Investment Rating - The report expects US GDP growth to slow from 2.5% last year to just 0.5% this year on a Q4/Q4 basis [2][5]. Core Insights - The slowdown is largely attributed to higher tariffs, tighter financial conditions, and increased policy uncertainty [2][5]. - Initial jobless claims, the Philly Fed manufacturing index, and ISM services indices are identified as timely indicators of slower growth [2][12]. - Consumer spending is anticipated to decline as disposable income is affected by rising consumer prices due to tariffs [29][37]. - Capital expenditure (capex) growth is expected to be depressed, with a peak drag anticipated in the second half of 2025 [42][44]. - The labor market is showing initial signs of weakness, with jobless claims being a key indicator [49][54]. Summary by Sections Economic Growth - US GDP growth is projected to decrease significantly, reflecting the impact of tariffs and financial conditions [2][5]. - Historical data suggests that hard economic indicators typically show signs of weakness about four months after a growth slowdown begins [20][62]. Consumer Spending - Higher tariffs are expected to raise consumer prices, leading to a slowdown in consumer spending as disposable income declines [29][37]. - Core retail sales are highlighted as a reliable indicator of consumer spending during growth slowdowns [37][38]. Capital Expenditure - Tighter financial conditions and policy uncertainty are likely to negatively impact capex growth, with a significant drag expected in 2025 [42][44]. - Historical analysis indicates that soft data on capex tends to deteriorate before hard data, which may take longer to reflect the slowdown [46][48]. Labor Market - Initial jobless claims are considered a timely indicator of economic slowdown, with expectations of increased claims as the economic outlook worsens [49][54]. - The report notes that while layoffs remain low, hiring in sectors like healthcare and education may slow down significantly [41][54].

Three major U.S. indexes the Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average closed deeply in red by 9.89%, 9.58% and 8.78% respectively, last week. The stocks have taken a beating after the implementation of President Donald Trump’s reciprocal tariff policies with major trading partners on April 2, 2025. Uncertainty over the impact of such policies on the U.S. economy has stoked fear of a near-term recession among market participants.Analysts are expecting a slowdown in economic growth a ...