ABOVE ALL FLOWERS

By David Kaplan

Greetings from the Wizard,

Economic News

Finally, the 43-day government shutdown is over! Trump signs bill to end the longest government shutdown on record

The bill, which funds the government through January, was passed by the House in a 222-209 vote and by the Senate with support from seven Democrats and one independent. The bill includes provisions for a bipartisan budget process, funding for the SNAP program and ensures federal workers will be paid for the shutdown period. The shutdown has delayed government economic data and has disrupted many agencies.

Consumer confidence is weakening on economic, and labor market concerns

Bloomberg reported that US consumer confidence fell for the third consecutive month in October, reaching its lowest level since April. The drop is attributed to concerns about the economy and labor market, with more consumers expecting fewer job opportunities in the next six months. US small-business optimism declined in October, with the National Federation of Independent Business index falling to 98.2 from 98.8 in September, driven by weaker earnings, labor shortages and concerns about the government shutdown and tariffs. Despite the index remaining above its long-term average, uncertainty remains high.

Retail sales rise ahead of holidays in October

Retail sales rebounded in October, climbing 0.6% over the previous month and 5% compared to the same month last year, according to the NRF/CNBC Retail Monitor. The growth follows a dip in September and signals strong consumer activity heading into the holiday season. Total retail sales for the first ten months of 2025 are up 5.11% year-over-year.

Corporate profits continue to rise amid weak job market

According to CBS News, US corporate profits are soaring to new heights, and the stock market is near record highs, but despite this financial success, companies across various industries are aggressively cutting jobs, a trend not typically seen during periods of strong profitability. Analysts point to the rapid adoption of AI, which is increasing business productivity and reducing the need for labor, as a key factor behind this unusual divergence between profits and employment.

US job losses increase in October  

The US economy experienced job losses in October, particularly in the government and retail sectors, amid cost-cutting measures and increased use of AI, according to private reports. Revelio Labs reports a loss of 9,100 jobs, including a decline of 22,200 government positions. Challenger, Gray & Christmas reports a 183% increase in planned layoffs, with technology companies leading the way, while the Chicago Federal Reserve estimates that the unemployment rate rose to 4.36%.

Consumers remain resilient but much of the numbers are coming from affluent households.

Early third-quarter earnings reports from major companies highlight ongoing consumer resilience, though the strength appears to be driven primarily by affluent households.

To quote a recent Reuters article there is a widening economic divide is impacting US businesses. Companies that serve lower-income consumers are facing declining sales and profits, while affluent households continue to sustain overall spending. Lower-income consumers are delaying purchases, seeking discounts and struggling with affordability as inflation remains elevated. Some companies are adapting products for both ends of the market, while firms reliant solely on budget customers are experiencing financial strain and workforce reductions.

Aggressive immigration tactics impact US labor market

The White House’s immigration crackdown is affecting the US labor market, with aggressive deportations, stricter enforcement — and most recently a major fee hike on H-1B visas — driving out low-wage and skilled immigrant workers. Employers across sectors report acute labor shortages as the loss of immigrant labor makes it increasingly difficult for industries such as agriculture, construction and health care to fill essential roles, leading to a nationwide slowdown in hiring and job growth. We have heard of large amounts of labor not showing up for work in the Northwest to harvest Christmas greens due to not wanting to deal with Ice.

The Federal Reserve

On Wednesday October 29^th the Fed approved the second interest cut of the year largely due to the faltering labor market. The Fed has a growing concern over labor market softness, and this now outweighs inflation risks.

