BIZ BUZZ

NATION

Consumer confidence still down

Americans' confidence in the economy slumped for the fifth straight month to the lowest level since the onset of the COVID-19 pandemic as anxiety over the impact of tariffs takes a heavy toll.

The Conference Board said Tuesday that its consumer confidence index fell 7.9 points in April to 86, its lowest reading since May 2020. Nearly one-third of consumers expect hiring to slow in the coming months, nearly matching the level reached in April 2009, when the economy was mired in the Great Recession.

The figures reflect a rapidly souring mood among Americans, most of whom expect prices to rise because of the widespread tariffs imposed by President Donald Trump. About half of Americans are also worried about the potential for a recession, according to a survey by The Associated Press-NORC Center.

“Rattled consumers spend less than confident consumers," said Carl Weinberg, chief economist at High Frequency Economics, in an email. “If confidence sags and consumers retrench, growth will go down.”

A measure of Americans’ short-term expectations for their income, business conditions and the job market plunged 12.5 points to 54.4, the lowest level in more than 13 years. The reading is well below 80, which typically signals a recession ahead.

How this gloomy mood translates into spending, hiring, and growth will become clearer in the coming days and weeks. On Wednesday, the government will report on U.S. economic growth during the first three months of the year, and economists are expecting a sharp slowdown as Americans pulled back on spending after a strong winter holiday shopping season.

And on Friday the Labor Department will release its latest report on hiring and the unemployment rate. Overall, economists expect it should still show steady job gains, though some forecast it could report sharply reduced hiring.

The stark decline in consumer confidence also likely reflected the sharp swings in stock and bond prices that roiled financial markets earlier this month. While all age groups and most income brackets reported lower confidence, the decline was steepest among households earning more than $125,000 and among consumers 35 to 55 years old.

Though major U.S. markets rebounded over the past week, the S&P 500 is still down 6% for the year and the Dow Jones has lost 5%. The growth-heavy Nasdaq is down 10% in 2025.

The Conference Board said that mentions of tariffs in write-in responses reached an all-time high this month, with the duties on the top of consumers' minds. Trump has imposed a tariff of 10% on nearly all imports, as well as a huge 145% tariff on most goods from China. He has imposed separate import taxes on steel, aluminum, and cars.

More Americans are also now worried that the economy could tip into a recession, with the proportion of consumers expecting a downturn in the next 12 months reaching a two-year high.

Fewer consumers said they were planning to buy a home or car in the next six months. Sales of previously occupied U.S. homes slowed last month in a lackluster start to the spring homebuying season as elevated mortgage rates and rising prices discouraged those looking.

And Americans also said they would spend less on services. The proportion of Americans planning an overseas vacation in the next six months fell to 16.4%, down from 24.1% in December. And the proportion of consumers planning to spend more on dining out plummeted by nearly the most on record in April, the Conference Board said.

Coca-Cola's Q1 optimism

Coca-Cola reported better-than-expected earnings in the first quarter and said the impact of tariffs on its business are likely to be “manageable.”

Coke and other beverage makers are facing a 25% tariff on the aluminum they use for cans, among other items. Last week, rival PepsiCo lowered its full-year earnings expectations due to the impact of tariffs.

“Based on what we know today, the dynamic tariff landscape could impact pockets of our system’s cost structure, as well as consumer sentiment in our markets,” Coke Chief Financial Officer John Murphy said Tuesday in a conference call with investors.

But Murphy said Coke has “numerous levers to help manage the impact.” The company has said previously that it may shift aluminum suppliers or rely more heavily on plastic or glass bottles.

Coke's unit case volumes grew 2% in the first quarter, led by higher demand in China, India and Brazil. Coca-Cola Zero Sugar was a standout, with case volumes up 14%. Demand for sports drinks and coffee fell.

In North America, case volumes fell 3%. Prices rose 8%, partly because Coke sold a higher mix of premium beverages like Topo Chico sparkling water and Fairlife milk.

Coke Chairman and CEO James Quincey said a video that was circulating on social media in February hurt U.S. sales, particularly among Hispanic consumers in the South. The video claimed that Coke was reporting its own workers to U.S. Immigration and Customs Enforcement officers and called for a boycott of the company.

Quincey said the claims in the video were false and the controversy has largely abated. Coke is trying to win back Hispanic sales by promoting the company’s local economic impact and offering targeted deals, he added.

The video aside, Quincey said there was a pullback in purchasing on both sides of the U.S.-Mexico border due to consumer uncertainty.

“I think some of the geopolitical tension was just causing people to be a little more cautious with their spend,” he said “A little less going out, a little more keeping the money in the pocket.”

Revenue fell 2% to $11.1 billion in the January-March period, the company said Tuesday. Adjusted for one-time items, including currency fluctuations, Coke reported revenue of $11.2 billion. That beat Wall Street’s expectation of $11.15 billion, according to analysts polled by FactSet.

Net income rose 5% to $3.3 billion for the quarter. Adjusted for one-time items, the Atlanta company earned 73 cents per share. That beat expectations of 72 cents.

Coke moderated expectations for its full-year profit Tuesday. The company said it now expects full-year adjusted earnings to grow 7% to 9%, down from 8% to 10% previously. Coke earned $2.88 per share in 2024.

Shares of Coca-Cola rose less than 1% in Tuesday morning trading.

Strong Q1 for GM

General Motors posted strong financial results for its first quarter Tuesday, but says it will reassess its expectations for 2025 due to auto tariffs.

