Economy in Brief

• Refinancing loans fall sharply and purchase loan applications decline as well.
• Effective interest rate increases to two-month high.
• Average loan size falls sharply.

• Gasoline prices fall sharply again.
• Crude oil prices edge higher.
• Natural gas costs decline further.

• Metals prices weaken broadly.
• Lumber & rubber prices fall.
• Crude oil prices remain soft.

U.S. policy decisions have sparked a sharp rise in financial market volatility in recent weeks, reflecting mounting investor unease about the global economic outlook. Consensus forecasts for growth in 2025 have been revised down significantly, while inflation expectations—particularly in the US—have moved higher, highlighting the stagflationary risks associated with the sweeping tariff measures introduced in early April (Charts 1 and 2). Although these actions have since been partially rolled back, the broader shift toward protectionism is already disrupting global trade flows and could soon feed through to consumer prices, compounding the challenge for central banks already struggling with sticky inflation. In parallel, measures of financial market stress have climbed to multi-month highs as investors reassess risks in an increasingly fragmented and uncertain environment (Chart 3). Business sentiment has also deteriorated notably, with this week’s Empire State Manufacturing Survey showing a collapse in forward-looking expectations (Chart 4). Adding to concerns, global shipping costs have begun to rise again, raising the risk that renewed supply chain frictions will put upward pressure on goods inflation across advanced economies (Chart 5). Finally, in China, hopes for stabilization in the property sector are fading. Despite some recent stabilisation in house prices, real estate investment continues to contract sharply, suggesting that structural headwinds remain firmly in place (Chart 6). Taken together, this week’s charts point to a fragile global economy contending with greater protectionism, rising inflation risks, weakening business confidence, and subdued demand—all of which are reinforcing the ongoing malaise in investment sentiment.

• Single-family starts plunge; multi-family weakens as well.
• Starts decline in West & South.
• Permits rise modestly after several months of decline.

• The headline index plunged to -26.4 in April from 12.5 in March.
• This is the lowest reading since April 2023.
• Both shipments and orders fell markedly.
• Prices paid rose further while employment indicators fell markedly.
• In contrast, after having fallen significantly since January, expectations six months ahead edged up in April.

• Initial claims come in much lower than forecast.
• Continuing claims rise modestly.
• Insured unemployment rate is unchanged.