Weekly Market Update by Retirement Lifestyle Advocates

First Quarter GDP Negative – But a Bright Spot?

         First quarter gross domestic product has been estimated to decline by .3% on an annualized basis.  The projection was made by the Bureau of Economic Analysis (Source:  https://www.bea.gov/news/2025/gross-domestic-product-1st-quarter-2025-advance-estimate)

         If you’re not familiar with the calculation utilized to calculate gross domestic product, it is consumer spending + investment + government spending + or – net trade (a trade surplus increases GDP while a trade deficit decreases GDP).

         The decline in gross domestic product is entirely attributed to an increase in imports, likely a result of tariffs threatened by the Trump administration, as importers looked to get their desired goods before the tariffs make them more expensive.

         Federal government spending, a component in the GDP calculation, was down while both consumer spending and investment rose.  Investment was up dramatically from the prior quarter.  Peter St. Onge, citing data from the Bureau of Labor Statistics (Source:  https://www.profstonge.com/p/gdp-goes-negative-and-its-glorious), noted that investment increased by 22% from the prior quarter.

         Ironically, the tariffs that drove the big increase in imports also spurred the big increase in investment which is just getting started.  At this point in time, according to St. Onge, there is $5 trillion in commitments for new investment in the United States.  The Trump administration is saying that as of last week there is another $3 trillion in investment committed bringing the real total to $8 trillion.

         $8 trillion in new investment would be a huge boon to GDP.  Since the current GDP is about $28 trillion, $8 trillion in new investment would be a huge number.  At this point in time, Taiwan Semiconductor has committed to invest $165 billion, Japan’s Softbank has pledged investment of $100 billion, Apple has committed to $500 billion in new investment, and Dubai and Saudi Arabia have combined to commit $2 trillion.

         While massive debt will be an economic drag moving ahead, likely limiting consumer spending, this new investment will be “GDP fuel.” It remains to be seen if it will be enough to offset diminishing consumer spending.

Survey:  Nearly Three in Four US Workers Living Paycheck to Paycheck

         A recent survey conducted by Talker Research found that 74% of US workers are now living paycheck-to-paycheck.  (Source:  https://studyfinds.org/young-workers-ready-to-quit-burnout-pay-concerns-driving-exodus/)

         The Talker Research survey was administered in March of this year, and more than 2,000 workers were contacted.  73% of Gen Z workers surveyed and 70% of Millennials surveyed were looking to change jobs or careers.  Gen Z’ers are defined as those workers born from 1987 through 2012, while Millennials are defined as workers born from 1981 through 1996.

         68% of Gen Z’ers state they are ‘burned out’; 61% of Millennials say the same thing.  47% of Gen X’ers (born from 1966 through 1980) report a burnout rate of 47%, and Baby Boomers (born from 1946 to 1965) report a burnout rate of 33%.

         33% of workers feel stuck in a daily grind of repetitive tasks.  Funny, I think that describes most work, doesn’t it?

         While I fully realize I’m not a Gen X’er or a Millennial, I can’t help but think the remote work movement (which is now dying) contributed to these feelings of burnout and now a return to a more ‘normal’ work environment with less autonomy is understandably less pleasant.

More Work Environment Changes Coming

         While some workers are feeling burned out, others are being replaced by technology.  Robots in the workforce are nothing new, but new robot uses are emerging.

         Morrisons, a major UK retailer, just introduced the company’s newest staff members – aisle roaming robots.  (Source:  https://www.dailymail.co.uk/sciencetech/article-14668561/Major-UK-retailer-brings-ROBOTS-undertake-crucial-supermarket-task.html)

         The company is trying out “Tally” robots at three of their locations.  The robot’s job is to monitor how products are being displayed on the store shelves.  Using computer vision technology and AI, the robot’s responsibilities include looking for out-of-stock items, identifying pricing errors, and finding products that are misplaced.

         Shortly before introducing the newest staff members, Morrisons announced the company would be permanently closing dozens of stores and cafés. 

         The “Tally” robots are produced by a US company, Simbe Robotics.  The robots are already being used by retailers Carrefour, BJ’s, Albertsons, Shoprite, and Kroger.

         According to the manufacturer, the robots can capture up to 30,000 items per hour with 99% accuracy.

McDonald’s, Starbucks Report Lower Sales and Earnings

         Both McDonald’s and Starbucks reported lower sales during the first quarter of 2025.  McDonald’s saw same-store sales decline by 3.6%, driven by fewer customers visiting their restaurants.  (Source:  https://realinvestmentadvice.com/resources/blog/mcdonalds-and-starbucks-confirm-eroding-sentiment/)

         That was the worst showing by McDonald’s since 2020, when many states had implemented lockdowns. 

         Starbucks saw the company’s revenues fall by 4% during the first quarter of the year. 

         Executives at both companies cited similar themes.  Lower-income households, hit by inflation, are more frugal in their discretionary spending.  Starbucks CEO, Brian Niccol, said, “Starbucks faces challenges in reviving its business…..with inflation and uncertainty driving up costs and dampening U.S. demand.”

         Both companies are finding it difficult to pass on higher costs to their customers and are reporting that consumer consumption is down.   

RLA Radio

         This week’s RLA radio program features an interview that I did with Mr. Charles Hugh Smith, author and blogger.  We discuss the eight economic headwinds that Charles sees for the US economy.  The interview is posted and available now by clicking on the "Podcast" tab at the top of this page.

Quote of the Week

“If work is so terrific, how come they have to pay you to do it?”

                                                      -George Carlin