Durable goods orders surged in March…A bit of front running before the tariffs hit.

What does it mean – Companies pushed up orders prior to the tariffs going into effect.

Nonfarm payrolls increased by 177,000 in April…Defying post tariff predictions, U.S. employers added 177,000 workers to their payrolls in April. The consensus was 130,000.

What does it mean – While March private sector payrolls revised down to 185,000 from 228,000. The private sector shows no sign of a recession. The labor participation rate is also moving in the right direction and ticked up a bit more in April. The U6 unemployment rate, which accounts for unemployed and underemployed workers, decreased to 7.3% from 8.4% over the last two months.

GDP was down 0.3%…While overall GDP was down, Core GDP was up over 3%.

What does it mean – According to the April 28, 2025, Financial Times article, “Core GDP is the Signal Among all the Noise”. While the headline number gets the press, economists look at what is really being spent and invested. Core GDP is the figures that reflect consumer spending and private investment. Core GDP is calculated by summing real personal consumption expenditures and real private fixed investment expenditures. According to economist Larry Kudlow, “Business fixed investment increased nearly 10 percent at an annual rate in the first quarter,” he said. “And, even better, business equipment and machinery — which is an incredibly important harbinger of productivity, job increases, and real wage hikes — rose an incredible 22.5 percent.” He went on to say, “There’s no recession there.”

Q4 productivity was upwardly revised to 1.5% vs a consensus of 1.2%…Q4 unit labor costs were revised down to 2.2% from the advance estimate of 3.0%.

What does it mean – America was more productive, and it cost us less to do so. Bottom line, this report shows that both components (productivity and unit labor costs) had the right skew for market sentiment. Productivity was higher than previously reported while unit labor costs (an inflation gauge) were lower than previously reported.

Durable goods orders surged 9.2% month-over-month in March…Bolstered by a 139% increase in orders for nondefense aircraft and parts.

What does it mean – New orders for transportation equipment surged 27.0% following a 1.2% increase in February. Much of this surge was due to getting in front of upcoming tariffs.

New home prices fall…The median sales price decreased 7.5% yr/yr to $403,600, while the average sales price decreased 4.7% to $497,700.

What does it mean – While total home sales increased by 7.4% month-over-month in March to a seasonally adjusted annual rate of 724,000 units from a downwardly revised 674,000, prices are starting to fall as affordability and rising interest rates are affecting the housing markets.

Existing Home sales fall to lowest pace since 2009…Sales of previously owned homes in March fell 5.9% from February to 4.02 million units on a seasonally adjusted annualized basis, according to the National Association of Realtors. That’s the slowest March sales pace since 2009.

What does it mean – After 4 years of massive inflation due to the printing of money by the Treasury, spending by your government and decades of artificially low interest rates, housing is starting to get hit by the reaction of not enough government spending, less printing of money and rates starting to normalize under a free market. While this President wants lower rates and yes, one can make an argument for and even justify lower rates, real cost of borrowing is bound to stay a bit higher due to credit risk of most borrowers. Currently the average person purchasing a home is turning over nearly 50% of their monthly income to make rent or a mortgage payment. Historically that number was roughly 30% to 35%. The equation is simple. To get back to a more normal loan to income level, a buyer must either bring in a larger down payment, rates must fall, or income must go up. If one or all of these issues does not budge, it will lead to higher credit risk and higher borrowing costs.

Number of container ships departing China for the US has declined sharply… Following a recent spike container ship activity from China, the current activity confirms and further suggests front-loading activity may be fading.

What does it mean – Used vessel capacity has dropped more steeply than total capacity, indicating rising empty space and softening US import demand. Per the chart below, shipping costs may get a lot cheaper for products coming from China.

 

 

They Hate Us Because They Want to Be Us…Xi’s actions speak louder than his words. I love the fact that China’s President Xi’s Presidential plane is a Boeing 747-8.

What does it mean – With a mandate to be the leader in the commercial air liner industry set by and subsidized by the communist government, President Xi does not trust his thieves nor his minister of “copycat” manufacturing to get it right. He rides in a supped-up Boeing 747-8 and refuses to fly on a Chinese made jet liner.

I totally understand why he wouldn’t want the very best and the very best people to build the plane he flies on. Safety and reliability are important. Not to mention can you trust people you take advantage of with no hope to work their way out of being an indentured servant to the government of China?

