The CEO Macro Briefing Book

Macroeconomic Outlook

• From reflation to stagflation... In a sense, Q1’s GDP report reveals the inflection point the US economy is in. On one hand, private demand started the year on a robust footing, but the headline number was distorted by a surge of imports. Expectations of 2025 growth have also universally lowered but are highly dependent on the timing and implementation of any tariffs.
• …as the Fed finds itself in a difficult position. Tariffs have complicated the rate cut trajectory since any rate cuts to support growth may risk pushing prices up even higher. For now, markets anticipate the Fed will cut rates more than expected at the start of the year with the labor market as a key deciding factor.

Operating enviornment

• Consumers are increasingly bifurcated and anxious. Nearly half of all spending is now driven by the top decile of consumers, while lower-income consumers show increasing signs of stress. Consumer sentiment has fallen to very low levels, as households expect higher prices in the near term.
• Labor market conditions hold despite government layoffs. Hiring remains a bright spot in the labor market even as job openings and wages cool. A more uncertain environment has led to more workers expecting near-term job losses.

Markets & Deal Activity 

• Equities and Treasuries sell-off amidst policy uncertainty. April’s sell-off was notable for affecting past leaders like the Mag 7, the hardest hit segment but quickest to recover. Still, US exceptionalism is being called into question, as traditional “safe havens” like Treasuries and the US dollar have also sold off, while markets outside the US have outperformed.
• Dealmaking momentum dented by increasing uncertainty. M&A sentiment has fallen to the lowest level in years as dealmakers adopt a wait-and-see approach. PE activity has fared better, helped by an increase in exit volumes. VC dollars are concentrated in larger, AI-related deals.

Politics

• After ‘Liberation Day,’ POTUS 47 faces more checks to policy. The ambitious plans of Trump’s second term may be tempered by increasingly negative net favorable ratings, historically high debt levels and deficit spending, and an increasingly anxious bond market.

• What business conditions say about the M&A activity in 2025 and how policy can affect dealmaking activity.
• A deeper look into the private equity space and the spillover effects of the relative lack of exits.
• A review of recent IPO activity how much VC activity is still AI-related