Economic Growth Metrics

Tariffs are raising inflation expectations — but will they reshape behavior and lead to persistent inflation? my new Bloomberg Opinion piece. The University of Michigan’s median long-term inflation expectations were 4.2% in May, up more than a percentage point this year, even as actual inflation slowed. However, I argue there are reasons to be skeptical. 🔹News about tariffs is driving expectations, but it's a complicated, politicized policy with which people have limited experience. 🔹1 in 5 respondents expect inflation to average 15% or more over the next 5–10 years. That's even higher than the prior peak in 1980 when inflation was in the double digits. 🔹 These outlier responses first began to rise after the Michigan survey moved online in 2024, suggesting methodological shifts may be contributing. 🔹 Despite the surge, there has only been a moderate increase in those who say it's a good time to buy consumer durables since prices will rise. Asking about expectations in surveys is a useful exercise, but the current environment is pushing it past its realistic limits. The clearest message from the Michigan survey is not for the Fed. It’s for the White House. In recent years, the survey has picked up sharply pessimistic opinions about inflation. Now it’s picking up sharply pessimistic opinions about tariffs. So while expectations of inflation may have become unmoored, Americans’ dislike of inflation — and tariffs— is firmly anchored. #inflation #expectations #FederalReserve #tariffs #economy #monetarypolicy #macroeconomics #consumerbehavior

The Federal Open Market Committee (FOMC) has strongly signaled that they won’t cut the Federal Funds Rate until September at the earliest, and likely only once in 2025 (unless the employment data shows significant deterioration). One reason for this is the FOMC is quite worried about sharp increases in inflation expectations exhibited by both consumers and businesses. Two charts below show these dynamics. Thoughts: •The top chart shows the median point prediction for the year-over-year inflation rate one year from now from the New York Fed’s Survey of Consumer Expectations (https://lnkd.in/g4Tsdtej). As recently as November, inflation expectations were back to 3%, which was the stable, pre-COVID level. Since then, inflation expectations have surged to 4.79% as of April. We know the culprit: tariffs. •The bottom chart shows the expected change in prices paid over the next 12 months for inputs from the Richmond Fed’s manufacturing survey (https://lnkd.in/gvHt3VQa), with data through May. While May’s reading came down to 6.75% from 8.38% in April (likely due to the China tariff pause), we can again see a sharp increase in inflation expectations that can only be due to one thing: tariffs. •Why do inflation expectations matter? In the FOMC’s mind, inflation expectations can turn into a self-fulfilling prophecy. For example, if firms expect to pay more for inputs, it makes it easier for suppliers to raise prices. While I think inflation expectations are often incorrectly predicted (e.g., consumers in 2022 were expecting 8% inflation over the next year, something that certainly didn’t come to pass), the FOMC gives these data weight in their decisions on the Federal Funds rate. Implication: the impact that tariffs have had on inflation expectations this time around, relative to 2018 and 2019, has been far more pronounced. Such increased expectations make the FOMC less likely to cut interest rates before multiple additional months of CPI, PPI, and PCE data are available (barring a sharp deterioration of the job market). I'll be curious if the ruling of the Reciprocal and Trafficking tariffs as unconstitutional has any effect. #economics #markets #supplychain #ecommerce #freight

