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Here’s a transcript from Jeff Tucker’s latest video:
Hi, I’m Jeff Tucker, Principal Economist at Windermere Real Estate, and these are the numbers to know right now.
This week, I’m jumping back in to check on the elephant in the room this spring: tariffs.
Tariffs Are Down—but Still Historically High
The first number to know is 17.8%. That’s the new average effective tariff rate on U.S. imports.
- It’s down sharply from 27% last month, but still the highest level since 1934.
- It’s also about five times the level we had at the start of the year.
- This data comes from estimates by the Yale Budget Lab, as of the week of May 12th.
While this is still a very high level of tariffs, it’s clearly moving in the right direction, toward lower tariffs. That said, even this smaller hike is still expected to reduce real GDP in the U.S.
- According to the Yale Budget Lab’s model, there will be a long-run decline of 36 percentage points in GDP.
- This follows a deeper short-term shock, though both impacts have shrunk significantly, about half as large as projections from just a month ago, when the tariffs were harsher.
Market Reaction: Tariff Walk-backs on the Horizon?
Just as important as the actual reduction in tariffs is what it signals:
Investors seem to believe more rollbacks are coming.
- The stock market has fully regained all its losses from earlier in the year.
- In fact, it’s now up slightly year-to-date, and up 20% from its early April low.
To me, that suggests investors have concluded we won’t see a major hit to U.S. corporate profits or economic growth after all.
Consumer Prices & Inflation: No Major Shock
The tariffs that have gone into effect haven’t yet caused a spike in consumer prices.
- April inflation data came in right around expectations.
- We did not see a spike in goods prices.
- Year-over-year inflation ticked down again, now landing at 3%.
This is more good news—it also gives the Federal Reserve a bit more breathing room to prepare for possible interest rate cuts later this year.
Housing Market: Inventory Hits a Milestone
Turning to the national housing market, we’ve reached a significant milestone:
- There were more active listings at the end of April 2024 than in the same month of 2020.
- You can see those two lines crossing on the chart—that’s a first since inventory began plunging during the early pandemic in spring 2020.
- In fact, many areas now have more inventory than in 2019.
In total, active listings were up 31% year-over-year at the end of April.
That means a lot more homes on the market for buyers to choose from, compared to recent years. It also means more competition for current sellers than we’ve seen at any time since the pandemic began.
Sales: A Small But Surprising Uptick
One surprising development: pending sales actually ticked up 2.2% year-over-year in April.
That’s notable given the drop in consumer sentiment I discussed last month. But it’s important to recognize this national trend masks significant regional differences.
For example, Realtor.com data showed:
- A 7% decline in pending sales in the Seattle metro area this April compared to last year.
So, the national average hides a lot of variation between local markets.
Mortgage Rates: Still Stuck
Finally, the ongoing issue we’ve all been watching: mortgage rates.
- They remain stuck between 75% and 7%.
- The bond market hasn’t recovered the way the stock market has.
- Factors like fading fears of recession and rising expectations for a larger deficit (based on current congressional budget drafts) are keeping bond yields—and mortgage rates—high for now.
Wrapping Up
That’s all for this week. Thanks, as always, for tuning in.
