In other words, companies were already carrying extra inventory before President Trump unveiled his aggressive view on tariffs.

“Excess imports combined with inventory rundowns gives companies about 1 to 2 months before the tariff impacts start to bite,” Chadha said.

So while Chadha’s estimate of “about 1 to 2 months“ of buffer for S&P 500 companies is arguably significant, it doesn’t even buy a quarter’s worth of time.

In a separate analysis of retailer inventories, BofA analysts expressed skepticism toward the idea that warehouses are well stocked. From their note (emphasis added):

“There was a surge in imports of consumer goods into the U.S. in March, according to Census Bureau data. Does this mean retailers' inventories are set to swell? In our view, no. The ratio of retailers' inventories to their monthly sales was not especially high in recent data to begin with. And at the same time, consumers also appear to have been buying ahead, with Bank of America internal data showing strength in consumer durables spending in March and April. Moreover, Bank of America internal data on retailers' payments to transportation and shipping companies does not suggest a big ramp up in inventories. And it appears container shipments into Los Angeles are likely down in May. So we think it is possible retail inventories may actually look 'lean' in coming months.”

It’s worth noting that the most recent retail inventories data from the Census only goes through February. So those particular figures are a bit stale.

That said, BofA makes a good point about consumers “buying ahead.” This suggests that a lot of goods left warehouses as quickly as they came in. This is consistent with government data on consumer spending, which has been very strong.

Goldman Sachs’ David Kostin analyzed the S&P 500 and came to a similar conclusion.

“1Q data do not show a buildup of inventories,” Kostin wrote on Friday. “The S&P 500 inventory to sales ratio declined year/year, with the largest declines in the Autos and Consumer Durables & Apparel industries. However, many retailers have yet to report 1Q results.”

The March retail sales report showed an unusual spike in autos sales, which supports the idea that consumers pulled forward purchases to front-run tariffs.

To Kostin’s point about fresh data, retailers will be announcing their Q1 results in the coming weeks. On Thursday morning we get Walmart’s earnings. That day also comes with the April retail sales and March inventories reports. Everyone will be watching for clues about inventory builds as well as how much inventory was cleared out by sales pulled forward.

Even if we had a more clear understanding of inventory levels, the bigger issue continues to be the uncertainty around tariffs.

If we ultimately get very high tariffs, then inventory stockpiling would’ve been a good move. If any new tariffs are low, then inventory stockpiling could prove to be a costly error.

There’s also the possibility that proposed tariffs or any tariff deals continue to get delayed, and this uncertainty nightmare persists.

These are uncertain times.

The economic data is sending ambiguous signals. Managers are having an unusually hard time forecasting the near future for the businesses. And investors and analysts are having an unusually hard time modeling where stock prices are headed in the coming months and quarters.

It’s periods like this where long-term investors have an edge: Time.

“Nobody knows what the market is going to do tomorrow, next week, next month,” Warren Buffett said last week. But as he often does, he argued, “The long-term trend is up.“

There’s basically three scenarios investors always have to consider: 1) Things improve from here, and the market goes up; 2) Things get worse before they get better, which means markets could fall before resuming a more firm rally; or 3) Things get worse and never get better.

If we’re facing scenario 3, then we may have bigger problems than stocks not recovering. But scenario 3 has never played out.

Scenarios 1 and 2 favor long-term investors. Maybe things get worse before they get better. (Note: Timing market bottoms is nearly impossible.) But staying long the stock market covers you in case the low of this cycle is behind us.

There were several notable data points and macroeconomic developments since our last review:

🏛️ Fed holds rates, Powell warns on tariffs. In its monetary policy announcement on Wednesday, the Federal Reserve left its target for the federal funds rate unchanged at a range of 4.25% to 4.5%.

