The U.S. economy is facing a challenging landscape as key sectors grapple with the fallout from trade policies and fluctuating consumer confidence. The first quarter of 2025 saw significant developments in the shale oil and gas industry, while companies like Skechers are withdrawing financial guidance amid rising tariffs and economic uncertainty.
According to a report from Enverus, mergers and acquisitions (M&A) in the U.S. shale industry kicked off the year with a total of $17 billion in deals, marking the second-best quarter since early 2018. However, this surge was largely driven by two major transactions involving Diamondback Energy, which accounted for over $8 billion of the total. Diamondback’s acquisition of Permian-focused producer Double Eagle IV cost approximately $4.08 billion, while a dropdown of mineral and royalty rights to its subsidiary Viper Energy was valued at $4.26 billion.
Despite these high-profile deals, the overall M&A climate appears to be cooling. Andrew Dittmar, principal analyst at Enverus, noted, "Upstream deal markets are heading into the most challenging conditions we have seen since the first half of 2020. High asset prices and limited opportunities are colliding with weakening crude." The analyst indicated that potential sellers are hesitant to part with their assets at discounted prices, while buyers are strained by high valuations and decreasing oil prices.
Last year, the U.S. oil and gas sector experienced a remarkable 57% increase in M&A activity, culminating in an all-time high of $155 billion in deals. However, as the focus began to shift from the Permian Basin to other shale regions, signs of a slowdown emerged. Enverus reported that lower oil prices typically deter deal-making, citing that in 11 of the 17 quarters since 2014 where prices fell by more than 5%, deal activity also declined significantly.
Meanwhile, the retail sector is also feeling the pinch. Skechers, a prominent footwear brand, announced on April 24, 2025, that it would withdraw its guidance for 2025, attributing this decision to "macroeconomic uncertainty stemming from global trade policies." Previously, the company had forecasted sales between $9.70 billion and $9.80 billion, alongside earnings per share of $4.30 to $4.50.
In a statement, CFO John Vandemore clarified that the withdrawal was not due to a decrease in consumer demand, as two-thirds of Skechers’ business lies outside the U.S. and remains unaffected by tariffs. However, the company heavily relies on imports, with 100% of its products sold in the U.S. sourced from overseas—40% from Vietnam and another 40% from China, which currently faces a staggering 145% duty.
Following the earnings report, Skechers shares plummeted 7% in after-hours trading, adding to a 25% decline year-to-date. The company reported adjusted earnings per share of $1.17 and revenue of $2.41 billion for the first quarter, slightly missing analysts’ expectations.
CFRA analyst Zach Warring expressed concerns about the retail environment, predicting a tougher macroeconomic backdrop as excess consumer savings dwindle and spending normalizes. He warned that rising costs from wages and marketing could pressure margins, even as lower freight costs offer some relief. Warring noted, "If companies just withdraw guidance because of all the uncertainty ... you'll see a lot more companies follow suit over the next two months as they report."
Moreover, the ramifications of the ongoing trade war with China continue to loom large over companies like Skechers. UBS analyst Jay Sole indicated that Skechers could face a 24% increase in its cost of goods if no mitigation actions are taken, given that less than 40% of its total costs are tied to U.S. sales.
As businesses navigate these turbulent waters, Vandemore highlighted three primary strategies to mitigate the impact of tariffs: sharing costs with vendors, reassessing production locations, and adjusting prices. He emphasized, "We don't want to raise prices because of increased duties. That's not our objective. If we have to do that because circumstances require it, then we will."
In addition to corporate challenges, consumer sentiment is also on shaky ground. GfK’s Consumer Confidence Index fell four points in April 2025 to minus 23, reflecting heightened concerns about the economy. Expectations for the broader economic situation dropped eight points to minus 37, significantly lower than the previous year. The personal finance confidence measure also fell by four points to minus three, indicating a deteriorating outlook for household financial situations.
Neil Bellamy, consumer insights director at GfK, stated, "There are good reasons for this downturn. Consumers have not only been grappling with multiple April cost increases in the form of utilities, council tax, stamp duty, and road tax, but they are also hearing dire warnings of renewed high inflation on the back of the Trump Tariffs." He cautioned that if inflation were to rise again, consumer confidence could plummet further, erasing the gains made since the low point recorded in September 2022.
As the U.S. economy grapples with these interlocking challenges—from the oil and gas sector's M&A dynamics to retail giants like Skechers recalibrating their forecasts—both businesses and consumers are bracing for a potentially rocky road ahead. With rising costs, trade tensions, and fluctuating consumer confidence, the landscape remains fraught with uncertainty.
