Week of June 2, 2025

Dec Mullarkey, CFA , Managing Director, Investment Strategy and Asset Allocation

It was a data rich week of sobering signals. The Institute for Supply Management’s survey of the service sector, the bulk of the economy, showed contraction. The trend has been evident over the last six months but still came as a surprise.

The report on business conditions, offered up by the U.S. Federal Reserve’s Beige Book, reported declining activity and rising prices across the 12 Fed regional districts that cover the U.S. Talk of tariffs and need for caution continue to rise. Although not pervasive, some sectors are reporting targeted layoffs. Also, there is a widespread view that prices will rise.

And to cap off the week, the official employment numbers for May were essentially middle of the road as not too hot nor too cold. These results captured the first full month of heightened tariff risk. If there were one conclusion to draw, it may be that companies still feel confident they can pass tariff increases along to consumers. Therefore, they may not be looking to trim headcount that aggressively right now.

The U.S. still has some levers it can pull to reset the economy. For one, tariff negotiations may result in more rollbacks and may help establish a stable outlook. The Fed also has room to cut rates, and certainly more visibility on tariffs would help speed that along.

Sources: Bloomberg, Financial Times, 2025.

The information may include statements which reflect expectations or forecasts of future events. Such forward-looking statements are speculative in nature and may be subject to risks, uncertainties and assumptions and actual results which could differ significantly from the statements. All opinions and commentary are subject to change without notice. SLC Management is not affiliated with, nor endorsing, any third parties mentioned within this article.

Market insights are based on individual portfolio manager opinions and market observations. These are observations only and are not intended to provide specific financial, tax, investment, insurance, legal or accounting advice and should not be relied upon and does not constitute a specific offer to buy and/or sell securities, insurance or investment services. Investors should consult with their professional advisors before acting upon any information posted here.

SLC-20250605-4563516