MW It's Trump's economy now - and businesses are anxious about tariffs and federal spending cuts

By Jeffry Bartash

Key S&P survey falls to lowest level in more than two years

A burst of optimism among companies after Donald Trump won the U.S. election has faded, as business leaders grapple with potentially negative policies of the new White House.

A survey of top executives who buy supplies for service-oriented companies slid to a 25-month low of 49.7 in February from 52.8 in January, S&P Global said Friday.

The S&P index had surged in December after Trump's win on the expectation that the old-now-new-again president would pursue business-friendly policies.

Yet the president's constant threats of tariffs on foreign countries has also unnerved businesses. Higher tariffs could raise their own costs, and if other countries retaliate, it could cost American exporters significant sales.

Service companies employ most Americans in areas such as banking, health care, travel and recreation.

A similar survey of manufacturers, however, rose to an eight-month high of 51.6 from 51.2 in the prior month. Manufacturers have been in a two-year slump.

Yet S&P linked the improvement to companies ordering imported goods and supplies ahead of potential Trump tariffs, suggesting "merely a temporary boost."

Any number above 50 signals growth; below that, contraction.

The S&P surveys are the first indicators of each month to give a sense of how the U.S. economy is performing.

Big picture: The economy has grown rapidly the past two years despite high interest rates and lingering inflation. A strong labor market has kept unemployment low and allowed Americans to spend enough to fend off a recession.

Yet businesses are waiting for more clarity on the White House plans for taxes, regulations, tariffs and immigration enforecement before making big plans.

The uncertainty could restrain economic growth early in the new year.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX fell again in Friday trading in the wake of cautious statements by Walmart $(WMT)$ on the state of the economy.

-Jeffry Bartash

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February 21, 2025 09:56 ET (14:56 GMT)

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