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The March survey of consumer sentiment from the University of Michigan shows the following:
- Consumer sentiment is declining rapidly both for households making more than $100,000 and less than $100,000 (see the first chart).
- Consumer worries about losing their jobs are at levels normally seen during recessions (see the second chart).
- A record-high share of consumers think business conditions are worsening (see the third chart).
- Households’ income expectations are declining (see the fourth chart).
- Inflation expectations are rising at an unprecedented speed (see the fifth chart).
The bottom line is that consumer sentiment is deteriorating at an alarming rate.
Source: University of Michigan, Haver Analytics, Apollo Chief Economist 
Source: University of Michigan, Haver Analytics, Apollo Chief Economist 
Source: University of Michigan, Haver Analytics, Apollo Chief Economist 
Source: University of Michigan, Bloomberg, Apollo Chief Economist 
Source: University of Michigan, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Surveys of firms show that companies have in recent weeks started to pull back capex plans, and consumers are getting more worried about their jobs, see the first two charts below. At the same time, leading indicators point to higher inflation ahead, see the third chart.
Furthermore, airlines this week reported a slowdown in bookings, and the latest credit card data points to broad-based weakness across all categories except online sales.
The bottom line is that the soft data points to weakness coming in the hard data. In addition, this past week was the survey week for the March employment report, and with uncertainty elevated, the downside risks to March nonfarm payrolls—when it is released on Friday, April 4—are significant.
Our updated chart book with daily and weekly indicators for the US economy is available here.
Sources: Apollo Chief Economist, Business Roundtable, NFIB, Federal Reserve Banks of Dallas, Kansas, New York, Philadelphia, and Richmond 
Sources: Apollo Chief Economist, Conference Board, Haver Analytics 
Sources: Apollo Chief Economist, BEA, FRBNY, Haver Analytics, Federal Reserve Banks of Dallas, Kansas City, New York, Philadelphia, and Richmond See important disclaimers at the bottom of the page.
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There are more 33-year-olds in the US than any other age group, see chart below.
For China, there are more 54-year-olds, and for Korea, there are more 53-year-olds.
Source: PopulationPyramid.net, Apollo Chief Economist See important disclaimers at the bottom of the page.
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What characterizes a wait-and-see economy is that consumers and firms are more cautious about spending decisions. Consumers are more reluctant to plan vacations, to buy cars, and to buy new washers and dryers. Similarly, firms are more reluctant to hire and more reluctant to do capex.
The wait-and-see economy is no longer just for companies directly involved in trade with Canada and Mexico. Uncertainty for small businesses is near all-time high levels. This is a problem because small businesses are the foundation of the economy, accounting for more than 80% of total US employment, see the first chart below.
Markets are not yet pricing in the coming slowdown in the hard data. The spread between CCC and single-B has only widened modestly and is still significantly tighter than where it was during the summer of 2022—when the economy was doing just fine—see the second chart. In a slowdown scenario, investors would start to migrate to higher-quality names.
The bottom line is that a wait-and-see economy eventually leads to a slowdown in the hard data. And markets should prepare for that scenario.
Source: Bloomberg, BLS, Apollo Chief Economist 
Source: Bloomberg, ICE BofA, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The February NFIB survey of small businesses shows that business uncertainty is near the highest levels since the survey started in the 1970s, see chart below.
Source: NFIB, Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Sixty-seven percent of global manufacturing capacity for electric vehicles is in China.
Similarly, most manufacturing capacity for batteries, solar, and wind is also in China, see chart below.
Note: Data for 2023. RoW = Rest of World. “Electric cars” values are calculated based on 2023 production numbers, adjusted according to the utilization rates of car assembly plants in the region. Source: IEA analysis based on IEA (2024a) and IEA (2023b), Apollo Chief Economist See important disclaimers at the bottom of the page.
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Medicaid provides healthcare coverage to low-income families (generally making less than $25,000 a year), and roughly 20% of the US population, or about 72 million people, are covered by Medicaid.
Note: Data for 2023. Source: KFF Health Insurance Coverage of the Total Population, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The US dollar is the global reserve currency because America is the most dynamic economy in the world, and the US provides stability and security. As a result, there is upward pressure on the US dollar because everyone wants to own the world’s safest asset.
This safe-haven upward pressure on the dollar overwhelms the negative impact on the dollar coming from the US current account deficit.
With safe asset flows putting constant upward pressure on the dollar, there is a need for a deal—a Mar-a-Lago Accord—to put downward pressure on the US dollar to increase US exports and bring manufacturing jobs back to the US.
The Mar-a-Largo Accord is the idea that the US will give the G7, the Middle East, and Latin America security and access to US markets, and in return, these countries agree to intervene to depreciate the US dollar, grow the size of the US manufacturing sector, and solve the US fiscal debt problems by swapping existing US government debt with new US Treasury century bonds.
In short, the idea is that the US provides the world with security, and in return, the rest of the world helps push the dollar down in order to grow the US manufacturing sector.
There are two instruments for the US to achieve this goal. The first tool is tariffs, which also have the benefit that tariffs raise the tax revenue for the US government. The second tool is a sovereign wealth fund to likely accumulate foreign currencies such as EUR, JPY, and RMB to intervene in FX markets to help put additional downward pressure on the US dollar.
For markets, this raises three questions:
1) The changes that are required to existing US manufacturing production, including eliminating Canada and Mexico from all auto supply chains, will take many years. Can the US achieve the long-term gain without too much short-term pain?
2) Globalization has for decades put downward pressure on US inflation. Will a more segmented global economy with a much bigger manufacturing sector in the US put too much upward pressure on US inflation, given the higher wage costs in the US than in many other countries?
3) With tariffs being implemented, the rest of the world may over time begin to decrease its reliance on US markets and also increase their own defense spending. Under such a scenario, what are the incentives for the rest of the world to sign a Mar-a-Lago Accord?
Source: Apollo Chief Economist See important disclaimers at the bottom of the page.
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There are adjustment costs associated with changing trade policy and changing the size of the government sector, see chart below. The immediate question for markets is how big the short-term pain will be, see chart below.
Source: Apollo Chief Economist See important disclaimers at the bottom of the page.
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Investors are getting very worried about the downside risks to their portfolios. VIX call volume buying is near record-high levels, and S&P 500 put volume buying is near record-high levels, see charts below.
Source: Bloomberg, Apollo Chief Economist 
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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