US economy trips on tariff uncertainty in first quarter

The rise in spending to hedge against a surge in tariffs masks an underlying weakness, notably in business investment, writes KPMG US Chief Economist Diane Swonk.

Real GDP in the United States (US) contracted at a 0.3 percent annualised rate in the first quarter after rising 2.4 percent in the fourth quarter. Attempts to front-run tariffs helped support consumer spending, investment and stockpiling of inventories. Surging imports subtracted five percentage points from overall growth. Exports increased only modestly after contracting in the fourth quarter. Separately, the GDP deflator and the PCE price index both accelerated unexpectedly during the f...

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Authors: Diane Swonk

Published Date: 02 May 2025