{"id":225841,"date":"2025-06-16T09:45:00","date_gmt":"2025-06-16T13:45:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=225841"},"modified":"2025-06-20T13:54:53","modified_gmt":"2025-06-20T17:54:53","slug":"economic-update-week-of-june-16-2025","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/economic-update-week-of-june-16-2025\/","title":{"rendered":"Economic Update: Week of June 16, 2025"},"content":{"rendered":"\n

Growth<\/h2>\n\n\n\n

The U.S. economy slowed more than expected in 1Q, with real GDP dropping 0.2% annualized. Consumer spending increased 1.2%, with goods up 0.1% and services up 1.7%. Private investment surged 24.4% due to inventory spikes before tariffs, while government spending fell -0.7% due to reduced federal spending. Net exports dragged growth by 4.9% due to a 42.6% import increase. Despite tariff-related distortions to trade, economic momentum still looks solid, allowing the Fed to hold rates steady for the foreseeable future.<\/p>\n\n\n\n

Jobs<\/h2>\n\n\n\n

The May jobs report showed some weakness in the details, though payroll gains remained solid. Nonfarm payrolls increased by 139k, exceeding expectations of 129k, but there was a 95k downward revision for the prior two months. The average level of monthly gains for 2025 now stands at 125k, significantly down from an average of 168k in 2024. Goods-producing sectors struggled with manufacturing jobs leading the declines, likely due to rising tariffs. The unemployment rate held steady at 4.2%, and wages rose 0.4% m\/m and 3.9% y\/y. The Fed will likely remain on hold unless the labor market begins to deteriorate more rapidly in the coming months.<\/p>\n\n\n\n

Profits<\/h2>\n\n\n\n

The 1Q25 earnings season has come to a close with a projected pro forma EPS of $63.45. This estimate would represent y\/y growth of 12.4% and q\/q growth of -3.5%. Looking at the three main sources of EPS growth, sales, margins and shares are expected to contribute 5.1, 8.4 and -1.1 percentage points, respectively, to y\/y growth. 77% of companies have beaten estimates, and earnings have come in 10.0% above consensus, driven by strong beats from the Mag 7. Technology is again contributing the majority of EPS growth, followed by health care on weak comparisons. Energy and materials are still struggling through weak oil prices and muted demand from China. While results have been solid, management teams are concerned about tariffs and discussing plans for cost cutting and price increases.<\/p>\n\n\n\n

Inflation<\/h2>\n\n\n\n