 Household finances are deteriorating but also normalizing. From the New York Fed's Q1 Household Debt & Credit report: "Transition into early delinquency held steady for nearly all debt types; the exception was for student loans, which saw a large uptick in the rate at which balances went from current to delinquent due to the resumption of reporting of delinquent student loans on credit reports after a nearly 5-year pause due to the pandemic." (Source: NY Fed) While the rate at which debt is going into delinquency has moved higher, the total amount of debt in delinquency remains low at just 4.3% of outstanding debt. (Source: NY Fed) And while credit card delinquency rates may be up, it's a mistake to say consumers are maxing out their credit cards. The $1.2 trillion in credit card balances as of Q1 represents just a tiny fraction of credit card limits. (Source: NY Fed) For more on household finances, read: 🛍️ 💼 Unemployment claims tread. Initial claims for unemployment benefits fell to 229,000 during the week ending May 10, unchanged from the week prior. This metric continues to be at levels historically associated with economic growth. (Source: DoL via FRED) For more context, read: 🏛️ and 💼 👎 Small business optimism falls. From the NFIB's April Small Business Optimism Index report: "Very few small businesses export their goods and services, but millions acquire imported goods as inputs to their operations and those supply chains are currently at risk. Tariff policy is suddenly and dramatically changing relative prices (costs), and relative prices drive all decisions. Uncertainty remains elevated and thus caution clouds spending, hiring, and investing decisions." (Source: NFIB) For more on the state of sentiment, read: 🔃 and 😵💫 🏠 Homebuilder sentiment sinks. From the NAHB's Robert Dietz: "Policy uncertainty stemming in large part from the stop-and-start tariff issues has hurt builder confidence but the initial trade arrangements with the United Kingdom and China are a welcome development. Still, the overall actions on tariffs in recent weeks have had a negative impact on builders, as 78% reported difficulties pricing their homes recently due to uncertainty around material prices." (Source: NAHB) 🔨 New home construction starts rise. Housing starts grew 1.6% in April to an annualized rate of 1.36 million units, according to the Census Bureau. Building permits ticked down 4.7% to an annualized rate of 1.41 million units. (Source: Census) 🏠 Mortgage rates tick higher. According to Freddie Mac, the average 30-year fixed-rate mortgage rose to 6.81%, up from 6.76% last week. From Freddie Mac: "The 30-year fixed-rate mortgage remained below the 7% threshold for the 17th consecutive week. Stable mortgage rates coupled with moderately rising inventory are attracting homebuyers into the market, with purchase application activity up 18% from last year." (Source: Freddie Mac) There are 147.8 million housing units in the U.S., of which 86.1 million are owner-occupied and about 34.1 million of which are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to movements in home prices or mortgage rates. For more on mortgages and home prices, read: 😖 😬 This is the stuff pros are worried about. From BofA's May Global Fund Manager Survey: "The US-China meeting in Geneva was announced in the middle of the May FMS survey period; even still, trade war triggering global recession continues to be seen as the biggest 'tail risk' per 62% of investors, albeit down from peak 80% in April (in 15-year history)." (Source: BofA) For more on risks, read: 🎢, 😟 and 🌈 🍾 The entrepreneurial spirit is alive. From the Census Bureau: "Total U.S. Business Applications were 449,508 in April 2025, down 0.9% from March 2025." (Source: Census) TKer is a small business that launched three years ago. For more, read: 📈🎂 🛠️ Industrial activity flattens. Industrial production activity in April didn't change much from prior month levels. Manufacturing output decreased 0.4%. (Source: Federal Reserve) For more on economic activity cooling, read: 📉 📈 Near-term GDP growth estimates are tracking positive. The Atlanta Fed's GDPNow model sees real GDP growth rising at a 2.4% rate in Q2. (Source: Atlanta Fed) For more on GDP and the economy, read: 📉 and 🤨 🏢 Offices remain relatively empty. From Kastle Systems: "Peak day office occupancy was 62.8% on Tuesday last week, down half a point from the previous week. New York and San Jose experienced the largest declines, falling 2.5 points to 66.8% and 2.9 points to 57.1%, respectively. The average low was on Friday at 34.8%, same as the previous week." (Source: Kastle) For more on office occupancy, read: 🏢 Upgrade to paid 🚨 The tariffs announced by President Trump as they stand threaten to upend global trade — with significant implications for the U.S. economy, corporate earnings, and the stock market. Until we get some more clarity, here's where things stand: Earnings look bullish: The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices. Demand is positive: Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation, while cooling, also remains positive, and the Federal Reserve — having resolved the inflation crisis — has shifted its focus toward supporting the labor market. But growth is cooling: While the economy remains healthy, growth has normalized from much hotter levels earlier in the cycle. The economy is less "coiled" these days as major tailwinds like excess job openings have faded. It has become harder to argue that growth is destiny. Actions speak louder than words: We are in an odd period given that the hard economic data has decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continue to grow and trend at record levels. From an investor's perspective, what matters is that the hard economic data continues to hold up. Stocks are not the economy: Analysts expect the U.S. stock market could outperform the U.S. economy, thanks largely due to positive operating leverage. Since the pandemic, companies have adjusted their cost structures aggressively. This has come with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth. Mind the ever-present risks: Of course, this does not mean we should get complacent. There will always be risks to worry about — such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, cyber attacks, etc. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets. Investing is never a smooth ride: There's also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect to experience as they build wealth in the markets. Always keep your stock market seat belts fastened. Think long term: For now, there's no reason to believe there'll be a challenge that the economy and the markets won't be able to overcome over time. The long game remains undefeated, and it's a streak long-term investors can expect to continue. A version of this post first appeared on