Fed officials seem divided on December rate cut outlook

According to Yahoo Finance “three Federal Reserve policymakers – Austan Goolsbee, Mary Daly, and Lisa Cook – have expressed uncertainty over whether the Fed will cut rates again in December. Goolsbee said he’s more concerned about inflation, which remains above the 2% target, and noted limited data due to the government shutdown. Daly said she’ll “keep an open mind,” balancing inflation and job risks, while Cook emphasized her concern for employment but stressed that policy isn’t on a predetermined path and each meeting remains live.” Federal Chair Jerome Powell openly acknowledged “strongly differing views” among committee members, reflecting uncertainties over whether to prioritize signs of labor-market weakness or continued economic growth, especially heading into December. He cautioned that further cuts are not assured, noting that the lack of economic data due to the government shutdown could necessitate a more cautious approach.

Tariffs

Supreme Court appears skeptical of Trump’s tariff powers

Although no decisions have been made by The Supreme Court  they have expressed doubt about President Donald Trump’s use of the International Emergency Economic Powers Act to impose tariffs without explicit congressional approval. CNBC reported Justices questioned whether the law grants such broad authority, with Justice Neil Gorsuch highlighting potential misuse by future presidents. The court’s decision could affect previously paid duties and future tariff policies.

Importers feel Supreme Court-ordered tariff refunds would be simple

A CNBC report said US importers feel refunding tariffs paid would be straightforward if the Supreme Court orders repayment, saying detailed customs paperwork tracks all tariffs paid. The Supreme Court has expressed skepticism about the legality of some of the Trump administration’s tariffs but raised concerns about the complexity of repayment. Treasury Secretary Scott Bessent says repayments could total as much as $1 trillion.

Tariffs have continued to drive up prices

Tariffs imposed in 2025 have led to an overall 4.9 percentage point increase in retail prices, according to a Tax Foundation report. Imported goods have seen prices climb by six percentage points, while domestic goods rose by 4.3 points, with both figures based on new Harvard research. The Tax Foundation explains that domestic producers often raise their prices in response to higher import costs, staying just below the latest import price to remain competitive and increase profits.

Tariffs could cost firms $1.2T, hit consumers harder

S&P Global estimates that global businesses will face $1.2 trillion in costs from President Donald Trump’s tariffs this year, with two-thirds of the costs falling on consumers. Based on information from 15,000 analysts, the analysis suggests that only a third of the costs will be borne by companies. The tariffs, including a 10% levy on all US imports, have prompted companies to diversify supply chains and onshore production.

Tariffs have created a global shift as companies seek new markets on both the import and export side

Bloomberg has reported the highest US tariffs in nearly 100 years are significantly altering trade flows, leading countries and businesses to seek alternatives to the US market. Countries are redrawing trade routes and forming new alliances, such as Canada increasing car imports from Mexico and China sourcing soybeans from South America (although after Trump’s meeting with China the US Farmers should regain their soybean exports.) US trade barriers are also causing some companies to stop importing goods into the US due to rising costs, prompting them to look for overseas customers instead.

Inflation

Inflation has risen modestly to around 3%. Importantly, the increase appears driven more by service-sector costs—such as housing, software increases, and financial services rather than by tariff-related goods inflation. For the time being, businesses have absorbed much of the cost pressure, though whether this is sustainable remains to be seen.

Personal income is growing at a 5.1% annual rate, and real disposable income remains positive despite inflationary pressures. Real hourly earnings are up 0.7%, and real disposable income is up 1.9%. Consumer balance sheets are strong, supported by two consecutive years of 20%+ equity market gains and housing prices up over 50% since 2019.

Personal consumption expenditures are growing at a 5.5% annual rate. Retail sales are up 5.0% year-over-year, reflecting continued consumer demand and a healthy appetite for goods and services.

Logistics

Freight shipments fell sharply in October, but higher rates kept total freight revenue about the same according to Cass Information Systems.

As we know UPS had a fatal crash of an MD-11. UPS and FedEX have grounded their MD-11 widebody cargo jets following the deadly crash of the plane as it took off from the UPS global hub in Louisville, Kentucky. UPS expects the flight grounding on the MD-11’s to be temporary. Boeing recommended the suspension of flights while they exercise an abundance of caution and work with the FAA and the NTSB investigates the accident.