From the Fed’s policy statement: “Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated. … Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”

Here’s what Fed Chair Powell said about tariffs during the post-meeting press conference: “If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.“

For more on how tariff rhetoric is affecting the economy, read: CHART: The confusing state of the economy 📊 and We're gonna get ambiguous signals in the economic data 😵‍💫

💳 Card spending data is holding up. From JPMorgan: “As of 29 Apr 2025, our Chase Consumer Card spending data (unadjusted) was 2.2% above the same day last year. Based on the Chase Consumer Card data through 29 Apr 2025, our estimate of the US Census April control measure of retail sales m/m is 0.46%.”

From BofA: “Credit and debit card spending per household increased 1% year-over-year (YoY) in April after a gain of 1.1% YoY in March, according to Bank of America aggregated card data. Seasonally adjusted (SA) spending per household was flat month-over-month (MoM), with the seasonally adjusted annualized growth rate (SAAR) remaining at 1.6% again for April.“

April spending is likely being boosted by consumers pulling forward purchases in an attempt to front-run tariffs.

For more on consumer spending, read: We're gonna get ambiguous signals in the economic data 😵‍💫 and Americans have money, and they're spending it 🛍️

💼 Unemployment claims tick lower. Initial claims for unemployment benefits fell to 228,000 during the week ending May 3, down from 241,000 the week prior. This metric continues to be at levels historically associated with economic growth.

For more context, read: A note about federal layoffs 🏛️ and The labor market is cooling 💼

👎 Inflation expectations mixed. From the New York Fed’s April Survey of Consumer Expectations: “Median inflation expectations were unchanged at the one-year-ahead horizon at 3.6% and increased by 0.2 percentage point at the three-year-ahead horizon to 3.2%, the highest reading since July 2022. In contrast, median inflation expectations decreased by 0.2 percentage point at the five-year-ahead horizon to 2.7%.”

The introduction of tariffs as proposed by president-elect Donald Trump would be inflationary. For more, read: 5 outstanding issues as President Trump threatens the world with tariffs 😬

⛽️ Gas prices tick lower. From AAA: “In the lull between spring travel and the kick-off to summer, gas demand slid week over week, dropping the national average three cents to land at $3.15. OPEC+ (the group of oil-producing countries) announced Saturday that it will increase output again in June, widening the supply surplus, which could cause crude prices to continue to fall. This means road trippers would see lower prices at the pump this summer. The national average is nearly 49 cents less than it was one year ago today.”

For more on energy prices, read: Higher oil prices meant something different in the past 🛢️

🚗 Used car prices rise. From Manheim: “Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were much higher in April compared to March. The Manheim Used Vehicle Value Index (MUVVI) increased to 208.2, an increase of 4.9% from a year ago and also higher than March levels by 2.7%. This is the highest reading for the index since October 2023.”

🤑 Wage growth is cool. According to the Atlanta Fed’s wage growth tracker, the median hourly pay in April was up 4.3% from the prior year, up from the 4.2% rate in March.

For more on why policymakers are watching wage growth, read: Revisiting the key chart to watch amid the Fed's war on inflation 📈

👎 Labor productivity falls. From the BLS: “Nonfarm business sector labor productivity decreased 0.8% in the first quarter of 2025 … as output decreased 0.3% and hours worked increased 0.6%. … This is the first decline in nonfarm business sector labor productivity since the second quarter of 2022. From the same quarter a year ago, nonfarm business sector labor productivity increased 1.4% in the first quarter of 2025.”

For more, read: Promising signs for productivity ⚙️

🏠 Mortgage rates flat. According to Freddie Mac, the average 30-year fixed-rate mortgage was unchanged at 6.76%. From Freddie Mac: “Mortgage rates stayed flat this week. At this time last year, the 30-year fixed-rate mortgage was 30 basis points higher and purchase applications were declining. Today, rates are lower and have remained stable for weeks, sparking continued increases in purchase applications.”

There are 147.8 million housing units in the U.S., of which 86.1 million are owner-occupied and about 34.1 million of which are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to movements in home prices or mortgage rates.

