The US economy is showing resilience despite growing concerns about tariffs and global trade, according to Commerzbank analysts. The latest hard data from the US remain strong, with no immediate signs of the feared stagflation. Antje Praefcke, an FX analyst at Commerzbank, noted that most tariffs have been suspended for 90 days.
Markets might not see any immediate effects until mid-July when tariffs could be reinstated unless further suspended. Praefcke highlighted that the current fundamentals in the US, particularly the labor market, appear robust and are likely to remain that way for some time. “The great uncertainty is certainly already having an impact on corporate decisions, even if this is not yet really visible in the hard data,” Praefcke stated.
Us economy remains robust for now
“At least weakening sentiment indicators such as the ISM index for manufacturing and services suggest that something is afoot among businesses and consumers. But for now, we will probably have to accept that the fundamentals in the US will remain quite strong, especially the labor market.”
The upcoming June labor market report is expected to confirm the strength of US job growth, despite the weak ADP index showing only 37,000 private sector jobs created.
The ADP index has traditionally underestimated the official data, highlighting a discrepancy between private reports and governmental statistics. Praefcke further explained the divergence between interest rate and currency markets, attributing it to their focus on different economic factors. “The interest rate market is reacting more strongly to the inflation outlook influenced by tariffs, whereas the FX market is focusing more on the decent growth figures.”
While uncertainties loom due to potential tariffs and weakening sentiment indicators, the US economy currently remains on a stable footing with strong labor market fundamentals.
The coming weeks, especially mid-July when tariff suspensions could be lifted, will be crucial in determining the future economic trajectory.