Think about it. Xi and the leadership of China are scared to death of free people. They fear free speech and the light it sheds on their atrocities and unholy alliances with evil regimes like Iran. China loves doing business with shortsighted CEO’s who manage to the next quarter and can’t see beyond the next earnings report. These CEO’s are easily manipulate and bribed with cheap labor and the expectation they will have access to billions of people. Unfortunately, those people are under the boot of the Chinese government and have little choice or freedom to choose. Not to mention, most of them can’t afford what they are selling.

Xi is one of the very few people who made billions working for the government of China. Gaining access to funds from the Chinese treasury and somehow those funds are now in his name and control. Don’t worry our politicians will not be outdone, they figured it out through USAID and political PAC’s.

At nearly 50% less expensive than the equivalent 737 or Airbus the Chinese version relies on one of three engines, two made by U.S. companies and one by Rolls Royce of Great Britain, and a host of technology made and developed in the USA.

China and their legion of merry band of spies and thieves have yet to crack the code on manufacturing commercial jet engines. Xi knows this and it just might be why he won’t fly Chinese made planes. Not to mention, many of his best spies are now finding it a bit more difficult to steal and plunder as this administration stops the insanity of turning a blind eye to China’s corporate espionage. Many have been arrested for industrial espionage and trying to steal military secrets from Boeing, GE and other vital companies, not to mention from research centers at our leading universities. HMMM.

Heavily subsidized by a government that is known for making companies who work in and or manufacturing in China give over their technology, they are also know to for deplorable working conditions and often use slave labor. Much of the stuff they make is considered knockoffs or junk by most standards.

It is common sense. Any dictator who ripped off his own people and became independently wealthy selling the fallacy of communism and socialism to his or her people as a greater benefit to society and yet, all that your citizens see ids you riding around on a private jet, traveling the world and enjoying the fruits of their labor, might just cause your citizens to wonder why and to what end? And yes, don’t worry our leaders like AOC and Bernie Sanders and many in our government will not be outdone.

I have to laugh and in a weird way love the audacity of Bernie Sanders and AOC as they fly around the country in a private jet telling us, “the world is about to end” if we don’t save the planet while they enjoy the benefits of free markets and capitalism. When will their followers wake up? Bernie has been warning of the approaching destruction caused by the creation of oligarchies since he got elected nearly 50 years ago. Yet he does nothing to break up bad actors and the very largest companies who lobby government officials and elected leaders to create more barriers to entry and make it more difficult for small businesses and entrepreneurs. He says one thing, but his actions speak volumes. He has a history of protecting and voting for regulations that destroys competition and puts in place barriers and regulations in the mane of the consumer that actually are the very antithesis to free markets, capitalism, consumer choice, and what our constitution protects. All one has to do is go to Open Secrets to find out he is one of the largest benefactors of political donations over the last 10 years by corporations from across all sectors of the economy. He was either the number one or top three recipient in the senate for donations from healthcare, pharmaceuticals, insurance companies, and green energy companies. The list goes on and on.

The tariff squeeze. According to Acting Associate Director, RAND China Research Center Gerrard DiPippo, “China has quietly removed over $40 billion of what the U.S. exports to China”. That is nearly 25% of what we currently export to China. This is a massive win for U.S. companies and goes a long way to leveling the playing field.

What does it mean – China is in trouble. Due to the pressure that the tariffs have put on China, workers are not getting paid and are now revolting in the streets. The building and construction industry was already in trouble in China. China is realizing the mess they have created due to socialism, a planned economy, and massive government control. Maybe Bernie, AOC, Tim Waltz, and the DNC can fly their private plane over to China to see how communism really works.

With nearly $8 trillion in new investments from foreign countries and corporations announced in the last three months due to the expectations of tariffs, a favorable tax policy, and reduction in regulations, it is the expectation that our leaders will vote for the continuation of the current tax structure and proposed reduction in regulations, taxes and the leveling of the playing field with tariffs.

Currently oil is down to $58 a barrel from nearly $80 in January. That is a real back pocket issue. Every American and everything bought is made with or transported with energy. Down over 25% in three months is putting money in every Americans pocket and reducing the cost of nearly everything we consume. Along with Drill Baby Drill we are seeing a massive offset to what price increases we are seeing from the tariffs. Reducing government waste and putting policies in place that reduce regulation, taxes and frees capital that will lead to individual prosperity, economic security and freedom and just might set an example China the most ardent socialists in Congress can not deny and continue to prosper from.

Let’s roll America!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

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