Existing home sales sputtering again

Trend watch

Spring break and the spring holidays (Passover, Easter, and Ramadan) are all now in the rearview mirror. Air passenger counts dipped modestly this past week, slipping 0.3% from the prior week to 17.6 million.

Meanwhile, we’re keeping a keen eye on freight trends – as we monitor the tariff impact. We’ve heard about spikes in so-called blank sailings for the Asia to North America West Coast route, which have dropped 12% in the past six weeks, according to Sea-Intelligence CEO Alan Murphy. (A blank sailing is a cancellation by the carrier for a scheduled port or the entire voyage.)

At this point, most of the data reflects the surge in volumes due to tariff front running. Container traffic at the 7 top U.S. ports (Los Angeles, Long Beach, Savannah, SEATAC, Houston, Charleston, Norfolk) rose 8.1% in March and increased 9.6% in the first quarter compared to 2024. Global air cargo tonnage is up 8% through week 16 compared to a year ago. U.S. rail traffic remains stable, up 0.8% in the latest week, halting a two-week slide. 

Our take

As discussed in the Trend watch section, we are closely monitoring the freight trends, especially from China to the United States. They are the two largest economies in the world and their economies and trade are closely tied. The U.S. is China’s largest trading partner, or about 16% of China’s exports. In turn, China is the third largest trading partner for the U.S. (behind Canada and Mexico) and is the destination for roughly 6% of our exports.

Both sides are currently throwing barbs and accusations at the other, ratcheting up the rhetoric. Both have made contradictory public statements in recent days as to whether there are even any consultations or negotiations taking place.

It does appear that one side will need to blink for there to be a thaw in icy trade relations, though each seems defiant at present. Alas, we are concerned that this U.S.-China skirmish will escalate before there’s a breakthrough. Too much is at stake for consumers, companies, and workers in both countries not to work towards a resolution.

Furthermore, we are growing concerned that the importance of the U.S.-China trade relationship will overshadow the many other trade deals that must be negotiated. These concerns, along with the on-again, off-again tariffs, are adding to the uncertainty for companies, consumers, and decision makers, keeping many businesses in “wait & see” mode, which isn’t pro-growth for the economy.

Ultimately, this uncertainty casts a long shadow over the economy, clouding decision making for businesses and consumers alike. While a recession isn’t our base case, time is not on the economy’s side. The longer this saga takes to play out, the more it gouges into economic growth. 

Bottom line

The U.S. economy has been resilient, but it’s in a holding pattern awaiting resolution on the tariffs. The longer this uncertainty lingers, the more intense the headwind for the economy becomes in the near term. That has contributed to the recent bouts of volatility in financial markets, which we expect will continue for the foreseeable future.