March has not started off particularly well and last month saw significant developments in the economy with tariffs, tech trades and politics moving the markets in ways we have not seen since 2022. Here’s a concise summary of the key highlights from last month:
Economic Performance: The U.S. economy entered 2025 with strong momentum, driven by robust consumer spending and a resilient labor market. GDP growth for Q4 2024 was revised to 2.3%, reflecting a solid handoff to the new year[1]. However, the outlook for the rest of the year remains cautious due to policy uncertainties and potential tariff impacts.
Stock Market Overview: February saw modest declines in major U.S. stock indices. The S&P 500 fell by 1.3%, the Dow Jones Industrial Average slipped 1.4%, and the Nasdaq Composite tumbled 3.9%[2]. Despite strong corporate earnings, investor sentiment was dampened by inflation concerns and looming tariff threats[3].
Inflation Trends: Inflation remains a focal point, with the Consumer Price Index (CPI) rising to 3% year-over-year in January[4]. The Federal Reserve’s preferred measure, the Personal Consumption Expenditures (PCE) price index, also showed a 2.5% annual increase[5]. These figures indicate persistent inflationary pressures, prompting the Fed to maintain its cautious stance on interest rate cuts.
Tariff Developments: February was marked by significant tariff announcements. President Trump reinstated a 25% tariff on steel and aluminum imports and imposed additional tariffs on imports from Canada, Mexico, and China[6][7]. These measures aim to protect domestic industries but have raised concerns about potential retaliatory actions and their impact on global trade.
Geopolitical Landscape: Geopolitical tensions continue to influence market dynamics. The U.S. administration’s protectionist policies and proposed tariffs on major trading partners like Canada and Mexico as well as the EU and China, are reshaping global trade flows[8]. Additionally, ongoing conflicts and political instability in Ukraine add to the uncertainty.
Market Sector Performance: Consumer Staples emerged as the top-performing sector in February, rising by 5.2%, while Consumer Discretionary fell by 7%[2]. The divergence in sector performance highlights the varying impacts of economic conditions and consumer behavior on different industries.
Employment and Labor Market: The U.S. labor market showed signs of improvement, with the unemployment rate falling to 4%[2]. However, labor supply constraints and wage growth remain areas of concern, potentially influencing future inflation trends and economic growth.
Looking Ahead:
As we move forward, our focus will closely monitor developments in inflation, tariffs, and geopolitical events. We believe these factors will play a crucial role in shaping the economic and market landscape in the coming months. We remain committed to providing you with timely updates and insights to help navigate these uncertain times.
Best regards,
Bryan Beamer, CIO APMA
References
[1] Economic Developments – February 2025 | Fannie Mae
[2] February 2025 Market Summary • Paragon
[3] February 2025 Market Recap – Marks Group Wealth Management
[4] Current US Inflation Rates: 2000-2025 – US Inflation Calculator
[5] The PCE report, the Fed’s preferred inflation measure, is out. Here’s …
[6] Fact Sheet: President Donald J. Trump Restores Section 232 Tariffs
[7] Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from …
[8] Top Geopolitical Trends in 2025 | Lazard
[9] Our investment and economic outlook, February 2025 | Vanguard
[10] The Fed – Monetary Policy: Beige Book (Branch) – Federal Reserve Board
[11] Dow Jones Total Stock Market Chart By February 2025 – StatMuse
[12] 2025 US Tariffs and Their Impact on Global Trade – UPS
[13] TRANSCRIPT: Jeffrey Sachs on the Geopolitics of Peace in the European …
[14] Geostrategic Analysis: February 2025 edition | EY – Global
