First Quarter 2025 Market Commentary and Economic Outlook

The first quarter of 2025 started strong but saw US markets reverse course as the Trump administration’s tariff policies grabbed the headlines. Meanwhile, international stocks as well as bonds posted gains for the quarter, offsetting some of the negative domestic returns in diversified portfolios. While economic indicators such as inflation and unemployment remain in a reasonable range, the uncertainty around trade policy and what high tariffs will mean for inflation and spending are weighing heavy on the markets as we roll into April.

You can read East Bay’s full analysis HERE or watch Mario’s video presentation here.

Check out The Kitchen Table Finance Epsidoe on this HERE (this video is posted below).

Summary

• U.S. stocks were down for the quarter, falling -4.7% (Russell 3000).
• Developed International stocks provided welcomed growth by increasing 6.2% during the quarter (MSCI World ex USA).
• Fed takes a cautious approach to future rate cuts as projections for inflation, growth, and employment are uncertain.

Glass Half – Full

• Global diversification boosted returns for U.S. Investors in Q1.
• Germany is dramatically increasing defense spending while the UK is spending on housing and infrastructure.
• Recent macroeconomic data suggests the U.S. labor market remains solid.
• Inflation declined to 2.8% in its latest reading from February 2025.

Glass Half – Empty

• Uncertainty as it relates to tariffs and impact of global trade wars.
• U.S. Consumer sentiment and confidence have declined.
• Growing skepticism around the timing and feasibility of future Fed rate reductions
• U.S. stock markets are off to a sluggish start in Q1, heavily impacted by the Mag 7.

Need help making sense of it all?

Schedule a chat with the team at Shotwell Rutter Baer—they’re always happy to help you cut through the clutter and make smart financial decisions for your future.
 Visit SRB’s website to schedule your appointment.

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