EMPLOYMENT
The economy added 177,000 jobs in April, exceeding expectations of a 138,000 increase. Revisions to the previous two months subtracted 58,000 jobs. The unemployment rate remained at 4.2%. Average hourly earnings rose 0.2% for the month and are up 3.8% year-over-year. The labor force participation rate increased from 62.5% to 62.6%.
Our Take: Job growth was solid in April, though it is slowing relative to previous months. Trade policy effects are likely somewhat muted in the April jobs numbers and could become more prevalent in future employment reports as tariffs work their way through the economy.
GDP
Real GDP fell at a 0.3% annualized pace in the first quarter.
Our Take: Now that there has been a quarter of negative GDP growth, the big question on everyone’s minds is whether Q2 will also be negative, tipping the economy into a recession. The likely answer is no. A Q1 surge in imports to avoid tariffs did not completely work its way into inventories and consumption, resulting in an over two percentage point decline in GDP growth. This is likely just a timing issue which will reverse in Q2, meaning there would have to be a dramatic slowdown in Q2 consumption and/or investment for GDP to remain negative. That said, consumption growth did slow considerably in Q1, so negative Q2 GDP growth, while highly unlikely, remains a possibility.
TARIFFS
Multiple firms withdrew their 2025 earnings guidance due to uncertainty around the impact of tariffs on input costs and demand. Some also detailed the likely negative impact of proposed tariffs on their margins. The Trump administration announced some tariff relief for automakers, while the Chinese government has been quietly exempting imports from the U.S. with no viable alternative suppliers. The Chinese government also indicated that it is open to trade talks with the U.S.
Our Take: Both the U.S. and China seem to be looking for ways to de-escalate the trade war and mitigate its negative impacts on both economies. This is a welcome development for capital markets.
MUNICIPALS
Ohio lawmakers, Cleveland city officials, Governor Mike DeWine, and Cleveland Browns owners continue to disagree about the funding and the location of the football team’s stadium. Republican lawmakers have included a new Cultural and Sports Facilities Building Fund in their budget, which will allow for issuance of $600 million of revenue bonds for a new domed stadium in a Cleveland suburb, Brook Park. Republican Governor Mike DeWine supports an increase in the sports gambling tax to generate revenue to help support professional sports facilities. Cleveland officials have argued that the Browns’ current stadium should be renovated, and the team should remain downtown. Court proceedings have started, which will determine if a move out of Cleveland is legal.
Our Take: The stadium location debate may be decided soon, as the next court date is scheduled for June. Once the location is determined, the funding plan can proceed. Using public money to finance stadium projects continues to be controversial and can become a slippery slope. Ohio is home to other professional sports franchises, which may seek help with facilities funding in the future. Many lawmakers and taxpayers balk at providing sports team owners funding, especially when budgets are under pressure.