As a succession of trade disputes under President Trump causes concerns about consumer demand and increased inflation calls business leaders back-off their 2025 ambitions and grow more wary.
S&P Global reported in a monthly survey of top executives who purchase goods for their businesses that “business expectations for the year ahead fell to their second lowest since October 2022 as companies grew increasingly cautious about the economic outlook.”
The S&P polls nevertheless revealed, on first glance, economic progress.
Based on a so-called flash or preliminary reading, the service-sector indicator peaked at 53.5, three months ago. Any figure higher than fifty indicates expansion.
S&P said business increased up following a cold snap in January and February, but it could prove ephemeral.
Most Americans work for services businesses including banks, stores, and healthcare providers, which also account for a significant portion of the GDP.
While manufacturers’ similar poll dropped three-month low of 49.8 from 52.7 in the previous month.
Key points: Since their primary cost is labour—waiters, doctors, hairdressers, cashiers and so on—service-oriented companies are less influenced by trade issues.
On the tariffs, manufacturers divide themselves. While some, like steel manufacturers, would gain, most would pay more and maybe see reduced demand for their goods should strong tariffs be implemented.
Businesses had been somewhat hopeful about the state of the economy in 2025 before Trump started his most recent salvos on trade. Most of the hope has evaporated.
The first signals of every month to help one understand the state of the U.S. economy are the S&P polls.
Big picture: The state of the economy is at a crossroads; so, the extent of President Trump’s initiatives will mostly determine where it proceeds from here.
Anticipating future: “Business confidence in the outlook has also darkened, souring further from the buoyant mood seen at the start of the year to one of the gloomiest readings seen over the past three years, largely caused by growing worries over negative impacts from recent policy initiatives from the new administration” said S&P Global chief business economist Chris Williamson.
“Most often mentioned were worries about the effect of tariffs and reduced Federal spending.”
