Overview

• U.S. corporate profits with inventory adjustments dropped by $118.1 billion in the first quarter, marking the first quarterly decline after a $204.7 billion surge in late 2024.
• The economy contracted at a 0.2% annualized rate in Q1, reflecting volatile import flows and tariff-driven uncertainty that led firms to withhold guidance.
• The PCE inflation index rose 2.1% year-over-year in April, the slowest pace since February 2021, as new duties have yet to fully pass through to consumer prices.
• Consumer spending increased just 0.2% in April, down from a 0.7% gain in March, while personal income climbed 0.8% and the savings rate jumped to 4.9%.
• The Fed has held its benchmark rate at 4.25%–4.50% since December and is closely monitoring how ongoing legal battles over Trump’s tariffs may influence inflation later in the year.