📊 The US economy continues to expand — but the foundations of that growth are shifting. 📉 Real GDP growth slowed sharply to 0.7% (annualized) in Q4, bringing full-year 2025 growth to 2.1% despite an extraordinary combination of supply shocks: trade policy upheaval, rapid AI adoption, and a historic collapse in immigration. Much of the late-year slowdown reflected the longest government shutdown in US history, but private demand also softened modestly. 🛍️ Consumers are still spending, but they are becoming far more selective. Spending rose 0.4% m/m in January, yet real consumption increased just 0.1%, with households rotating away from tariff-impacted and higher-priced goods. Outlays are increasingly concentrated in “must-do” services such as housing, utilities, healthcare and insurance, while discretionary categories like travel, restaurants and leisure are seemingly losing momentum. 💰 The income foundation supporting consumption is fragile. Real #consumer spending is growing 2.4% y/y, but real disposable income is expanding at a slower 1.8% pace. This gap suggests resilience in consumption is increasingly sustained through tighter budgeting and spending selectivity rather than stronger income growth. ⚙️ Meanwhile, #productivity — not hiring — is driving the expansion. The economy added only 116,000 jobs in 2025, yet output continued to expand as firms focused on efficiency in a high-cost, high-interest-rate environment. Productivity has grown at a 2.2% annualized pace since 2019, supported by operational discipline and increasingly by #AI investment. 📈 Inflation pressures also remain stubborn. Core PCE #inflation accelerated to 3.1% y/y in January, and short-term momentum suggests underlying price pressures were already firm before the recent energy shock tied to the #MiddleEast conflict. ⚠️ Looking ahead, the US economy faces a new set of crosscurrents. Higher energy prices, tighter financial conditions and elevated geopolitical uncertainty are likely to push inflation temporarily higher this spring while weighing on growth. The expansion is continuing — but it is becoming more uneven, more selective and more sensitive to supply shocks. We have revised our #GDP growth forecast to 2.0% in 2026. EY-Parthenon EY Lydia Boussour

Most founders I meet think their market is twice the size it actually is. I've seen this hundreds of times as an investor and a mentor. A founder pitches me on a "£5 billion market opportunity" and I immediately know they haven't done the work. There's a massive difference between the total market size and what you can actually capture. That's why understanding TAM, SAM, and SOM is crucial if you want to scale beyond £3 million. These aren't just acronyms to impress investors. They tell you if your business is actually scalable. Here's what they mean: ➡️ TAM (Total Addressable Market) The total revenue opportunity if you captured 100% of the market. How to measure: Total potential customers × Average revenue per customer. Example: If you're opening a gym chain in the UK, TAM = all UK adults who could use a gym × average annual membership fee. ➡️ SAM (Serviceable Available Market) The portion of TAM you can realistically reach with your product and business model. How to measure: TAM × percentage of market that fits your criteria (geography, customer segments, distribution). Example: If you only operate in London and target budget-conscious members, SAM = London adults interested in affordable gym membership × average budget gym fee. ➡️ SOM (Serviceable Obtainable Market) The portion of SAM you can realistically capture in 3-5 years given competition and resources. How to measure: SAM × realistic market share percentage based on competitors, your advantages, and growth assumptions. Example: If you plan to open 20 locations and estimate capturing 3% of London's budget gym market, SOM = SAM × 3%. When to use each: ✅ TAM: Long-term vision and total market opportunity ✅ SAM: Target market and go-to-market strategy ✅ SOM: Financial projections and realistic growth targets If your SOM is less than 1% of TAM, investors will question if the market is too competitive. If your SOM is more than 25% of SAM in 3-5 years, they'll question if you're being realistic. TAM shows the dream. SAM shows the strategy. SOM shows the plan. At HomeServe, we learned this the hard way. Early on, I thought our market was every homeowner in the UK. Our SAM was actually homeowners who would pay for home emergency cover. And our SOM was the percentage we could realistically sign up through utility partnerships. Once we understood the difference, we were able to offer our services to those who really needed it. If you want more strategies for building and scaling your business, sign up for my weekly newsletter "How to Make a Billion." Every week I break down lessons from 40 years of entrepreneurship and show you real businesses that have applied them. Subscribe here: https://lnkd.in/ergDQtiK Share this with founders who need to understand how scalable their business really is.

