WSJ Your Money Briefing - The Remarkable Resilience of the U.S. Economy

Episode Date: May 6, 2025

Amid changing tariff policies and the threat of a trade war, the American economy is proving its resilience. Wall Street Journal reporter Jeanne Whalen joins host Julia Carpenter to discuss how the economy is faring, and what could happen in the coming months.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Here's your Money Briefing for Tuesday, May 6th. I'm Julia Carpenter for the Wall Street Journal. Finally, some good news about the economy. It's proving to be remarkably resilient. Despite a whirlwind market cycle, triple-digit tariffs, and more, economists and researchers say there's more holding strong than falling apart. Economic growth was very good. The job market was great coming into this year.

And it looks like most pillars of that economy are still holding up for now. We'll talk more with Wall Street Journal reporter Jean Whelan about what's been going on with the economy and what we can expect to see going forward. That's after the break. The headlines have been scary. Tariffs, trade wars, possible recessions, but a closer look can show us how steady the economy is holding despite these outside pressures. Wall Street Journal reporter Jean Whalen joins me. Jean, I'm so curious. What did you expect to find

when you first dove deep on this story? We were trying to weave together all of the economic data that's out there, and going into last week, there were two big missing pieces. One of them was the GDP report, the quarterly report on how much our economy is growing. And the other was the monthly jobs numbers report, which shows how many jobs the economy is adding each month. We had seen a lot of negative headlines, a lot of negative surveys of consumers and businesses cropping up because

of some of Trump's policies and some data here and there showing that things are going in a bad direction. But without those two main pieces of data last week, we didn't really know how well the economy was doing. JL – Job creation seems to be a big plus here, if not the big plus here. What did the most recent jobs report tell us about the health of the economy? JL – There was a pretty widespread expectation that the tariffs that Trump has started putting on imports and some of his immigration crackdown might lead to a deteriorating job market. But what we actually saw was that the economy added more jobs than economists were expecting last month and that the unemployment rate held steady at a really low level, about 4.2%.

So it ended up being a lot more of a positive jobs report than anyone was expecting. You mentioned the GDP report as well. What did that add to your understanding of the economy? The GDP report showed that our economy contracted. It decreased by 0.3% in the first quarter. GDP is the value of everything that we produce in the U.S. It's the value of all of the goods and services that we produce. So sneakers, apples, and then on the services side, haircuts, manicures, legal advice, et cetera.

And the way that you calculate GDP is you add up all spending on those items. You add up the spending that American businesses, consumers, and the government do to buy stuff that we create. You also add up spending by foreigners on stuff that America produces. So all the stuff that we export to foreign buyers, you add that in too. And then finally you subtract the value of things that we import so that we're focusing not on our consumption of foreign-made goods, but on our consumption of US-made goods. The thing that really affected the GDP number in the first quarter was that our imports really surged. A lot of companies were rushing to import tons and tons of things,

way more than they normally would. All kinds of consumer goods and equipment needed for manufacturing because they wanted to get them to the US before Trump's tariffs hit. So we saw an enormous surge of imports more than we had seen in many years in the first quarter, and because that number is subtracted from the total calculation for GDP, that made the GDP number contract, it made it fall for the first quarter. But overall there was still very solid demand in the economy and that, many economists said, showed that the economy actually was still quite healthy despite this kind of strange surge in imports that somewhat artificially lowered the

final GDP number. I'm so glad you brought up tariffs because even though we haven't yet felt the full effects of these threatened tariffs, consumers are feeling uneasy at best. Where did your sources highlight areas of concern? We have seen a lot of concern when consumers and businesses are surveyed for their opinion about what's happening. Their confidence in the economy has really been dropping. They're more worried than they were several months ago. They're worried that prices are going to go up again. A lot of people were extremely scarred by the inflation that took off a couple of years ago and brought inflation to 40 year highs, really drove up prices at the grocery store, etc. People are still smarting from that. So even though inflation has come back down to quite normal levels now, people are really bracing and worried when they hear about all these tariffs.

Oh, no, that's going to start happening again. And there's reason for them to be worried about that. There has been a big drop off in cargo shipments coming from China because we have such high import tariffs on Chinese goods. And so a lot of economists and retailers are saying, look, in a couple of weeks, we're going to start noticing some scarcity in our big box stores, Walmart, Target, not enough products on the shelves, and therefore prices will go up. When consumers start to worry more about the economy,

they don't spend as much, they tighten their belts, they save more. Businesses are also really worried about higher costs and so some of them are also reporting real fears. They're saying we're not going to be spending as much this year on new projects, we're putting that factory on hold, we're not going to finish building that warehouse because we see all these higher costs coming for us. So we've seen a lot of deteriorating sentiment in the economy from these surveys. And that can often be an early sign of an economic downturn. So many Americans are fearful of a possible recession, and they're worried about layoffs. And a lot of workers are still really frustrated by high prices. Are these fears borne out

in economic predictions? Economists as of early last month, early April, were very worried about a recession. They put the likelihood of a recession happening in the next year at about 45%. What we have seen since then is a little more positive economic data, like the data that came out last week, that maybe could calm some of those economists' fears. LESLIE After reporting this story and surveying so much information,

where would you say the economy is headed? KATE We're never in the prediction game here. My own outlook on the economy changed a bit over the last week as I wrote the story and saw that positive or at least not horrible data coming out. It made me realize the US economy was very robust coming into this year despite years of very high inflation that absolutely were extremely hard for people to cope with. That inflation had come down a lot. Prices were not rising quickly anymore and economic growth was very good. The job market was great coming into this year and it looks like most pillars of

that economy are still holding up for now. And so we came into the year with pretty strong economy and if it's going to be knocked off course, it will probably take a little more stress than we have seen at the moment. That's WSJ reporter Jean Whalen. And that's it for your money briefing. This episode was produced by Zoe Kolkin with supervising producer Melanie Roy. I'm Julia Carpenter for The Wall Street Journal. Thanks for listening.