May 2025 Economic Update: Top 9 Takeaways You Need to Know Now

During our May 2025 Market Pulse webinar, our panelists discussed emerging trends in and the impact of the economy on the fintech industry. 

To open the conversation, Wescott Strategic Advisors President Dr. Robert Wescott shared a macroeconomic update, dissecting the latest market changes and trends to watch, from the stock market to the housing market.

Although sentiment shows economic uncertainty is running rampant, Dr. Wescott shared hard data that points to an encouraging economic horizon.¹ Find a snapshot of key takeaways below, and make sure you register for next month’s webinar so you never miss up-to-the-minute insights from top economists. 

Top 10 Takeaways: May 2025

1. Hard data is strong, but confidence is cracking.
   Hard data is quantifiable, measurable information that demonstrates how people are behaving, such as consumer spending. While indicators like job growth and retail sales are holding up, sentiment from both consumers and businesses is slipping, creating a growing gap between reality and perception.

2. Stock market losses are threatening the wealth effect.
   With $4 trillion in household equity wealth wiped out in recent weeks, the psychological boost from portfolio gains, known as the wealth effect, may reverse, pulling down consumer confidence and spending, especially on big-ticket items. The stock market has revived in the last week or so and the risk may become less important, but it’s something to keep an eye on.

3. Consumers are spending sooner — and that might backfire.
   Retail sales jumped in March, but many consumers may be accelerating purchases to get ahead of expected price hikes and setting the stage for slower spending in summer. Notably, retail sales declined in April as underlying consumer spending has been slipping.

4. Discretionary spending is showing cracks.
   McDonald’s just posted its biggest sales decline since early COVID. This could be a sign that travel, dining, and hospitality could see further drops as households tighten budgets.

5. Tariff uncertainty is distorting the economy.
   Businesses are front-loading imports ahead of potential tariff hikes, artificially inflating short-term activity while injecting volatility into trade and inventory planning.

6. A K-shaped economy is getting sharper.
   Those with investments and assets are staying afloat — or even thriving — while others are slipping behind. Credit card data reveals rising financial strain for many.

7. Student debt is a sleeping economic drag.
   Around 43% of borrowers haven’t resumed their federal student loan payments. These borrowers could see significant decreases in their credit scores, and the resulting hits could slow homebuying and shave 0.2 percentage points off overall consumer spending.

8. Housing affordability remains in a rut.
   Mortgage rates aren’t falling fast enough to boost affordability. Homebuyers remain sidelined, and builder confidence is low, stalling momentum in the housing market.

9. “Animal spirits” are turning cautious.
   Emotional drivers of growth, otherwise known as animal spirits, — optimism, confidence, risk-taking — are fading. If fear drives business pullbacks, it could spark the very slowdown everyone is hoping to avoid.

Keep Your Business Goals Within Sight

Need your business to run better and more efficiently? Reach out at riskadvisors@equifax.com.  

We hope you will join us for our June 2025 Market Pulse webinar, where our talented and dynamic panel will discuss current sentiments around economic uncertainty. To ask questions in real time and gain deeper insights before anyone else, you must be there. Don’t miss it!

Interested in learning how personalized insights can drive your business forward? Sign up for a complimentary 60-minute Market Pulse Advisory with one of our experts. 

Find our monthly Small Business Insights, National Consumer Credit Trends reports, the Market Pulse podcast, and more at our Market Pulse hub. 

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Source:

1. Equifax, May 2025 Market Pulse Webinar