Economic Outlook April 2025

Modern skyscraper facades with financial graphs in blue and yellow, conveying a theme of dynamic economic activity.

In early April, President Trump announced an across-the-board 10% tariff on imported goods (except those from Canada, Mexico and Russia), with higher rates for more than 60 other countries, including significant trading partners like China. Markets reacted negatively in the days following the announcement, with the largest U.S. stock indices dropping significantly. The markets found a reprieve a few days later, when the administration rolled out a 90-day pause on tariffs to allow some time for negotiations, but volatility has persisted.

Although, in my opinion, the administration had broadly telegraphed its intent to impose tariffs – citing reasons including increased manufacturing jobs, a reduced trade deficit and some remuneration for global security spending – the extent and level of the tariffs certainly seemed to surprise investors.

Our 2025 economic outlook, penned in December 2024, called out a few topics that have more substance behind them now. At the time, we wrote that “the equity market returns seen in 2024 will not be repeated in 2025,” and “there will be a lull or correction at some point.” That appears to be the case given the events of the past few weeks. Once anxiety enters the stock market, it has a way of hanging around for a while. Expect to see gyrations and further volatility moving forward.

As mentioned above, the market narrative is looking to tie the stock market declines to the implementation of tariffs, even though there may be other factors at play. Warren Buffet, known for his stock prowess, was holding higher cash positions as of the middle of last year due to elevated stock valuations, and that was before the election and the tariff announcements. My point here is that perhaps tariffs have become, at least in part, the scapegoat for a sharp decline from elevated valuations, which we have been cautioning against for a while now.

One thing is for sure: moving through this type of environment requires significant patience and discipline while avoiding any sudden reactions.

Just like a race car driver going into a turn, it is best to be positioned correctly for the greatest results. Having an asset allocation that fits each person’s investment profile, and not making any major changes to your positions, is key to limiting portfolio volatility to a level that is acceptable to each investor.

As significant as the market volatility has been over the last several weeks, it is important to remember that, on average, the stock market has a 5% sell-off three times a year, a 10% sell-off every 18 months, and a 20% sell-off every three years. Timing the market is a bit like gambling; you may win once or twice, but over the long-term the house wins. The best bet is to be allocated properly, stay invested and remain focused on your long-term plan despite any short-term volatility.

Greg Sweeney is the Chief Investment and Economist Strategist at Bell Institutional Investment Management. He guides the investment strategy, and this outlook is his perspective on the latest market trends and what they could mean for investors. Any views, strategies or products discussed in this article may not be appropriate or suitable for all individuals and are subject to risks.

Greg Seeney

Greg Sweeney, CFA®

SVP/Chief Investment & Economic Strategist

Products and services offered through Bell Bank Wealth Management are:  Not FDIC Insured | No Bank Guarantee | May Lose Value | Not a Deposit | Not Insured by Any Federal Government Agency