A slump in ocean shipping demand since U.S. President Donald Trump imposed a raft of new tariffs on trade partners earlier this year has helped send ocean container rates to their lowest since January 2024, threatening profits at major carriers including Maersk and Hapag-Lloyd (from Reuters). The Drewry World Container Index (WCI), which tracks the spot market rate to transport a 40-foot cargo container on major shipping lanes, dropped to a 20 month low of $1669 per 40 foot container.

Conclusion

• Looking ahead to 2026, the broad direction for interest rates is down as long as inflation continues to cool and the labor market does not weaken sharply.
• If inflation cools and growth continues, we hope to see a doveish Fed
• High income consumers continue to drive demand. The top 20% of all households account for about two thirds of the spending.
• The cost of goods, labor, services, insurance, and logistics are still increasing. It is more important than ever to become even more efficient.
• Ice is continuing to scare current labor sources. The government wants to charge crazy amounts for special work visas.
• The Supreme court has not yet decided on the legality of tariffs. Hopefully this comes soon and is favorable. In our additional stories section, we have a few articles about tariff concessions. (Although nothing has broken loose on flowers, we hope it happens soon. Trump’s administration is negotiating with Ecuador and Guatemala to roll back Tariffs on flowers. Hopefully we will see some results like we have seen on food items and other items not produced in the States. Several floral agencies and organizations like SAF, AFIA, IFPA, and others are lobbying the government to stop charging tariffs on flowers.
• Exchange rates: 1 USD =3,803 Colombian Pesos (as of Nov 23rd) down almost 12% since April 2025 resulting in less pesos for every dollar. The exchange rate for the Euro to the peso is currently 1 Euro=4,362. This explains why many Colombian growers are looking to expand their market in Europe. The exchange rates are not helping flower prices.
• Trump has repeatedly stated he would not rule out attacking Colombia drug operations.
• The Trump administration recently stated that they were going to go after the countries that support drug trafficking against the United States. We have a large military presence off the coast of South America.
• Currency exchange rates are still causing higher flower prices.
• The third quarter of 2025 closed with a surprising degree of economic resilience. Despite the implementation of historically high tariffs, the U.S. economy has continued to grow at a healthy pace. Financial markets have responded favorably, driven by strong corporate earnings, enthusiasm around artificial intelligence (AI), and a renewed easing stance from the Federal Reserve.
• Personal income is growing at a 5.1% annual rate, and real disposable income remains positive despite inflationary pressures. Real hourly earnings are up 0.7%, and real disposable income is up 1.9%. Consumer balance sheets are strong, supported by two consecutive years of 20%+ equity market gains and housing prices up over 50% since 2019.
• Personal consumption expenditures are growing at a 5.5% annual rate, with real growth at 2.7%. Retail sales are up 5.0% year-over-year, reflecting sustained consumer demand and a healthy appetite for goods and services.
• As 2025 draws to a close, the U.S. economy continues to defy early-year concerns, demonstrating resilience in the face of elevated tariffs, policy uncertainty, and a moderating growth environment. Key pillars such as consumer strength, AI investment, and monetary support have helped sustain expansion.
• AI spending is accelerating at an unprecedented pace—raising the question: Are we witnessing a bubble or the foundation of a long-term transformation? (However, the most recent market drop has not helped the AI market)
• Between November 13-November 18th the stock market has been down. The Dow lost over 2200 point on those 4 days. Most markets were at their all time high three weeks ago. Is it time to sell or buy the dip?

Let’s hope for a Santa Claus Rally. When people feel they have more money they spend more on flowers!

All these economic factors and conditions influence some part of the Flower industry to some degree. We are all in this together.

Thanks for reading my rants,

The Flower Wizard

To contact David Kaplan (also known as the “Flower Wizard” or “Floradamus”) at Above All Flowers
Email: aboveallflowers@mac.com
Call 401-486-0525