3 Things You Need to Know This Week | US Consumer Confidence, UK Economy, Inflation (Mar. 24, 2025)

Transcript

Stephanie Kuehne:

Hello and welcome to 3 Things You Need to Know this Week. Our regular series designed to help you sift through the noise across financial media and understand what really matters for markets.

And now, here are the three things you need to know this week.

First up, US consumer confidence.

This week we'll get two updates on US consumer sentiment. First from the Conference Board on Tuesday, and then the University of Michigan on Friday. Recent US consumer confidence data has shown sharp declines, but in our view, this isn't too surprising. Consumer confidence tends to rise and fall along stocks, economic data, and even the overall tone of financial news coverage. Given recent stock market volatility and renewed recession chatter, some weakness in consumer sentiment is to be expected. While consumer sentiment data reflects how people feel right now, it doesn't predict what they will do, And our view, depressed consumer sentiment helps illuminate the fears markets have been pricing in over the last few weeks. But looking further out, markets will move most on the gap between these expectations and what actually happens. And given how low sentiment has fallen, reality should have an easier bar to clear, which should help this bull market reassert itself.

Next, UK Spring Statement.

On Wednesday, UK Chancellor of the Exchequer Rachel Reeves will deliver the Spring Statement. The Chancellor provides an update on the government's budget and the economy twice a year in spring and in autumn, which can include announcements about tax changes and fiscal spending priorities. Some announcements are bigger than others. Last October's autumn budget stirred up speculation and consternation over changes to the capital gains taxes, the inheritance tax and more. The spring statement is expected to be less eventful. Either way, we think the UK government has less influence on economic growth than many presume. In our view, the UK economy is too big and diverse for it to surge or stall on budget changes alone. Concerns over previously announced tax hikes still linger, but we believe the economic reality likely positively surprises this year. The UK economy is far from robust, but even a slow growth environment isn't automatically bad for stocks, especially when the headwinds are already well known.

Finally, US inflation.

On Friday, we'll see February's personal consumption expenditure data. The PCE is the Fed's preferred inflation measure, and it accelerated for three consecutive months from October to December before decelerating to 2.5% year-over-year in January. Some people worry President Trump's tariff announcements could cause inflation to jump again, but recent history shows that a broad rise in inflation due to tariffs isn't likely. For example, in 2018 and 19, the first Trump administration announced many tariffs. Some tariffs never took effect. Others were enacted only temporarily and then reversed later. And some tariffs stayed in place, such as a variety of levies on China. But these didn't dent global commerce or spike inflation at the time. Trade largely rerouted through third countries and businesses adapted. While uncertainty remains over where the Trump administration's trade policy will go from here, we believe big inflation fears tied to tariffs will likely prove overblown as the year progresses.

And that's it for this episode of 3 Things You Need to Know this Week.

For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit FisherInvestments.com. Thanks for tuning in and don't forget to "subscribe!"