“Do More of What Works and Less of What Doesn’t” — unknown

1. U.S. Trade Deficit Hits Record as Companies Front-Load Pharmaceuticals — The U.S. trade deficit ballooned 14% to a record $140.5 billion in March, as businesses stockpiled goods to get ahead of sweeping tariffs that President Trump imposed the following month. The value of imported goods totaled $346.8 billion, according to Census Bureau data, continuing a sharp increase that began in January. Nearly all of the $22.5 billion surge in imported consumer goods for March were pharmaceutical products, which the Trump administration is currently considering to hit with tariffs. Imports of computer accessories, automobiles, and car parts and engines also increased.
2. Fed Warns of Rising Economic Risks as It Leaves Rates Steady — The Federal Reserve warned that the economy faced growing risks of higher unemployment and higher inflation due to tariff increases when officials agreed to hold interest rates steady on Wednesday. Tariffs represent a shock that can decrease an economy’s ability to supply goods or services while sending up prices. The unpredictable rollout of increased duties on imported goods threatens to sap profits and chill new investment until businesses have more clarity on their underlying cost structure. Expectations of a rate cut at the Fed’s next meeting in mid-June declined when Powell said officials felt like the costs of waiting to learn more about the economy were “fairly low.”
3. US Productivity Drops for First Time Since 2022 as Output Falls — Productivity, or nonfarm employee output per hour, decreased at a 0.8% annualized rate after a revised 1.7% increase in the fourth quarter, data from the Bureau of Labor Statistics showed Thursday. Because of the decline in productivity, unit labor costs — what businesses pay employees to produce one unit of output — jumped 5.7% in the January-March period, the most in a year. The retreat in productivity was largely due to a 0.3% decline in business output, foreshadowed by data last week showing a trade-related slide in gross domestic product, even as worker hours climbed. Over the near term, productivity gains may suffer somewhat as companies reconsider investment plans until there’s more clarity about US trade and tax policy.
4. Trump Hails UK Trade Framework as First of Many Tariff Deals — Under the agreement, Trump said Thursday the UK would fast-track US items through their customs process and reduce barriers on “billions of dollars” of agricultural, chemical, energy and industrial exports, including beef and ethanol. The British government said auto tariffs would be reduced to 10% and metals duties to zero. Trump and UK Prime Minister Keir Starmer said final details of the pact would still be negotiated over the coming weeks and statements from both governments made clear that many specifics were left to be resolved later.

The week ahead — Economic data from Econoday.com: