Input Stories

Real GDP decreased at an annual rate of 0.3% in the first quarter of 2025, down from a 2.4% increase in the fourth quarter of 2024 and below consensus expectations of meager growth. The decrease in GDP during the quarter was mostly reflective of an increase in imports, which are a subtraction in the calculation of GDP, and a decline in government spending. This was partially offset by greater investment, consumer spending and exports. Since, by definition, GDP measures domestic output, imports are subtracted from the final calculation since they are reflected in other parts of the equation, such as inventories and consumption.

Consumer spending grew at an annual rate of 1.8%, down from a 4.0% increase in the fourth quarter, with both spending on goods (up 0.5%) and services (up 2.4%) contributing to the gain. Consumer spending on durable goods decreased 3.4% after exhibiting significant growth of 12.4% in the fourth quarter. The decline in consumer spending was led by motor vehicles and parts, with a slight decline in other durable goods. Meanwhile, consumer spending on nondurable goods rose 2.7%, down from 3.1% growth in the fourth quarter. Within services, spending increases were widespread, with health care, housing and utilities being the largest contributors to the increase. The decrease in federal government spending (down 5.1%) was led by an 8.0% decline in defense spending, but nondefense spending was also down 1.0%.

Investment surged 21.9% at an annual rate in the first quarter, driven by a 22.5% increase in business spending on equipment, with information processing equipment being the largest contributor. Meanwhile, business spending on industrial equipment declined. Exports rose 1.8% in the first quarter, with the increase entirely concentrated in goods exports.

In February, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index recorded a 3.9% annual gain, down slightly from 4.1% in January. The 10-City Composite saw an annual increase of 5.2% in February, down from 5.4% the previous month, while the 20-City Composite rose 4.5% year-over-year, down from 4.7%. Among the 20 cities, New York again posted the highest annual gain at 7.7%, followed by Chicago at 7.0% and Cleveland at 6.6%. Tampa again exhibited the lowest annual return, with prices falling 1.5%.

On a month-over-month basis, the U.S. National Index rose 0.4%, the 10-City Composite improved 0.8% and the 20-City Composite increased 0.7% before seasonal adjustment. Meanwhile, after seasonal adjustment, the 10-City and 20-City Composites posted increases of 0.5% and 0.4%, respectively, while the U.S. National Index improved 0.3%. Of the cities tracked by the 20-City Composite Index, 17 showed monthly price increases, a reversal of recent seasonal weakness. San Francisco (+1.8%), Seattle (+1.6%) and Los Angeles (+1.5%) led monthly price gains, while only Tampa (-0.3%) and Miami (-0.3%) exhibited monthly declines.

Even as mortgage rates have slipped from their peaks to the mid-6% range, affordability continues to be a challenge, with the monthly payment burden remaining historically elevated relative to incomes. Consequently, buyer demand has cooled compared to peaks in recent years, but limited housing supply continues to support price growth—resulting in slower, more sustainable price increases rather than broad declines.

Consumer confidence declined 7.9 points in April to 86.0. The Consumer Confidence Index fell for the fifth consecutive month to levels not seen since the onset of the pandemic, driven mainly by consumers’ expectations.

The Present Situation Index, reflecting current business and labor market conditions, fell 0.9 points to 133.5. Meanwhile, the Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, dropped 12.5 points to 54.4, the lowest level since October 2011 and well below the recession signal threshold of 80.

All components of the Consumer Confidence Index declined sharply, exhibiting pervasive pessimism about the future. Views of the current labor market situation softened, with 31.7% of consumers saying jobs were “plentiful,” down from 33.6% in March, while 16.6% said jobs were “hard to get,” up from 16.1%. Looking to the future, 32.1% anticipate there will be fewer available jobs in the next six months, nearly as high as April 2009 in the middle of the Great Recession. Additionally, expectations about future income turned negative for the first time in five years, with 18.2% of respondents anticipating decreases.

Although April’s drop in confidence was broad-based across age and income groups, the decline was steepest for consumers between the ages of 35 and 55 and among consumers in households earning more than $125,000 a year. Inflation expectations likewise ticked up to 7.0% in April, the highest since November 2022. Meanwhile, expectations for higher interest rates continued to rise. Consumers’ views of their current financial situation softened from March to the lowest level since 2022, while expectations for a recession in the next 12 months increased to a two-year high.

Consequently, buying plans for homes and cars declined, as did vacation plans. Plans to buy big-ticket items also lowered but remained slightly elevated on a six-month moving average. Mentions of trade and tariffs in written responses reached an all-time high. Respondents also mentioned the impact of the high cost of living, stock prices and uncertainty.

In April, Texas factory activity rose, but at a slightly slower pace than the prior month. The production index slipped 0.9 points to 5.1, still indicating modest positive output growth. On the other hand, the new orders index plummeted nearly 20 points to -20.0, after March’s reading of -0.1. The capacity utilization index dropped to -3.8 from -2.3, while the shipments index turned negative for the first time this year, dropping from 6.1 to -5.5.

