SCOTT SIMON, HOST:
Some news about the job market this week that is better than expected, and this was encouraging after several days of more gloomy economic news. On Wednesday, we learned the U.S. economy shrank in the first three months of the year, and consumer confidence has fallen to its lowest level since the onset of the pandemic. NPR's Scott Horsley joins us. Scott, thanks so much for being with us.
SCOTT HORSLEY, BYLINE: Good morning. Good to be with you.
SIMON: Let's begin with this positive note because even with the backdrop of the president's trade war, employers continued to add a lot of jobs last month. This sounds encouraging.
HORSLEY: Yes, that's right. Employers added 177,000 jobs in April - not quite as many as the month before, but more than forecasters had expected. And the unemployment rate held steady at a low 4.2%. That suggests that even with all the tariff chaos of the recent weeks, employers are still hiring. Wages are also still going up. So with more people working and paychecks getting bigger, that should provide some juice to keep the economy moving forward.
SIMON: But we also learned this week that the economy went backwards a little bit January through March. What do those numbers disclose?
HORSLEY: Right. Gross domestic product, which is the broadest measure of the economy, contracted in the first three months of the year after fairly strong growth in the waning months of the Biden administration. In particular, consumer spending slowed down. And it's really a two-speed economy here. Wealthy people are still spending pretty freely, but the rest of the country is tightening its belt. One example is McDonald's. A lot of customers there are budget-conscious, lower-middle-income people. This week, the chief financial officer, Ian Borden, said McDonald's U.S. sales had dropped more than 3.5% in the early months of this year.
IAN BORDEN: The big thing is people are just visiting less and that speaks to, I think, the pressure on consumers, consumer sentiment, obviously, that the things that we've been talking about for a while now - inflationary pressures, interest rates that are weighing, obviously, particularly on lower consumers and that spilling over into middle-income consumers right now.
HORSLEY: McDonald's is expanding its discount menu to try to bring more customers through the doors, but, you know, as an economic indicator, that drop in sales at my old employer McDonald's is not such a happy meal.
SIMON: Well, and they miss you still. General Motors, another iconic U.S. company, also had some sober and economic news this week. What did they say?
HORSLEY: Yeah. GM projected that the president's tariffs could cost the company as much as $5 billion this year. The company hopes to mitigate some of that by ramping up production at a truck plant in Indiana, shifting where some of its parts come from. But this is a reminder that a lot of domestic manufacturers rely on imports for parts and for raw materials, and they are struggling with Trump's tariffs. Automakers cut almost 5,000 jobs in the U.S. last month. Factories overall are in a slump right now. Tim Fiore conducts a monthly survey of factory managers for the Institute for Supply Management, and he's hearing a lot of complaints about how the trade war is driving prices up and driving business away.
TIM FIORE: This is not good. This is just another confirmation that tariffs are probably taking us in the wrong direction. We could be in a growth profile here, if not for the administration trying to change the way the entire world does business.
HORSLEY: As the trade war heated up last month, we saw factory orders, factory output and factory employment all come down.
SIMON: Yet the stock market ended the week on a high note. What are investors figuring?
HORSLEY: Yeah. This is one of those weeks when you can see the economic glass as half full or half empty, depending on which of the indicator numbers you look at and where you think the trade war is going. For the moment, investors are drinking from the half full glass, but that could easily change next week.
SIMON: NPR's Scott Horsley. Thanks so much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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