First Friday: How April’s Tariffs Changed the Economy

Afford Anything

Paula Pant | Cumulus Podcast Network

Entrepreneurship, Business, Investing

4.6 • 3.4K Ratings

🗓️ 2 May 2025

⏱️ 61 minutes

🔗️ Recording | iTunes | RSS

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Summary

#604: The biggest trade shake-up in 135 years is happening right now. April brought tariff levels that economists say haven't been seen since the 1890s, creating ripple effects throughout the economy. We're seeing a stark disconnect between official economic data and how people feel about their financial future. While the economy added 177,000 jobs in April — beating forecasts — consumer confidence has plummeted to alarming levels. Almost 70 percent of Americans now expect higher unemployment ahead, despite the strong job numbers. The tariffs have triggered some unexpected behaviors. Companies rushed to import goods before prices increased, which ironically pushed the trade deficit to record levels. Consumers went on buying sprees for cars, computers, and other expensive items, fearing they'd soon cost much more. Meanwhile, inflation expectations have surged to their highest levels in decades. What does this mean for investors? Bond markets reacted dramatically, with Treasury yields posting one of the sharpest spikes on record mid-April before settling back down. The dollar weakened significantly, and economists have raised recession probability to 45 percent — up from 30 percent just last month. Small businesses are feeling the uncertainty too. After initial optimism about potential tax cuts and deregulation, their expectations have soured amid concerns about how tariffs might hurt smaller firms disproportionately. Market volatility has hit retirement savers particularly hard. We take a call from a listener named Johanna who shared that she lost 30 percent of her portfolio due to recent tariff-related swings. She’s wondering whether she’s still "Coast FIRE" — even when market shocks alter her retirement math. Join us as we break down April's economic data, explain what's behind the market volatility, and discuss what these historic tariffs might mean for your money in the months ahead. Timestamps: Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths. (00:00) The Economic Experiment (02:00) April 2025 Job Gains (05:41) Interest Rate Forecast (07:04) Benefit of Roth Conversions during market declines (08:17) Tariffs and the Smoot-Hawley Tariff Act (13:23) The Bond Market (17:49) The Dollar’s Decline (19:31) Economist's Recession Predictions (22:20) Consumer Sentiment (25:29) Consumer Spending Rises (27:13) Is Johanna still FIRE after the drop? Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	We're living through an economic experiment that hasn't been seen in over a century.
0:04.4	April brought us to highest tariff levels that we've seen in over a century since 1890,
0:10.1	the steepest in modern American history, and it triggered these big economic shockwaves across markets.
0:17.2	The stock market is volatile, the bond market is sending mixed signals.
0:20.2	The trade deficit exploded to record levels as companies frantically stockpiled imports.
0:26.4	Bond yield spiked in one of the sharpest jumps ever recorded and the dollar posted its weakest performance in decades.
0:32.7	Yet, the economy added 177,000 new jobs in the month of April. That's data that came out this morning
0:40.3	from the Bureau of Labor Statistics, beating all forecasts and all expectations. Unemployment has
0:46.8	stayed within a very narrow band between 4% to 4.2%. It stayed within that band since May of
0:51.8	2024. And we have higher rates of labor force participation.
0:56.7	So employment is strong, but the mood is sour. Nearly 70% of Americans now expect higher unemployment
1:03.6	ahead. Inflation expectations have surged to their highest level since the early 1980s, and small
1:09.1	business sentiment has soured dramatically. We're going to talk about all of that in today's 1980s, and small business sentiment has soured dramatically.
1:11.6	We're going to talk about all of that in today's upcoming episode, and we're also going to
1:15.6	answer a question from an afforder from one of you who says, hey, my portfolio has tanked.
1:24.0	Am I still fi?
1:25.9	Joe Saul-Sehi is going to join me in the second half of the show, and we're going to tackle that question together.
1:31.4	Welcome to the Afford Anything Podcast, the show that understands you can afford anything but not everything.
1:36.3	Every choice carries a trade-off.
1:38.3	This show covers five pillars, financial psychology, increasing your income, investing, real estate and entrepreneurship.
1:43.4	It's double-eye fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Once a month,
1:49.7	on the first Friday of the month, we release a monthly economic update. So welcome to the May
	...

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