Perceptions of manufacturing business conditions worsened in April, with the general business activity index plunging more than 19 points to -35.8, the lowest reading since May 2020. The company outlook index fell more than 17 points to its post-pandemic low of -28.3. Meanwhile, the outlook uncertainty index, which has been volatile in previous months, increased again in April, rising nearly 11 points to 47.1. The series average is 17.3.

Labor market indicators suggested a decrease in head counts and shorter workweeks in April, with the employment index inching up to -3.9, while the hours worked index decreased to -6.4. Just more than 9% of firms reported net hiring, and a larger percentage (13.0%) noted net layoffs.

Upward pressure on prices intensified in April, while wage growth remained relatively stable. The prices paid for raw materials index jumped from 37.7 to 48.4, the highest reading since mid-2022. Meanwhile, the prices paid for finished goods index increased from 6.3 to 14.9. The wages and benefits index edged down from 16.0 to 14.3, below the series average of 21.1.

The outlook for future manufacturing activity is still positive, but less optimistic than March’s reading, with the future production index decreasing from 27.6 to 14.8. On the other hand, the future general business activity index fell nearly 9 points to -15.2, and the future company outlook index turned negative, falling 10.2 points to -6.0.

New orders for manufactured goods rose 4.3% in March, up for three consecutive months. When excluding transportation, new orders slipped 0.2%. Orders for durable goods jumped 9.2%, following a 0.8% increase in February. Year to date, durable goods orders are up 5.5%. Nondurable goods orders ticked down 0.3% in March after increasing 0.1% in February. Nondurable goods orders are up 0.8% over the year.

New orders for nondefense aircraft and parts led the increase in durable goods by leaping 139.0%, after shrinking 7.4% in February. In March, the largest monthly decrease occurred in mining, oil field and gas field machinery, which declined 16.3%, after rising 11.7% the month prior. The largest over-the-year changes also occurred in nondefense aircraft and parts (up 99.3%) and ships and boats (down 19.2%).

Factory shipments decreased 0.1% in March, after rising 0.7% in February. Shipments over the year increased 1.6%. Shipments excluding transportation were flat in March, following a 0.4% increase the previous month. Shipments for durable goods improved 0.1% in March, down from 1.3% in February but up 2.4% year to date. Meanwhile, nondurable goods shipments declined 0.3% in March but are up 0.8% year to date.

Unfilled orders for all manufacturing industries rose 2.0% in March, following a 0.1% increase in February. Inventories rose 0.1%, the same as the past three months, and the inventories-to-shipments ratio remained the same at 1.45. The unfilled orders-to-shipments ratio for durable goods increased to 6.98 from 6.81 in February.

The S&P Global U.S. Manufacturing PMI was 50.2 in April, the same as March, signaling marginal growth. Production declined for a second month in a row but at a slower pace than the prior month. Supported by domestic demand, new orders grew for the fourth month in a row, but at the lowest rate this year, dragged down by declines in new export orders. Additionally, optimism fell to its lowest reading since June, and employment fell for the first time in six months.

Tariffs led to steep increases in both input and output costs, with output costs rising at the fastest pace in more than two years. Input prices rose at a slightly slower pace than in March, when prices rose at the highest rate since August 2022. Although some firms reported beneficial tariff-related switching to domestic suppliers to avoid import tariffs, any sales increase was countered by tariff-related worries over supply chains and lost export sales.

Additionally, tariffs are leading to supply-side disruptions, with the seventh straight month of lengthening lead times and the second consecutive month of reduced stocks of purchases. Meanwhile, stocks of finished goods declined at the greatest rate this year and for the fifth consecutive month, likely due to firms modifying their sales forecasts and inventories downward. Firms are also adjusting employment plans, which fell for the first time since October, by choosing not to fill open positions.

In April, the global manufacturing activity contracted after three consecutive months of growth, falling to 49.8 from 50.3. Three of the five PMI components—new orders, employment and stocks of purchases—signaled contraction. While output and delivery times improved, global trade conditions worsened and optimism slumped to a two-and-a-half-year low. Companies cited concerns about tariffs and protectionism impacting new orders, supply chains and pricing.

India, Greece and the Philippines had the highest PMI readings in April, while the Eurozone and China’s PMI also registered expansions. On the other hand, Japan and the U.S. were two of the larger nations to record contractions, while the U.K. showed the steepest decline. New orders fell for the first time this year, with new export orders suffering its steepest decrease since August 2023. Of the 28 nations included in the report, all but three—Germany, India and Greece—showed declines in new export orders. Output rose slightly in both the consumer and intermediate goods industries but was unchanged for investment goods producers.

Additionally, manufacturing employment fell for the ninth consecutive month in April and at the fastest rate since January. Staffing levels sank notably in China, the U.S., the Eurozone and the U.K. These cuts stemmed from a higher cost environment, as both input and output prices increased, with output prices hitting a 25-month high.

Job openings for manufacturing ticked up by 4,000, from 445,000 in February to 449,000 in March. However, the February job openings level of 445,000 was revised downward dramatically from 482,000 in the previous report. Durable goods job openings in March stayed the same at 313,000, while nondurable goods job openings increased by 5,000, from 131,000 in February to 136,000 in March. The manufacturing job openings rate stayed the same at 3.4% in March and decreased from 3.8% the previous year. The rate for durable goods manufacturing similarly stayed the same at 3.8%, while it ticked up 0.1% to 2.7% for nondurable goods.

