Weekly Economic & Business Outlook

Historic Tariffs Cloud Economic Outlook

On April 2, the federal government announced some of the most sweeping changes to trade policy in more than a century, and the anticipated changes have worsened economic expectations. The new effective tariff rate is 22.4% higher than the tariff increases of the Smoot-Hawley Act of 1930, which brought the effective rate to 20%. This marks a significant departure from the effective rate of 2.4% when the second Trump administration began in January.

The announcement of these historic tariffs did not help soothe mounting uncertainty or improve economic outlooks. Economic uncertainty increased dramatically in March amid speculation about the April tariff announcement. Meanwhile, researchers at the Budget Lab at Yale estimate the April 2 tariffs in tandem with the tariffs already in effect are projected to raise consumer prices by 2.3% in the near future (assuming there is no policy reaction from the Federal Reserve). In addition, they also predict GDP growth to be 0.9% lower than the rest 2025, and 0.1% lower in 2026. As of April 3, the Atlanta Fed Nowcast estimates first-quarter GDP to contract by 2.8%.

While the future of trade policy is far from set in stone, the current administration is posturing toward a willingness to shoulder short-term economic losses in pursuit of long-term economic gains from achieving its trade policy goals. Tariffs are expected to drive prices higher—an intentional move to spur domestic industry and negotiate better deals with other countries. However, this will likely hamper consumer spending, which is already under pressure from inflation and interest rates. Inflation-adjusted consumer spending (real PCE) contracted by 0.6% in January and rose only 0.1% in February, according to the Bureau of Economic Analysis. Given that consumption has been a primary driver of economic activity, it is reasonable to expect slower economic growth in the short term.

Hiring Rate Holds Steady to Start 2025

Hiring is in a stabilizing pattern, according to the March 2025 LinkedIn Workforce Report, which showed hiring grew marginally (up 0.3%) from January to February. The LinkedIn Hiring Rate, which represents the number of hires divided by LinkedIn membership, was 3.4% lower in February 2025 than 2024, which is among the smallest year-to-year gaps since the measure began declining in spring 2022.

Month-to-month, metro areas experienced mixed hiring growth as exactly half of the 20 metropolitan areas LinkedIn tracks saw hiring growth from January to February. Dallas-Fort Worth (3.1%), Houston (3.0%), and Los Angeles (2.6%) saw the greatest hiring gains, while the hiring rate in Denver (-4.8%), Seattle (-4.5%), and St. Louis (-2.2%) slowed the most.

Hiring gains were more widespread by industry, with hiring rates increasing from January to February in 15 of 20 industry categories. Wholesale (16.5%); oil, gas, and mining (6.8%); and administrative and support services (6.5%) grew the most, while hiring in holding companies (-10.3%), government administration (-6.4%), and utilities (-3.1%) saw the greatest declines. LinkedIn reports that the slowdown in government administration hiring coincided with elevated job applications in the Washington, DC, and Baltimore, MD, areas of the country, reflecting the effects of layoffs in the federal government.

This year has not started out with the hiring growth many expected, as economic uncertainty remains a hindrance to labor market activity. Hiring has continued to hold steady overall in early 2025, but staffing firms seeking opportunities need to monitor and adapt to trends within their industry and region. For ASA members, the ASA Central community offers sector-specific networking opportunities. Learn more here.