Consumer confidence slumps amid tariffs and layoffs Consumer confidence fell to a two-year low in March, which was not a big surprise given the volatility caused by tariffs and government layoffs. The headline index dropped to 92.9, just slightly below our forecast of 93.3. Concerns over tariffs and their impact on inflation are evident in the survey, which shows that median inflation expectations for the next 12 months rose to 5.1%—the highest since May 2023. The risk of slower growth and fewer jobs, due to layoffs across the federal government, kept the labor differential index—a proxy for the unemployment rate and job gains—at a five-month low in March. However, the bigger question is whether these pessimistic consumer responses will actually translate into reduced spending. According to the survey, the results are mixed. Fewer consumers plan to buy a new or used car in the next six months, but more are planning to purchase new homes, refrigerators, or TVs. The decline in spending plans for certain categories does not seem to match the significant drop in the headline sentiment index. This aligns with our forecast, which points to a rebound in spending in February and March. Looking beyond that, however, it's difficult to predict overall consumer spending—especially if tariffs on Canadian and Mexican goods take effect in April. The impact on spending would likely be negative if tariffs are implemented, but whether consumers will be able to absorb the resulting price increases remains an open question.

Consumer Sentiment Falls, Long-Term Inflation Expectations Hit 32-Year High The University of Michigan’s final March reading of consumer sentiment came in at 57, down sharply from 64.7 in February and well below expectations. The expectations index plunged nearly 18%, reflecting rising pessimism about personal finances, business conditions, and job prospects. Two-thirds of consumers now expect unemployment to rise in the next year - the highest reading since 2009. Long-term inflation expectations surged to 4.1%, a level not seen since 1993, while short-term inflation expectations jumped to 5.0%, the highest since 2022. While the Fed tends to downplay this survey as an outlier, the University of Michigan’s data shows long-run expectations have now jumped three consecutive months—this time to their highest level in 32 years. That’s not something we can easily dismiss. In fact, this morning’s PCE inflation data showed core prices rising 0.4% month-over-month and 2.8% year-over-year, the fastest pace in a year. Consumer spending barely increased, climbing just 0.1%, despite nominal income gains. These inflation pressures are real, and consumers are feeling it. Sentiment and inflation expectations are measured through direct monthly surveys of around 500 U.S. households. Unlike consumer confidence (published by the Conference Board), which focuses on current conditions and labor markets, consumer sentiment captures emotional and financial outlooks—including inflation, jobs, and household finances. That makes it particularly useful for anticipating discretionary spending trends. And according to the report, high-income households (who have historically propped up consumer spending) showed the sharpest drop in sentiment. That should raise red flags for sectors reliant on discretionary spending, from luxury retail to travel. For businesses, this sentiment collapse signals a potential retrenchment in demand, especially if inflation fears and labor market uncertainty persist. Consumers, already pulling back, may start saving more and spending less, especially on big-ticket items. At Havas Edge, we track consumer sentiment closely because it often provides an early signal of turning points in behavior - especially when confidence is replaced by caution. In marketing, timing matters. And right now, all signs point to a consumer who is anxious, uncertain, and increasingly cost-conscious. #ConsumerSentiment #Inflation #EconomicOutlook #BehavioralEconomics

Investors have learned to fear a cooling labor market but it might be time to retire that habit. The latest data suggest slower hiring is undermining neither growth nor profits. Rather, the numbers reflect an economy generating more output with fewer workers — a productivity-driven expansion that is unusual by historical standards but nonetheless bullish for asset prices. Through 2025, the labor market faltered and aggregate hours worked flattened. Typically, that combination would foreshadow a slowing economy, as many on Wall Street predicted repeatedly last year. Yet this time real GDP continued to accelerate, clocking in at 4.3% in the third quarter. Productivity, meanwhile, surged at a nearly 5% annualized rate. This presents a particularly juicy set up for corporate America: • Unit labor costs are falling • Inflation pressure is softening • Profit margins are expanding In other words, companies can grow earnings without relying on aggressive hiring or price increases. Full analysis in Opening Bell Daily! 👇