In the larger economy, the number of job openings fell to 7.2 million, a decrease of 288,000 from the previous month and 901,000 from the previous year. The job openings rate declined to 4.3%, down from 4.5% in February and from 4.9% last year. This data reflects an overall labor market that has eased back to pre-pandemic levels, but remains relatively tight from a historical perspective.

The number of hires in the overall economy increased 41,000 to 5.4 million in March but dropped 61,000 from the previous year. The hires rate for the overall economy stayed the same in March at 3.4%. Meanwhile, the hires rate for manufacturing stayed the same at 2.5% from February. The hires rate for durable goods edged down 0.1% to 2.3%, but ticked up 0.2% to 2.8% for nondurable goods.

In the larger economy, total separations, which include quits, layoffs, discharges and other separations, fell 179,000 from February to 5.1 million and dropped 131,000 from the previous year. The total separations rate edged down 0.1% to 3.2% for the overall economy and also ticked down 0.1% for manufacturing to 2.4%. Within that rate, layoffs and discharges declined by 15,000 in March for manufacturing, while quits increased by 4,000. The quit and layoff rates continue to remain lower for manufacturing than the total nonfarm sector.

Nonfarm payroll employment increased by 177,000 in April, above expectations. On the other hand, March’s job gain was revised downward dramatically by 43,000, from 228,000 to 185,000. The 12-month average stands at 156,833 job gains per month. The unemployment rate stayed the same at 4.2%, while the labor force participation rate inched up 0.1% to 62.6%.

Manufacturing employment slipped by 1,000, but the March gain of 1,000 was revised upward by 2,000 jobs to an increase of 3,000. Durable goods manufacturing employment rose by 2,000, while nondurable goods employment declined by 3,000. The most significant gains in manufacturing in April occurred in fabricated metal product manufacturing and food manufacturing, which added 3,100 jobs each over the month. Meanwhile, the most significant losses occurred in motor vehicles and parts manufacturing, which shed 4,700 jobs over the month, followed by computer and electronic product manufacturing, which lost 4,000 jobs.

The employment-population ratio ticked up 0.1% to 60.0% but is down 0.2 percentage points from a year ago. Employed persons who are part-time workers for economic reasons decreased by 90,000 to 4.69 million but are up from 4.46 million in April 2024. Native-born employment is up 1,042,000 over the month and 1,120,000 over the year. Meanwhile, foreign-born employment is down 410,000 over the month but up 1,333,000 over the year.

Average hourly earnings for all private nonfarm payroll employees rose 0.2%, or 6 cents, reaching $36.06. Over the past year, earnings have grown 3.8%. The average workweek for all employees stayed the same at 34.3 hours but ticked down 0.2 hour for manufacturing employees to 40.0 hours.

In April, the U.S. manufacturing sector contracted for the second consecutive month and at a slightly faster pace than the prior month, with the ISM Manufacturing^® PMI decreasing to 48.7% from 49.0% in March. Customer demand and output weakened, while input strengthened further, which are not seen as positive conditions for economic growth. The New Orders and Employment Indexes continued to contract but at a slower pace, rising to 47.2% and 46.5%, respectively. Production contracted at a faster pace, weakening to 44.0%, 4.3 percentage points lower than March. Meanwhile, inventories (50.8%) grew at a slower pace in April, which is not a positive sign amid slowing demand.

The New Orders Index contracted for the third consecutive month but at a slower pace than the prior month, a 2.0 percentage point rise from March. The index hasn’t shown consistent growth since a 24-month streak of expansion ended in May 2022. Of the six largest manufacturing sectors, four—petroleum and coal products; machinery; computer and electronic products; and chemical products—reported an increase in new orders. The percentage of respondents noting “higher” and “lower” new orders both rose in April, an unusual sign and indication of a period of transition.

The New Export Orders Index contracted for a second consecutive month and at a faster pace since the pandemic to 43.1%, 6.5 percentage points lower than March. The sharp contraction was due to the combination of slower global growth as well as the application of retaliatory tariffs applied to a variety of U.S.-manufactured products. Meanwhile, the Imports Index contracted after three consecutive months of expansion, dropping 3.0 percentage points to 47.1% in April. Unlike in prior months, buyers were no longer pulling forward deliveries as increased tariff rates went into effect, and lower demand reduced the need to maintain the import levels of prior months.

The Employment Index contracted for the third consecutive month but at a slower pace than the prior month, a 1.8 percentage point bump from March. Of the six-largest manufacturing sectors, three—petroleum and coal products; transportation equipment; and computer and electronic products—reported increased employment. Companies continued to reduce headcounts through layoffs, attrition and hiring freezes.

The Prices Index rose 0.4 percentage points to 69.8%, indicating raw materials prices increased for the seventh straight month in April to its highest reading since June 2022, driven by the dramatic rise in steel and aluminum prices, as well as the broad 10% tariff applied to imported goods. Forty-nine percent of companies reported paying higher prices, up dramatically from 21% in January.