Yes, March Data Are Obsolete. No, That Isn’t New.

Wednesday brought a trove of economic data, all of it things investors would normally slice and dice for insight on where global GDP—and stocks—are heading. China’s Q1 GDP and March data smorgasbord. UK March inflation. US March retail sales and industrial production. This time, headlines greeted all of it with a shrug, dismissing the overall good results as old news, irrelevant since they predate the latest tariffs and, in the UK’s case, April’s tax hikes. And, spoiler alert, we agree! But here is the thing: Economic data have always been backward-looking. And they have never predicted stocks. Seems to us the world is just cottoning on to an old, basic truth.

Tariffs and UK tax changes are merely an extreme means of illustrating data’s backward-looking nature. Obviously, China’s economic results in Q1 are irrelevant now if they preceded the current, triple-digit tariffs. That 5.4% y/y GDP growth, 7.7% y/y March industrial production growth and 5.9% retail sales growth tell us how China was doing heading into the trade spat, not how China will do during or after it.^[i] US retail sales’ 1.4% m/m jump in March tells us what shoppers did as (frequently contradictory) tariff rumors swirled, but not how the retail landscape will look in April and beyond, as non-tariffed inventories run down and the new levies have more of an effect on supply and demand.^[ii] And UK inflation’s slight easing in March merely gives the lay of the land before payroll taxes and the minimum wage went up.

Mind you, we don’t think any of these are immediate, wildly negative gamechangers for local or global economies. UK taxes we covered last week. The US’s trade war with China is a negative, in our view, but businesses on both sides have extremely heavy incentives to use third countries to navigate the tariff firewalls and keep costs as low as possible. China may be communist on paper, but its businesses have a thriving entrepreneurial and (dare we say) capitalist spirit, just like their American counterparts. Capitalism and commerce always find a way … perhaps through neighboring Vietnam, the preferred transshipping stopover in 2018 – 2019, which just got a 90-day reprieve from the threatened 46% “reciprocal” tariff rate.

But these big changes between March and April have made the world acknowledge March data are obsolete. Which is fine, but it changes nothing. March data would have been obsolete regardless. Economic indicators are always and everywhere backward-looking. March’s data reflect things that happened in, well, March. That depended on the conditions at play then. What happens in April, May, June and over the next several months will depend on the future backdrop. That includes the future credit environment, overall business conditions, how regulatory and tax chatter affects companies’ willingness to take risk and a host of other things. And that would be true even if tariffs and the UK tax code didn’t change this month.

Or, look at it from stocks’ standpoint. A day of pretty good data didn’t make the S&P 500 boom. It is too busy looking forward, registering investors’ evolving feelings about tariffs and trying to suss out what is likely to happen over the next 3 – 30 months relative to expectations. This is because markets are forward-looking and already lived through March. Probably even before the calendar hit March! Whatever data now tell us happened that month, markets have long since priced it in and moved on. Just as they had priced in December’s results by the time the world got them in January. And and and.

Don’t get us wrong, we like data. We even think the March figures are kinda helpful, as they at least give us a baseline, telling us what shape businesses and households were in before tariffs ratcheted up and the UK made it a bit costlier for businesses to maximize work hours. Pretty decent shape, it turns out, which might imply some underappreciated resilience. But it is nice to see headlines finally acknowledging what has long been true.