Economic Uncertainty Peaks as Trump’s Policies Start Market and Consumer Concerns
- Tyler White
- Mar 24
- 2 min read
This week concerns over President Trump’s economic policies spiked uncertainty, the S&P 500 has entered a correction phase, witnessing a 10% decline from its February peak.
This shift in market sentiment was highlighted by Citi US equity strategist Scott Chronert, who noted a drastic change in investor focus and sentiment compared to last year. The protective tariffs, federal job cuts, and strict immigration policies introduced have led to fears that these could slow economic growth. Many research teams have downgraded their GDP growth forecasts and adjusted their year-end targets for the S&P 500 downward.
Additionally, The University of Michigan’s consumer sentiment index has experienced a significant downturn, plummeting by 11% to a new low of 57.9 in mid-March from 64.7 in the previous month. This is the lowest reading since November 2022 and falls below the forecasted 63.2 by economists. Over the past year, consumer sentiment has declined by 27%, similar to Chronerts thoughts, economic policy uncertainty and a decline in stock prices have undermined consumer confidence.
Along with these key thoughts, Warren Buffett’s Berkshire Hathaway has notably increased its cash reserves, reaching levels higher than seen in recent years. This strategic move suggests a defensive position, aiming to buffer against ongoing market volatility. In 2024, the company’s cash reserves nearly doubled to $334.2 billion from $167.6 billion in 2023. This liquidity move has led to investor speculation that Buffett foresees a recession incoming. However, in his annual letter Buffett emphasized its role for future investment opportunities
However, despite the current market setbacks, the outlook among many financial experts remains cautiously optimistic. For instance, Yardeni Research has only modestly lowered its year-end S&P 500 target from 7,000 to 6,400, still predicting a 14% increase from current levels. Similarly, BlackRock’s Gargi Chaudhuri remains bullish, emphasizing that the current market pullback is seen as a healthy correction rather than an introduction to a recession. This sentiment was echoed by Ryan Detrick from Carson Group, who notes that historically, most 10% corrections do not escalate to bear market.
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