Are Markets Rethinking The Prospects For Trump 2.0?

2025-02-26 14:03:00 ET

Summary

• The University of Michigan’s Consumer Sentiment fell sharply this month.
• Signs of weaker sentiment may be starting to resonate in the small business sector, too.
• Financial markets are apolitical, and recent shifts in the directional bias for stocks and bonds are getting harder to ignore.
• Some analysts are starting to worry that the president’s aggressive plans for tariffs are beginning to weigh on consumers’ expectations, which in turn has implications for the economic outlook.
• The good news is that the Trump administration still has time to shore up confidence on Main Street and for markets.

Recent headlines appear to have shaken investor sentiment. It’s premature to read too much into a few days of weaker-than-expected survey numbers. More importantly, the latest data indicate that the economy is still growing, businesses continue to hire, and the near-term outlook for consumer spending remains positive. But the White House would do well to consider the implications of the recent slide in Main Street’s sentiment. The financial markets seem to be doing just that....

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