The automaker is pushing back its conference call to discuss its guidance and quarterly results until Thursday, so that it can assess potential tariff changes.

GM said that its initial full-year financial forecast doesn't contemplate the potential impact of tariffs. In January the company announced that it anticipated 2025 adjusted earnings in a range of $11 to $12 per share.

Late Monday The Wall Street Journal reported that President Donald Trump will possibly dial back automotive tariffs, with anonymous sources claiming that he’ll stop duties on foreign-made cars from piling on top of other tariffs he implemented and easing some levies on foreign parts used to make cars in the U.S.

White House press secretary Karoline Leavitt said Tuesday morning that Trump would sign an executive order relaxing some of his tariffs on cars and auto parts, though Treasury Secretary Scott Bessent said the goal remained enabling automakers to create more domestic manufacturing jobs.

Bessent added that Trump is concerned with “jobs of the future, not of the past.”

It remains unclear what impact Trump’s broader tariffs will have on the U.S. economy and auto sales. Most economists say the tariffs — which could ultimately hit most imports — would raise prices and slow economic growth, possibly hurting auto sales despite the relief that the administration intends to offer on its previous policies.

Trump will be holding a rally in Michigan, the heart of the nation's auto industry, on Tuesday. Michigan has been jolted by his steep trade tariffs and combative attitude toward Canada.

Trump is making an afternoon visit to Selfridge Air National Guard Base for an announcement alongside Democratic Michigan Gov. Gretchen Whitmer. He’s expected to speak at a rally at Macomb Community College, north of Detroit.

Michigan was one of the battleground states Trump flipped from the Democratic column in his election. But it’s also been deeply affected by tariffs on imported cars and auto parts.

Michigan’s unemployment rate has risen for three straight months, including jumping 1.3% from March to reach 5.5%, according to state data. That’s among the highest in the nation, far exceeding the national average of 4.2%.

Industry groups have urged the White House to scrap plans for tariffs on imported auto parts, warning that doing so would raise prices on cars and could trigger “layoffs and bankruptcy.”

General Motors earned $2.78 billion, or $3.35 per share, for the three months ended March 31. A year earlier it earned $2.98 billion, or $2.56 per share.

Removing one-time charges and benefits, GM earned $2.78 per share, topping the $2.68 per share that Wall Street had expected, according to a survey by FactSet.

Revenue climbed to $44.02 billion from $43.01 billion.

GM’s stock declined about 2% in morning trading.

Insured losses may hit $145B

Insured losses from natural catastrophes could soar to $145 billion this year - well above the 10-year average - as population growth, urban sprawl and climate change combine to supercharge risks, according to a report by Swiss Re Institute.

Severe thunderstorms, floods and wildfires are the main drivers behind this year’s loss estimate, the reinsurer said in a report on Tuesday. The figure is based on a long-term growth trend of 5% to 7% each year and includes about $40 billion in losses from the Los Angeles wildfires.

Swiss Re also warned that the risk of “peak” loss years is growing. Such events, which can result in insured losses of about $300 billion in a single year, “should not be considered an anomaly,” it said.

As natural disasters become more frequent, the US is bearing the brunt of insured losses. In 2024, America accounted for almost 80% of the global total, with losses concentrated in Florida, Texas, California, Louisiana and Colorado, Swiss Re said. The development has led to rising insurance premiums. In hurricane-exposed Florida, for example, premiums per household are now twice the national average.

In a separate report also published on Tuesday, Zurich Insurance said that extreme weather events led to about $2 trillion in economic losses over the past decade and will continue to disrupt “ecosystems, agricultural productivity and human health.”

The outlook is now “alarmingly bleak,” Zurich Insurance said.

Insurers and reinsurers have responded by raising prices in high-risk areas while seeking new sources of capital to buttress their balance sheets. For large, one-off disasters, insurers are passing more of the risk to capital markets via catastrophe bonds, a fast-growing market that’s seen record levels of issuance in recent months.

“Insurance coverage is not keeping up with growing losses, leading to more underinsured or uninsured households and businesses,” Zurich Insurance said in a statement.

Financial watchdogs are concerned about the systemic repercussions. The European Central Bank and the European Insurance and Occupational Pensions Authority recently warned that the insurance protection gap in Europe, which already stands at 75%, is likely to increase as the continent warms.

It’s a similar story across the globe. Over the last 30 years, the total cost of insured losses from natural catastrophes grew at a faster pace than the global economy, more than doubling relative to global gross domestic product since 1994, according to Zurich.

The escalating costs “highlight an urgent need for action from governments, insurers, and communities to collaboratively build climate resilience,” it said.

To keep a lid on losses, the insurance industry says it needs the flexibility to lower the cost of insurance while continuing to transfer risk to other parts of the financial economy. Swiss Re says that while it may be expensive to build dikes, dams and gates for flood protection, doing do is ten times more cost effective than rebuilding after a disaster.

“That is why it is important that capital grows in line with rising risk, for the industry to fulfill their role for future peak years,” said Jerome Haegeli, group chief economist at the reinsurer.

WORLD

$300M for Africa education

The Mastercard Foundation will spend $300 million to help about 500,000 refugees in Africa complete their education, giving them a pathway to jobs.

The foundation will work with the UNHCR, the UN Refugee Agency, for the next five years to help displaced people complete secondary education, it said in a statement on Tuesday.

A spate of conflicts in Sudan, the Democratic Republic of Congo and South South have resulted in 45 millions of people fleeing their homes to neighboring countries, according to the foundation, calling it the world’s largest displacement crises.