Tariffs threatened by President Trump have raised concerns among businesses and consumers about the economy. Still, stock markets have surged, with the S&P 500 and Nasdaq hitting record highs. The economy has proven resilient, with a steady labor market and a low unemployment rate of 4.1%. Although inflation rose to 2.7% in June, there has been no feared spike in consumer prices. Corporate earnings have surpassed initial market expectations, contributing positively to investor sentiment despite future recession risks being estimated at 33% within the next year.
"The economy has proven to be more resilient than many feared in the face of tariff threats," says Brad Peterson, who's the national portfolio adviser at Northern Trust.
Despite the concerns about the impact of tariffs, the economy has held up much better than many expected. The labor market has held up well, with a historically low unemployment rate of 4.1%.
Most economists still expect the U.S. economy to grow at a slower pace in the second half of the year than in 2024, with the chance of a recession seen at 33%.
Corporate earnings are proving sturdier than what many in the markets had initially feared, contributing to the positive sentiment in the stock market.
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