By: Ade Yunus | Market Research & Analyst
The U.S. economy is currently sending mixed signals—between resilient growth and potential slowdown. In its latest reports, several key indicators such as Q1 Gross Domestic Product (GDP) and personal income reflect strength, while data on durable goods orders suggests potential weakness in the industrial sector.
Sharp Decline in Durable Goods Orders
Durable goods orders saw a steep drop in May, down -6.3%, following a strong 8.5% increase in April. This figure came in well below the market consensus of -5.2%, potentially signaling early signs of weakened investment and declining business confidence in the U.S. manufacturing sector.
GDP and Income Remain Strong
In contrast, Q1 GDP growth held steady at 2.4%, far exceeding the initial forecast of -0.2%. This indicates that the U.S. economy remains robust despite global pressures. Additionally, personal income surged by 0.8% in May (vs. projection of 0.4%), suggesting a healthy labor market and resilient household spending. However, personal consumption only rose 0.2%, indicating that consumers are becoming more cautious.
Inflation and the Prospect of Rate Cuts
The Core PCE Price Index—The Fed’s preferred inflation gauge—remained stable at 0.1%, in line with expectations. This stability opens the door for the Federal Reserve to consider rate cuts if the trend continues.
External Risk: Oil Prices and the Strait of Hormuz
While domestic indicators show both strength and caution, external risks are also worth monitoring. Geopolitical tensions in the Middle East—particularly around the Strait of Hormuz—have resurfaced. This has driven oil prices close to (and potentially above) the psychological level of $80 per barrel.
“The tendency for oil prices to rise above $80 poses the risk of increasing global living costs. This situation is further driven by geopolitical tensions in the Strait of Hormuz—a vital artery for global energy distribution.”
— Andrew Fischer
If oil prices continue to rise, the impact could weaken global purchasing power and reignite inflation across multiple economies, including the United States.
Market Implications
- US Dollar: May weaken if markets focus on the drop in industrial orders and stable inflation.
- US Equities: Likely to benefit, given stronger expectations for rate cuts.
- Bonds: Yields are expected to decline, driven by increasing speculation of monetary easing.
Conclusion and Advice for Investors
The current U.S. economic condition reflects short-term resilience with early warning signs for the medium term. Global investors—particularly in emerging markets like Indonesia—are advised to:
- Monitor industrial and consumer sentiment data closely.
- Adjust portfolios with a mix of defensive and growth assets.
- Anticipate energy price movements that may significantly affect consumption and transportation sectors.
In this dynamic environment, caution paired with strategic flexibility is key to navigating the second half of 2025.
source: https://www.youtube.com/watch?v=5DIGKzzdJEo
