Below are the economic and market highlights for the week:
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Markets rallied this week on news that China and the U.S. would pause tariffs against one another while President Trump took full advantage of his overseas trip to the Gulf region to broker a number of trade and investment deals. The tech heavy Nasdaq Composite Index entered a new bull market on Monday, while the economically sensitive Dow Jones Industrial Average closed 10% higher from its low set in April.
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Consumer prices rose modestly in April with the Consumer Price Index (CPI) increasing 0.20%, up from March’s 0.10% decline. Year-over-year (YOY), prices were up 2.30%, their lowest annual rate since early 2021. Core CPI, which excludes volatile food and energy, increased 0.20% in April and was up 2.80% YOY. Shelter drove the headline inflation rate, up 0.30% on the month and accounted for more than half of the overall gain. Energy also moved higher month-to-month, up 0.70%, driven by higher costs for natural gas and electricity. Although inflation was up modestly in April, Trump tariffs remain a wild card in the inflation picture with trade negotiations expected to continue through the summer.
- Retail sales cooled in April, up 0.10% for the month. That’s a sharp slowdown from March’s 1.70% surge driven by consumers rushing to buy vehicles before new tariffs took effect. Core retail sales, which exclude autos, gasoline, building materials, and food services, fell by 0.20% after rising 0.50% in March, indicating a pullback in discretionary spending. Sporting goods, clothing, and department stores led the decline, offsetting gains in restaurant receipts. The report suggests consumers have opted for the sidelines until tariff uncertainty lifts.
Wall Street Soars as Deals Roll In
Animal spirits reigned on Wall Street as the U.S. and China agreed to suspend most of the tariffs on each other’s goods for 90-days and as President Trump announced economic commitments from Gulf partners on his 4-day tour of the Middle East. Over the weekend, the administration agreed to slash Chinese tariffs from 145% to 30% for 90 days. In response, China dropped tariffs on U.S. imports from 125% to 10% for the period. While the announcement was a positive first step, nothing concrete was formalized, and negotiations are ongoing for a longer-term trade deal. In the Middle East, Trump put on his dealmaker-in-chief hat and announced a $1.2 trillion economic commitment from Qatar, a $600 billion investment commitment from Saudi Arabia, and $200 billion in deals with the United Arab Emirates. The deals revolved around defense, energy, technology, and infrastructure. Investors cheered the progress on trade, helping to ease the uncertainty around tariffs and impact on the economic outlook. However, it is still too early to announce the all-clear as there remain a number of unknowns over where tariffs will ultimately land. The Yale Budget Lab crunched the numbers, taking into consideration the recent rollback in China tariffs. According to their calculations, the overall average effective tariff rate stands at 17.80%, the highest level since 1934. At the current rate, the price level from all 2025 tariffs is presently estimated to increase by 1.70% in the short run – the equivalent of an average household paying $2,800 more than it had previously. While that may be a hit to consumers’ wallets, it’s far better than the estimated $4,800 they would have suffered if Chinese tariffs remained at 145%. Consumers have thus far been spared the full effects from tariffs since most companies have held off on raising prices in anticipation that trade deals with the U.S.’s major trading partners will be worked out during the current moratorium. That is beginning to change, however. Walmart – the world’s largest retailer – announced this week that it will begin raising prices later this month. More companies are expected to follow if faster progress is not made on the 150+ individual trade negotiations still outstanding – a reality that Trump himself acknowledged on Friday. With the initial tariff pause set to expire on July 8th, consumer and investor sentiment will continue to be highly coupled to the trade narrative for the immediate future. Data this week showed that consumer sentiment dipped to its second lowest level in 75 years in May, but that polling predated recent developments. Given consumer sentiment’s deeply depressed levels, should trade talks continue to progress, there is ample room for sentiment to snap back which could provide a solid tailwind for markets through early summer.
The Week Ahead
With the Memorial Day weekend upon us, Week in Review will pause in observance. Our next edition arrives on May 30th with the latest durable goods and PCE data.
Hair with Heart
This month marks the official launch of the call for entries for the 2025 USA Mullet Championship. Yes, you read that correctly. This silly and fun event means business — well, at least in the front anyway. If you’re wondering what a mullet is, allow us to shed some light on this longstanding, iconic hairstyle celebrated by rock stars, athletes, and proud dads alike.
The mullet haircut traces its roots (insert laughter here) to 6th century BCE. Ancient Greek statues depict figures with “business in the front,” meaning short hair in the front, top, and sides, and “party in the back” where locks are worn longer. Roman emperor Tiberius was said to have worn his hair similarly. The style was also common among Native Americans. In the modern era, the mullet gained prominence in the 1970s and 1980s, thanks to rock stars like David Bowie, Rod Stewart, Paul McCartney, and Eddie Van Halen. Legendary female rock stars also adopted the look, including Joan Jett, Debbie Harry of Blondie, Tina Turner, and even Dolly Parton sported variations of the edgy style. Though it fell out of mainstream fashion in the 1990s, the mullet has seen periodic revivals, proving its enduring appeal.
The USA Mullet Championships started in 2020 as the Michigan Mudflap Contest before expanding into a national event. Since then, it has grown into a widely recognized competition celebrating the bold, rebellious, and iconic hairstyle. The competition has a division for different age groups, including kids, teens, and adults. A female category is called the Femullet.
While the USA Mullet Championship may seem all about fun and flair, it has a serious mission at heart with 100% of proceeds benefitting Jared Allen’s Homes for Wounded Warriors. Founded by mullet-wearing former NFL star Jared Allen, this nonprofit provides mortgage-free, accessible homes for U.S. military veterans who were critically wounded in combat.
One of the best parts of the USA Mullet Championships is the creativity contestants bring to naming their hairstyles. Here are a few from last year:
- The Kammander – Kamden Cunningham, winner of the Kid Contest.
- Flow Motion – Todd Grubb, winner of the Adult Contest.
- The West Coast Wave – Mason Padilla, winner of the Teen Contest.
- Killi Ray Cyrus – Killian Depew, a top donor and contestant.
- Hair 2 Party – Brody Byrne, runner up in the Kid Contest
- The Texas Waterfall, Avery Quiroz, finalist
Jared Allen’s infamous mullet will soon be cast in bronze and have a permanent place inside the NFL’s Pro Football Hall of Fame when Allen is inducted later this summer. The former Minnesota Vikings defensive end delighted fans when he confirmed earlier this year that his bronze bust will “absolutely rock a mullet,” immortalizing his signature flow and ensuring his mullet’s legacy lives on.