American Economy Contracts
Thursday, April 31st, 2025
World Events — Are American Investors Right To Shrug Off the Trade War?
The Economists
American stock investors’ cautious optimism appears fragile as escalating U.S.-China trade tensions and supply chain disruptions pose significant risks. While the S&P 500 has declined only 2.4% since Trump’s “Liberation Day” tariffs and markets are not yet pricing in a recession, the tariffs’ full economic impact remains delayed, with importers’ stockpiles and shipping lags masking the impending strain on supply chains and consumer prices. Federal Reserve rate cuts may cushion demand but cannot resolve supply shortages or tariff-induced inflation, and while Trump has temporarily eased some tariffs (e.g., auto exemptions), the broader trade war’s unpredictability and China’s export declines threaten to destabilize markets further, suggesting investors’ calm may hinge on a swift de-escalation that is far from guaranteed.
Tech — Can Shien and Temu Survive Trump’s Trade War?
The Economists
Shein and Temu face existential challenges from Trump’s trade war, as their ultra-low-price business model-built on China’s supply chains and the now-defunct de minimis exemption-collides with 145% tariffs and new $100–$200 per-package fees, forcing drastic price hikes (e.g., Shein items surging up to 377%) and driving away cost-sensitive Gen Z shoppers. While both firms are diversifying supply chains (e.g., Shein to Turkey/Mexico, Temu to Southeast Asia) and markets (prioritizing Europe), China’s government reportedly pressured Shein to halt supply-chain shifts, and their reliance on Guangdong factories for rapid, cheap production limits near-term adaptability. Though Temu’s “local-to-local” pivot and Shein’s London IPO plans offer partial mitigation, their survival hinges on untangling from China’s supply chains faster than tariffs erode U.S. demand-a race they’re ill-equipped to win without sacrificing core cost advantages.
Business — Can Starbucks Be Turned Around?
The Economists
Starbucks’ turnaround under CEO Brian Niccol remains precarious as the coffee chain faces persistent same-store sales declines (down 1% globally, 2% in the U.S. for Q2 FY25), rising costs from labor expansion and store revamps, and tariff-driven coffee price hikes exacerbated by Trump’s trade policies. While Niccol’s “Back to Starbucks” strategy-simplifying menus, reintroducing “third space” amenities, and boosting barista staffing-has stabilized China’s sales (flat after prior declines), U.S. customer traffic fell 4%, and net profit halved year-on-year, underscoring the challenge of reviving growth amid trade disruptions and weakened consumer sentiment.
Health — Carb Loading
Carb loading is a nutrition strategy used primarily by endurance athletes to increase glycogen stores in the muscles and liver by consuming a high-carbohydrate diet (typically 2.3–5.5 grams per pound, or 5–12 grams per kg, of body weight per day) while reducing exercise in the days leading up to an event, with the goal of improving performance in activities lasting more than 90 minutes. While several carb loading protocols exist-from classic 6-day plans to simple 1-day approaches-they all focus on temporarily increasing carbohydrate intake and decreasing exercise to maximize glycogen storage. Common mistakes include carb loading when unnecessary (such as for short-duration or high-intensity activities), consuming too much fat or fiber (which can cause weight gain or stomach discomfort), failing to track carbohydrate intake accurately, introducing unfamiliar foods that may upset digestion, and not tapering exercise appropriately. To carb load effectively, athletes should focus on high-carb, low-fat, and low-fiber foods that are familiar, such as white bread, pasta, fruit juices, and lean proteins, while avoiding high-fat or high-fiber foods like creamy sauces, beans, and whole grains, and should only use this strategy when the event duration and intensity warrant it.
Song Rec — Birds of a Feather (iLab Remix)
Quote of the Day
“Let everything happen to you, Beauty and terror, just keep going. No feeling is final.” - Rainer Maria Rilke