How Policy and Sentiment Are Reshaping the Economic Outlook

In the latest episode of the Market Pulse podcast, Equifax Senior Advisors Jesse Hardin, Dave Sojka, Tom O’Neill, and Maria Urtubey break down how the economic mood is shifting. 

What began in January as a wave of cautious optimism has turned into a moment of pause as businesses and consumers alike adjust to uncertainty, driven by policy changes and a noticeable drop in consumer sentiment. In this episode, the advisors offer recommendations for mitigating economic impacts.

Listen now to the latest Market Pulse podcast for the full interview.

Hard Data vs Soft Data

In January, there was a lot of momentum and optimism building with the economy. And then, wham—policy change and economic shifts called that outlook into question.

But what’s striking now, the team agreed, is the tension between the “hard” economic data (such as employment and GDP growth) and the “soft” data (like consumer sentiment surveys). As Dave Sojka puts it, “What was looking rosy a month ago… now has us rethinking everything.”

Tom O’Neill agrees, adding, “It’s an interesting mix of hard and soft data… Inflation is under control, but it’s not quite dead yet. And we have all these areas that are sort of gray.”

This dichotomy has led to consumers behaving more cautiously, even if the metrics don’t yet show signs of full-blown economic trouble. “Consumers are reacting. They’re being more cautious, they’re cutting back on spending, even assessing if and when to make big purchases,” says Maria Urtubey.

Tariffs as a New Economic Headwind

One of the most pressing concerns addressed in the episode are tariffs, which have begun to influence both consumer behavior and business planning.

“Tariffs are a charge on imports or exports… and that fee is placed on the ability to bring in goods and services from other places,” explains Tom. But the true impact depends on what’s being taxed—and how essential those goods are to consumers.

Dave highlights the potential consequences: “Think finished product manufacturers or even your local restaurant who sources product and supplies from other countries. The impact potentially is really huge.”

On the consumer side, the effects can be deeply felt. “The cost of toys imported from China will be at least 50% higher given the current levels,” Dave notes. “That added cost to a household budget could result in half as many toys under the tree this year.”

Jesse also cites data from the Yale Budget Lab and Moody’s Analytics that underscores how tariffs disproportionately affect lower-income households. “Tariffs tend to be a regressive tax,” he explains. “They reduce disposable income the most for those who have the least.”

Leading Indicators to Watch

With volatility looming, the panel identifies key indicators to monitor in the months ahead.

“The health of the U.S. economy relies on consumer spending,” Dave says. “Are people rushing to buy big-ticket items like cars and appliances ahead of tariff increases? Surprise—they have been.”

Employment is another critical signal. Dave notes, “A recent CNBC CEO poll showed a percentage of CEOs anticipating or considering job reductions this year.”

From a consumer standpoint and from a lending standpoint, it’s always important to be monitoring those risk levels—particularly delinquency rates. Those are going to be the first signs of where we’re starting to see more consumer stress, according to Tom.

Maria adds another dimension. Home equity has reached $35 trillion—an 80% increase since the beginning of 2020, she says. But people are now hesitating—how do I meet these payment obligations, with higher borrowing costs and rising property taxes?

Recommendations for Navigating What’s Next

Despite the uncertainty, the team emphasizes that there are smart ways for businesses and lenders to adapt.

“The way to reduce uncertainty is with information,” Tom says. “Applying that information on a regular, frequent basis is the best way to understand the situation—and to pivot as it changes.”

Maria reinforces the need for intentionality. You need more data and insight. You need to be more orderly in how you’re using that data if you want to identify those limited growth opportunities, you have to be looking closely and often, she says.

And for those wondering whether it’s time to panic? “It’s not,” Dave assures. “If you’ve got sound business practices, you’re in good shape. Just make sure you’re staying on top of them with the right information and taking appropriate action in a timely fashion.”

Looking ahead, the team offered a final reminder: We have good data. We can see what behaviors were a couple of years ago. Use that baseline. Think about how we see similarities and differences now—and react accordingly.

Stay Informed

For more insights or to suggest topics for future episodes, reach out to the Equifax Advisory team at riskadvisors@equifax.com. And don’t forget to subscribe to the Market Pulse Podcast wherever you get your podcasts.

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