The economy can’t quite decide how it’s doing.

As inflation has risen so far this year, consumer sentiment has dropped, signaling the effects of a challenging labor market and a retail environment where increases have made the price of some key goods volatile. The Federal Reserve met this week to decide on its main interest rate – ultimately landing on an expected rate cut amid slowly rising inflation, higher unemployment and a tough labor market.

And yet, the stock market continues to climb, setting record highs multiple times so far in 2025. Consumer spending has held steady – and even grown – this year, with retail sales exceeding August forecasts to increase for the third straight month (though that’s likely at least partially due to heightened spending from the wealthiest U.S. households). And after slipping in the first quarter, the United States’ GDP was up 3.3% in Q2, thanks to that increased spending and lower imports, the Bureau of Economic Analysis said.

So how does the promotional products industry fit into a conflicting and changing economic landscape? Here are five key metrics – based on findings from ASI Research and key U.S. economic data and indices – that show how the promo industry is faring compared to the overall economy.

1. Inflation has been on the rise since the beginning of Q2

The latest data from the Bureau of Labor Statistics (BLS) suggests that inflation has been on the rise so far in 2025, ticking up as high as 2.9% in August. The inflation rate – which the BLS measures through a statistic called the Consumer Price Index (CPI) – had largely been ticking down from its most recent massive spike of 9% in June 2022, until reaching its lowest point since early 2021 in April and then starting to increase again.

The BLS estimates inflation each month by determining prices for a representative “basket” of goods and services in a variety of geographic areas. It then calculates the year-over-year change based on the resulting index: aka, the most commonly cited inflation rate.

The good news about August’s rate of 2.9% is that it’s relatively low compared to the very high inflation rates from 2022 and 2023, for example. As mentioned, April’s rate of 2.3% was the lowest BLS has calculated since February 2021.

However, the increases since then mean that it’s still higher than economists would generally like to see. For comparison, the Federal Reserve generally views an inflation rate of 2% as its goal benchmark for avoiding deflation, while simultaneously encouraging employment and price stability.

Despite retail spending being up so far this year, economists suggest that was both more heavily driven by spending from the wealthiest Americans and attributable to simply higher prices – in other words, higher prices mean more spending, even if people are buying the same number of items or services. But an increase is an increase – which is unusual in a period of higher inflation and lower consumer confidence.

2. However, some price increases have been slower to actually hit consumers

However, where that inflation has actually affected consumer spending so far has varied widely.

Prices for some goods have shot up dramatically in the past few months, thanks to tariffs and other external factors – like the price of coffee shooting up 21% compared to this time last year due to Brazil- and Vietnam-specific tariffs, as well as recent droughts in coffee-producing countries.

Food prices more generally, as well as housing costs, have also outpaced general inflation rates.

On the other hand, apparel has faced comparatively minimal price changes for consumers so far this year, with an increase rate of just 0.3% in August, and even some price decreases in the spring. A similar sentiment goes for the general category of commodities – excluding categories like food, energy and services to focus largely on products, the BLS calculated an inflation rate of about 1% in August. While both rates are on a slow climb, they’re far lower than the general inflation rate suggests.

Why does this make sense? Apparel manufacturers – at least in the promo industry – have become more diversified in recent years, pulling away from China and moving toward other countries like India, Bangladesh, Vietnam and others. It tracks, then, that volatile tariff rates on China that affected prices for many other types of goods entering the United States would affect that sector less.

3. Wholesale prices dropped in August – but not for apparel

For the promo industry specifically, it’s also worth taking a look at the Producer Price Index (PPI) from the BLS. Whereas the CPI discussed in #1 tracks retail prices for consumers, the PPI tracks how much producers are getting paid for their product.

In other words, the PPI would be comparable to what a distributor or screen printer pays a supplier for a batch of blank T-shirts, and the CPI would be comparable to the retail price the distributor sells the tees to an end-buyer for.

Based on the PPI, July producer prices were 6% higher than they were in July 2024. August, though, was a mixed bag: Prices for wholesale traders dropped unexpectedly after that July spike, as did overall prices by this metric.

