Markets shifted tone, and investors grew more anxious of the current economic environment as foreign trade policy took hold with the Trump administration’s announcement of a 10% universal tariff and additional tariffs on various countries. Consumer confidence has fallen, touching levels last seen in 2021, as risk of recession grew and inflation remains elevated.
The Fed’s economic projections have softened from its pre-election views in 2024, as the board of governors digests sticky inflation and increasing uncertainty in the labor market. The recent projections suggest the Fed may be comfortable maintaining their current restrictive policy stance running counter to the current administration’s hopes.