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Market Minute: Business confidence plunges amid sweeping tariffs

by and

When the only certainty in the economy is uncertainty, it becomes difficult for businesses to ramp up investment.

It’s hard for a manufacturer, for example, to fulfill a major commitment to build an assembly plant that relies on foreign-sourced components if trade taxes suddenly make the input costs surge.

The solution, then, is to wait, and not invest.

That’s just one example of the pervasive impact of ever-changing trade policies on business investment decisions.

Business confidence index

We are tracking this increasingly sour sentiment among business leaders in our RSM US Composite Business Confidence Index, which has plummeted since January as tariff uncertainty began to ripple through the economy.

Regardless of whether tariffs ultimately help or hurt American companies, policy uncertainty is one of the most damaging forces to business confidence—an essential driver of investment planning and long-term strategy.

Read more of RSM’s insights on the economy and the middle market.

As product supply chains grow ever more complex, the global disruptions witnessed during the pandemic revealed that most American businesses are not equipped to react quickly to sudden changes in trade policy.

If this level of uncertainty persists, we should expect investment spending to begin to crater—especially as rising prices start to erode overall demand.

And from now until July, when the 90-day pause on reciprocal tariffs reaches its deadline, there’s little reason to expect anything but more volatility weighing on overall market sentiment.

The index

The index is a weighted combined index of widely used business sentiment indexes:

  • PMI Manufacturing and Service Index from the Institute of Supply Management.
  • Composite PMI Index from S&P Global.
  • Small Business Index of Good Time to Invest from the National Federation of Independent Business.
  • Small Business Outlook Index from the National Federation of Independent Business
  • Dallas Fed manufacturing Outlook
  • Richmond Fed Manufacturing Index
  • Empire State Manufacturing Index
  • Philadelphia Fed Business Index
  • Kansas City Fed Index
  • New York Fed Business Leaders Survey

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

About Tuan Nguyen

@tuannguyen0709

Tuan Nguyen is an economist at RSM US LLP who analyzes high-frequency economic data within the United States and global economies to better understand the American middle market. Tuan’s data-driven economic analysis and insights enhance the ability of middle market companies to thrive in an increasingly competitive global economy. In December 2023, Nguyen and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Based in New York, Tuan works closely with the firm’s cutting-edge Industry Eminence Program to help senior analysts accelerate data-driven strategies in their line of business. His areas of focus include the comprehensive measurement framework for environmental, social and governance (ESG) financial reporting, as well as trends in behavioral, labor and network economics and in industrial organizations. Before joining RSM, he was a graduate researcher, lecturer and teaching assistant for the economics department of his alma mater, Northeastern University, where he taught macroeconomics, international economics and microeconomic theory.

Nguyen holds a Ph.D. in econometrics and quantitative economics from Northeastern University and holds a bachelor of arts in economics and international affairs from the University of New Hampshire, where he graduated summa cum laude and was recognized as an outstanding economics student.

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