by Konstantin Tskhay​

June 15th

🧭 Navigating Uncertainty: The Economy, Your People, and What Comes Next

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Obviously, not investment advice.

Hey, All!

We are about 70% done with the new project, so I am ramping up my thought leadership.

And, in this issue, I have something special for you:

The State of the Economy and how it affects us, People's People.

We are now 25% into 2025 and kicking off the jolly Q2 of the calendar year. And, if there is one word to describe Q1, it's UNCERTAINTY.

And no, I am not talking only about tariffs, though those are gripping the business world and broader trends.

So, we will start by reviewing the different forces in the market today and how they might affect organizations and HR.

Let's dive in.

First things first: Tariffs.

I don't think there is a reason to beat around the bush here.

Since taking office, President Trump has driven the entire business world into volatility with his tariff announcements.

Here is a quick timeline:

• Jan 20: Trump inaugurated for a second term
• Feb 1:
  • Announced 25% tariffs on all imports from Canada and Mexico
  • 10% tariff on Canadian energy
  • 10% tariff on Chinese imports
• Feb 3:
  • 1-month delay on Canada/Mexico tariffs after talks with Trudeau and Sheinbaum
  • Mexico agreed to deploy 10,000 troops to its northern border
  • Canada promised to appoint a "fentanyl czar" and boost border efforts
• Mar 4:
  • Tariffs on Canada and Mexico officially go into effect
  • Canada announces retaliatory tariffs
• Mar 4:
  • Chinese tariff increased to 20%
• Mar 5:
  • Trump exempts USMCA-compliant auto imports (85% of Mexican cars) from new auto tariffs for 1 month
• Mar 6:
  • Tariff delay extended to April 2 for all USMCA-compliant goods from Mexico and Canada after new negotiations
• Mar 26:
  • Announced 25% tariff on all foreign-made cars and key parts, effective April 2
• Apr 2 ("Liberation Day"):
  • TBD
  • But, Trump did mention that everyone "will be very pleased" 🤔

This, of course, resulted in up, down, and all around markets overall, despite us all knowing very well that Trump loves the word tariffs.

And... Markets absolutely hate it.

But, if anything, the world is telling us that we are following the path of Trump 1.0 in the markets, at least thus far.

With S&P500 and Nasdaq shaving 8-10% since the start of the year. 🩸

We expected this correction from the investment market perspective in Q1, with Warren Buffet and other notable hedge funds going up to 25% cash right at the start of the year.

What does this all mean for organizations?

1. Risk-off behaviour: Investors are less willing to part with their cash unless there is indisputable market leadership and potential.
   1. Only the most productive companies survive
   2. Companies relying on finding have to cut costs
   3. Job market becomes stale with people looking for roles
2. Manufacturing confusion: Should we sell you the goods now or wait until the tariffs are in place to produce higher prices?
   1. Delays in ordering parts
   2. Temporary layoffs or slowdown in hiring to adjust
   3. Supplies that exist are in limbo

On the latter, one furniture manufacturer took 1.5 months to provide my client with pricing and mentioned that they may increase the prices up to 25% due to tariffs.

As you can see, presidential actions affect companies and the broader economy.

Speaking of economy...

Overall, we are doing okay.

Not amazing, but okay.

The final GDP growth results came slightly above expectations, but we are seeing a notable decline from what was delivered last year.

We also see a decline in job creation as indicated in this report from the Bureau of Labour statistics. The latest number came in at 7.57M versus 7.69M expected.

ADP's Non-Farm Employment Changes follow a similar trajectory of decline but to a lesser degree.

Also, here is the Non-Farm Employment Change.

And the unemployment rate is pushing for the highs of the target range of 4%.

But earnings remain relatively stable for those employed.

And inflation continues to decline towards the 2% target:

The consumer feels the strain of low employment opportunities and a lack of affordability due to inflation over the last several years.

Just look at the March reading.

So, what does it all mean for HR and organizations?

We are seeing a weak consumer with a weak job market.

1. Finding talent is easier:​
   With fewer jobs out there and more free agents, your roles will attract more applicants—and faster. This is especially true in HR and recruiting, where many experienced people are actively looking right now.
2. Keeping talent is also easier:​
   When consumer confidence is low and unemployment is creeping up, people think twice before making a risky job switch.
3. Raise expectations can cool down:​
   I'm not saying you should pull back on raises, but the market pressure to make big comp adjustments is softening. The power dynamic has shifted.
4. Restructuring is on the table:​
   Companies underperforming or operating inefficiently may take this opportunity to realign teams, shed headcount, and refocus on productivity. Also, read this as cost savings when it comes non
5. Performance culture prevails:​
   Did you already notice your CEO shouting from the top of their lungs about performance? For the company to be productive, it needs to manage performance effectively, which means using data to move away from "Meets Expectations" scales to quantifying actual expectations of the roles.
6. Return to office pushes: ​
   Having the power, many organizations can call the talent back into the office. Given the alternative of quitting and going into the labour market, employers can mandate in-office work with much less impact than if they did so a few months ago.
7. Engagement changes:​
   Of course, we will likely see changes in engagement and decreased morale. When you see your savings evaporate with market movement, increases not coming through, and start to feel the pressures of months of accelerated inflation, it's easy to feel down.

But once again, we are not in a full-blown recession. Yet.

Will we be?

Only time will tell, but currently, we seem to be okay.

Let's see what the Liberation Day holds.

K

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Whenever you’re ready, there are 2 ways I can help you:

#1

If you’re still looking to get started in People Analytics, I recommend starting with my affordable course:

​Practical People Analytics: Build data-driven HR programs to 10x your professional effectiveness, business impact, and career. This comprehensive course will teach you everything from building an HR dashboard for business results to driving growth through more advanced analytics (i.e., regression). Join your peers today! ​
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#2

If you are looking for support in your human capital programs, such as engagement, retention, and compensation & benefits, and want to take a more data-driven approach, contact me at Tskhay & Associates for consulting services. Or simply reply to this email!