April 2025 Economic Insights from Tony Gomes, CEO of Advanced Wealth Management
Is a recession on the horizon or is the economy just hitting a speed bump?
That’s the million-dollar question as we unpack the latest economic data. April brought a mixed bag of indicators: a resilient service sector, shaky manufacturing, a surprise dip in GDP, and ongoing hiring hesitations. But as Tony Gomes, CEO of Advanced Wealth Management, breaks it down—there’s more to the story than headlines suggest.
Let’s dive into what’s really happening beneath the surface.
Services Sector Stays Afloat—For Now
Let’s start with some (relatively) good news.
The ISM Services Index came in stronger than expected at 51.6 in April, indicating continued growth. Since services make up two-thirds of the U.S. economy, that’s no small feat. It reversed the dip we saw in March and showed signs of life, especially in new orders, which rose to 52.3.
Some companies even signaled a shift in strategy—reshoring production and sourcing back to U.S. soil. That’s a long-term trend to watch.
However, business activity slowed slightly, dipping to 53.7, and employment remains a sore spot. For the second month in a row, the hiring index stayed in contraction territory. Comments from respondents pointed to government spending cuts and grant reductions as a big reason for this hiring freeze.
And while service companies might not be hiring aggressively, they are definitely feeling the heat—literally. Input prices surged, with the prices index climbing to 65.1, its highest level since early 2023. Nearly every industry reported rising costs, putting pressure on margins and, eventually, consumers.
Real GDP Takes a Hit—but Don’t Panic
Yes, real GDP declined by 0.3% in Q1 of 2025. And yes, that sounds alarming. But before sounding the recession alarms, let’s look at what really caused the drop.
The primary culprit? Trade distortions. Both companies and consumers rushed to import goods ahead of expected tariff increases, causing a massive spike in imports—which GDP subtracts from the equation because it measures domestic production. So while the number looks bad, it’s more of a technical blip than a fundamental downturn.
In fact:
- Real consumer spending rose at a 1.8% annual rate
- Business equipment investment skyrocketed 22.5%
- Core GDP (consumer spending + fixed investment + home building) grew a healthy 3.0%
That’s not a recessionary picture, folks. It’s a recalibration.
Labor Market Remains Resilient—But Watch for Cracks
April’s nonfarm payrolls added 177,000 jobs, beating expectations. Even factoring in downward revisions, net jobs came in around 138,000—not too shabby.
Here’s the kicker: the biggest gains came from education and health services (+70,000) and restaurants and bars (+24,000). But when you strip out sectors driven by government and regulations, the “core” private payroll growth (think manufacturing, professional services, etc.) still added 73,000 jobs—above the 12-month average.
Civilian employment, which includes small business jobs, soared by 436,000. Yet, the unemployment rate stayed flat at 4.2%, mainly because more people entered the labor force.
On the manufacturing side, jobs dropped slightly, but the overall trend has been stable. The main challenge? Businesses are unsure about tariff impacts, so they’re waiting before making big hiring moves.
Manufacturing Weakness & Supply Chain Woes
While the service sector held up, manufacturing stayed under pressure.
The ISM Manufacturing Index dipped to 48.7, marking another month in contraction. The biggest drag? Production, which fell hard, likely due to:
- Delayed or canceled orders amid tariff uncertainty
- Longer delivery times due to border slowdowns
- Companies delaying spending until they understand the new rules
The employment index here also remained negative, with 8 out of 18 industries cutting jobs in April. On top of that, prices paid by manufacturers jumped, hitting 69.8, the highest level since the inflation spikes of 2022.
That’s not just noise—it’s a warning.
Fiscal Policy: A Sudden Shift in Direction
Over the past few years, deficit spending had been propping up parts of the economy. But now the tide is turning.
In a major pivot, the Trump Administration is pushing federal budget cuts, especially in non-defense discretionary programs. The latest request? $679 billion for FY2026—a massive 32% cut from earlier projections.
While that might free up resources in the private sector over the long haul, in the short run, expect some turbulence. Jobs tied to government programs and grants are at risk, and communities dependent on federal support may feel the squeeze.
At the same time, rising tariffs are making business planning more difficult. The uncertainty alone is enough to spook supply chains and delay investments.
Inflation Still Sticky
Let’s not sugarcoat it—inflation is still a problem. Even though March’s PCE prices were flat, the year-over-year numbers show:
- PCE up 2.3%
- Core PCE (excluding food & energy) up 2.6%
- “SuperCore” prices? Up 3.3%
The Fed is watching these numbers like a hawk. With average hourly earnings rising 3.8% year-over-year, wage pressures remain elevated. That likely delays rate cuts until late 2025.
Final Takeaways from Tony Gomes
Here’s the bottom line:
- No, we’re not in a recession yet.
- Yes, risks are rising—especially from tariffs, inflation, and government cutbacks.
- Core economic indicators like consumer spending and business investment are still strong.
- Monetary and fiscal tightening are beginning to take hold, which may expose more economic fragility in the second half of 2025.
“The service sector continues to keep us afloat, but cracks are forming. Investors and policymakers alike should stay alert and avoid knee-jerk reactions to misleading data points. We’re not out of the woods, but we’re also not lost in them—yet.”
FAQs
Is the U.S. currently in a recession?
Not officially. Despite a GDP dip in Q1, underlying data like jobs, spending, and core investment remain solid.
What’s causing the biggest economic headwinds right now?
Tariff uncertainty, sticky inflation, and cuts in federal spending are creating pressure across multiple sectors.
Will the Fed cut interest rates soon?
Unlikely before Q4 2025. Inflation remains too high for the Fed to feel confident in loosening monetary policy.
Should investors be worried?
Stay cautious but not fearful. Fundamentals in many sectors remain strong, but vigilance is key.
What’s Next?
As the second quarter unfolds, all eyes will be on whether GDP rebounds and inflation shows signs of consistent cooling. The U.S. economy is walking a tightrope, and while it hasn’t fallen off, a gust of policy missteps—or global shocks—could change that fast.
Stay diversified, stay informed, and keep an eye on the data—not the noise.
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Thank you for your continued trust and engagement.
Tony Gomes, Author, MBA
CEO and Founder
Advanced Wealth Management
Content Disclosure: The information here is general and educational. It is not a substitute for professional advice and does not constitute a recommendation. Forecasts and opinions are subject to change.