While foreign direct investment to many developing countries has declined in recent years, a new analysis by IFC - International Finance Corporation reveals a promising shift: ✅ Environmental technology such as renewable energy, electronics, critical minerals, and sustainable manufacturing has attracted nearly $700 billion in announced FDI since 2021. ✅ If realized, these projects could generate up to 650,000 jobs in emerging markets, including 100,000 in Africa. This surge reflects a growing global demand for technologies that increase energy efficiency, reduce emissions, and support sustainable growth. Read this #IFCResearch Note to learn more: http://wrld.bg/LFs150W7EsE #IFCImpact #GreenFDI #PrivateCapital #EmergingMarkets #JobCreation #FDI

Every VC will ask about your market size. Most founders wait until they hear "the market's too small" 20 times before fixing it. I calculated mine upfront and raised $790k. Here's the exact playbook 👇🏾 When we started pitching Chezie, I knew market size would be the # 1 concern. DEI software? ERG management? VCs were already skeptical. So instead of waiting for rejection after rejection, I showed up with the exact math. Not some hand-wavy $50B TAM. Real, defensible calculations. "There are 57,000 companies globally with ERGs. At $25-125k average contracts, that's a $2.63B serviceable market." Whenever I explained our math, the mood changed. Investors leaned in, and suddenly, we weren't defending our market - we were discussing go-to-market strategy. THE MARKET SIZING PLAYBOOK Here's the step-by-step process I used: 1. Set up your foundation Create a spreadsheet with two tabs: - SAM_SOM Calculations - Definitions_Assumptions This keeps your math organized and easy to update. 2. Find your true customer count Skip the industry reports. Go to Perplexity and search: "How many [your specific customer type] exist globally?" For us: "How many companies have employee resource groups?" Answer: 57,000 companies 3. Research realistic pricing Check competitor pricing pages. If no direct competitors exist, look at adjacent markets. Our research: $25k (small companies) to $125k (enterprise) Average: $45k annual contracts 4. Calculate your SAM [Total customers] x [Average price] = Serviceable Addressable Market 57,000 x $45,000 = $2.63B This is what you can actually sell, not some theoretical market. 5. Estimate market capture Find market share data from leaders in your space. We used Workday's 20% HRIS market share as our benchmark. 6. Project your SOM [SAM] x [Expected market share] = Serviceable Obtainable Market $2.63B x 20% = $512M This is what you could realistically capture at maturity. THE RESULT When you show this level of detail, you're signaling to investors that you are thorough. For founders without a deep VC network, being thorough is how you build credibility. Stop pitching imaginary billion-dollar markets. Use this playbook and watch how differently investors respond. P.S. - I’ll share the prompt that I use to estimate the number of potential customers using AI in the comments 🤝🏾

We know tariffs could push inflation higher. But data released over the past week really shows just how much is at stake. A little nugget that you don't want to miss from our quarterly Economic Indicator Survey, released last week: More than half of economists (55%) expect that inflation will stay above the Federal Reserve’s 2% target through the end of 2027. In our prior-quarter poll, just 15% expected inflation to stay hot for that long. It also breaks a tradition where economists were previously more hopeful about inflation returning to the Fed's target than Fed officials themselves. The Fed’s latest projections suggest that officials don’t think price pressures will now hit their target for two more years. Most economists say tariffs will cause higher inflation. Those renewed price pressures come at a detrimental time, with Fed officials’ 2% inflation target in arm’s reach. Last month, prices rose just 2.4% from a year ago, while inflation excluding food and energy touched a new low of 2.8%, according to the latest data from the Bureau of Labor Statistics. Higher goods prices, meanwhile, could circumvent some of that progress. For the past few months, cooling inflation on the “goods” side of the economy has offset higher prices in services and housing, preventing our annual inflation rate from being even higher. Case in point: Back in November, inflation would've risen almost 2.8% (a tenth of a percentage point higher) had commodities prices not fallen 0.2%. Here’s what’s on my mind: What happens when we lose those tailwinds? And similar to the pandemic, could we face another situation where higher input prices spread to other corners of the economy, impacting services and more? Let me know what you’re thinking, and read more: https://lnkd.in/emzEQcJt