Overall, it’s an indicator that many producers have been slower to pass off tariff costs to their customers, at least so far. Even the 6.0% jump in July wasn’t completely off base with historic inflation levels, with a 6.1% spike coming in March before tariffs were announced and 2024 kicking off last year with three straight months of 5% in increases.

When surveyed at the end of Q2, about two-thirds of suppliers reported increasing prices, compared to December 2024, as a direct result of the tariff and trade war situation. Based on ASI Research calculations, that represented an approximate 6.3% price increase, on average, caused by the tariffs alone – excluding any price increases brought on by general inflation or other increased expenses.

But with the PPI known for being an indicator of what’s to come for overall inflation and consumer pricing, the apparel sector may want to watch out. With a spike of 12.5% in what apparel wholesalers were paid for their goods in August, it’s probable that segment of retail – and promo – may start feeling the pinch, despite its more diversified supply chain.

The jump was most likely caused by increased reciprocal tariffs on countries like Vietnam and India – which, in particular, was slapped with a 50% levy rate – where apparel, at least in promo, has increasingly been sourced from.

4. The labor market has slowed to a halt

At the beginning of 2025, ASI Media wrote about the “white-collar recession” – aka, the hiring stalls that have plagued industries like finance and business services since last year.

Job prospects, for those sectors and beyond, haven’t gotten much better since.

The most recent U.S. jobs report showed that just 22,000 jobs were added in August, which was only about one-third of economists’ predictions for growth that month. An annual revision from the BLS also course-corrected estimates for the year prior to March 2025, dropping initial job growth reports by 911,000.

This type of data update is routine when revising initial BLS job estimates, but it certainly does not paint a rosy picture for the current state of the labor market – especially when you look at certain sectors relevant to the promo industry.

Job numbers have overall been shrinking in manufacturing, wholesale trade and professional and business services (the sector that includes advertising) so far this year.

Business services have had more months with job shrinkage than growth – moving month to month – over the past year. Wholesale trade has been in the red since President Trump’s first round of heightened tariffs was announced back in April. And despite the push for domestic production at the heart of the tariff conversation, the manufacturing sector has been slowly shrinking since late 2022.

In promo, that has manifested in a labor market that favors employers more than employees. Filling new positions has become easier, suppliers reported in this year’s Counselor State of the Industry, but just 22% of suppliers reported adding to their employee headcount in 2024, compared to 30% in 2023. The percentage of suppliers that reported concerns about retaining and attracting qualified workers has dropped steadily since 2022, meaning that while it’s still on companies’ minds, company workforce is far less of an issue than it was in the height of the COVID-19 pandemic.

Granted, the reported changes in industry employment for manufacturing, wholesale and business services represent extremely small percentages of the overall workforce in these industries, but the slowing of growth is unmistakable.

And in addition to impact on headcount at promo firms directly, lower job growth can mean less sales opportunity in areas like new hire gifts, employee trainings or simply general marketing cutbacks, if a lack of people growth indicates lack of sales growth. That’s in line with promo sales declines so far in 2025.

5. Counselor’s Confidence Index mirrors general consumer confidence rates

Each quarter, ASI Research measures the overall health of the industry using the Counselor Confidence Index, which compares industry health to a baseline value of 100. Though predictions for the end of 2025 slightly ticked up again during the last measurement at the end of Q2, it’s been low since the beginning of the year, especially compared to the industry’s optimistic predictions at the end of 2024.

And measures of general consumer sentiment – taking into account both the current and future state of the economy – have revealed a similar pattern so far this year.

The Consumer Confidence Index, published by the Conference Board, surveys a large number of households each month to gauge overall consumer confidence, which has been strongly correlated with the state of the overall economy and generally more affected by the state of the labor market. The University of Michigan also publishes an Index of Consumer Sentiment, which generally can have a lower baseline value and is more focused on household finances and the impact of inflation.

Unsurprisingly, despite their differences in baseline value, these three metrics of consumer and business confidence generally mirror each other – including a noticeable drop off in confidence between the end of 2024 and the spring of 2025 when tariffs were announced. As mentioned in #1, though, this lack of confidence in the state of the economy hasn’t had a major impact on spending – yet.