For more on mortgages and home prices, read: Why home prices and rents are creating all sorts of confusion about inflation 😖

🤷🏻 Services surveys were mixed. From S&P Global’s May U.S. Services PMI: “While tariff announcements mean manufacturing dominates the news, a worrying backstory is developing in the vastly larger services economy, where business activity and hiring have come closer to stalling in April amid plunging business confidence. Business and consumer facing service providers alike, and especially financial services firms, are reporting markedly weaker growth prospects, citing intensifying uncertainty over the economic outlook amid recent tariff announcements and ongoing federal spending cuts.“

Meanwhile, the ISM’s Services PMI improved slightly in April.

Keep in mind that during times of perceived stress, soft survey data tends to be more exaggerated than actual hard data.

For more on soft sentiment data, read: The confusing state of the economy 📊 and What businesses do > what businesses say 🙊

🚢 Trade deficit balloons as imports surge. Here’s Bloomberg on March Census data: “The US trade deficit widened to a record in March as companies rushed to import products including pharmaceuticals as the Trump administration readied sweeping tariffs. The goods and services trade gap grew 14% from the prior month to $140.5 billion, Commerce Department data showed Tuesday. … Imports of consumer goods climbed by the most on record, primarily due to the largest-ever inflow of pharmaceutical preparations. Imports of capital equipment and motor vehicles also increased.

From Bloomberg’s Michael McDonough: “Pharmaceutical imports led the surge, soaring to a record high in March as U.S. companies rushed to stock up before tariffs hit. Imports of medicines, vaccines, and blood-related products saw the biggest increases, highlighting companies' urgency to secure supplies.“

For more on the implications of purchases pulled forward ahead of tariffs, read: A BIG economic question right now 🤔 and CHART: The confusing state of the economy 📊

⛓️ Supply chain pressures remain loose. The New York Fed’s Global Supply Chain Pressure Index — a composite of various supply chain indicators — ticked lower in April and remains near historically normal levels. It's way down from its December 2021 supply chain crisis high.

For more on the supply chain, read: We can stop calling it a supply chain crisis ⛓

🏢 Offices remain relatively empty. From Kastle Systems: “Peak day office occupancy was 63.3% on Tuesday last week, down six tenths of a point from the previous week. New York and Washington, D.C. hit new single-day record highs, up 2.7 points to 69.3% and one full point to 63.4%, respectively. Several other cities experienced losses, led by Dallas, where occupancy on Tuesday fell 4.4 points to 67.1%. The average low was on Friday at 34.8%, up more than nine full points from the previous week’s holiday.”

For more on office occupancy, read: This stat about offices reminds us things are far from normal 🏢

📈 Near-term GDP growth estimates are tracking positive. The Atlanta Fed’s GDPNow model sees real GDP growth rising at a 2.3% rate in Q2.

🚨 The tariffs announced by President Trump as they stand threaten to upend global trade — with significant implications for the U.S. economy, corporate earnings, and the stock market. Until we get some more clarity, here’s where things stand:

Earnings look bullish: The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices.

Demand is positive: Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation, while cooling, also remains positive, and the Federal Reserve — having resolved the inflation crisis — has shifted its focus toward supporting the labor market.

But growth is cooling: While the economy remains healthy, growth has normalized from much hotter levels earlier in the cycle. The economy is less “coiled” these days as major tailwinds like excess job openings have faded. It has become harder to argue that growth is destiny.

Actions speak louder than words: We are in an odd period given that the hard economic data has decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continue to grow and trend at record levels. From an investor’s perspective, what matters is that the hard economic data continues to hold up.

Stocks are not the economy: Analysts expect the U.S. stock market could outperform the U.S. economy, thanks largely due to positive operating leverage. Since the pandemic, companies have adjusted their cost structures aggressively. This has come with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth.

Mind the ever-present risks: Of course, this does not mean we should get complacent. There will always be risks to worry about — such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, cyber attacks, etc. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets.

Investing is never a smooth ride: There’s also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect to experience as they build wealth in the markets. Always keep your stock market seat belts fastened.

Think long term: For now, there’s no reason to believe there’ll be a challenge that the economy and the markets won’t be able to overcome over time. The long game remains undefeated, and it’s a streak long-term investors can expect to continue.

A version of this post first appeared on TKer.co