Air pocket in 3, 2, ...

The economic data we’ve been given of late has told a pretty clear story: Businesses have been pulling forward spending to avoid tariffs while freezing investment decisions and hiking prices. Consumers have been listening to the tariff discourse and are deciding that they, too, will pull back on some of their spending. It suggests the next round of indicators will show that we’ve hit quite the air pocket.

— Geert De Lombaerde 
 
• Tariff heartburn surfaces in CFOs’ hiring plans

• Uncertainty in need of a plot twist: Tariffs, trade wars and a disappearing trucking prebuy
 

Still looking through

And after that turbulence?

Maybe it’s back to something resembling the normal course of business. A handful of big corporate names have recently said they intend to spend billions of dollars to make sure they can profit from key structural trends. On the one hand, smaller firms might throw up their hands and say they can’t compete at that level. The strong get stronger and all that. On the other, there will be tremendous supplier and job networks attached to these long-term investments from the likes of GE Aerospace and Schneider Electric. That’s something to hang our hats on.

A similar mid- to long-term theme showed up in the Dallas Fed’s quarterly survey of oil-and-gas executives. Respondents groused plenty about the uncertainty being caused by the Trump administration as well as the higher prices for some equipment they’re already paying. But the share of leaders saying their capex budgets will grow in the coming year barely budged from December’s level.

The takeaway here: Strategic plans aren’t being tossed into trash cans and the bottom isn’t falling out of this economy.

• J&J to invest $55B in U.S. manufacturing and R&D

• Hyundai announces $5.8B Louisiana steel mill for auto supply
 

“We sense a bit of unease in some supply chains
as customers deal with the current uncertainty.
However, we are seeing normal buying
patterns from many of our customers.”

So said Geoff Gilmore, president and CEO of Worthington Steel, discussing his team’s quarterly results March 20. Another sign that staying the course might be the preferable path in the coming weeks.
 

In the meantime

“Give us a direction and we’ll handle what needs to be done from our end to make sure we’re competitive and our customers are still competitive.” That’s the attitude of Richard Demirjian, president of Illinois-based commercial vehicle parts maker TCCI, in an IndustryWeek story outlining three manufacturers’ responses to tariff uncertainty.

• How supply-chain executives are adapting to tariffs

• Strategic insights for manufacturers needing to navigate cost pressures
 

+7.0

The change in the raw materials prices component of March's Manufacturing PMI report

It was the largest move of any element of the broader index, which returned to contraction after two months of showing growth, and marked the sixth straight month respondents said they are paying more for their inputs.

What we'll be watching

In the short term, it’s Friday’s payrolls report for March. I want to see if uncertainty has already pushed a meaningful number of C-suites to go beyond pausing and to start cutting. Beyond that, the first few days of Q1 earnings season will feature industrial distributor Fastenal and aluminum titan Alcoa. What type of tone might they set?