Diane Swonk on 1% Q1 Economic Growth Outlook and Mild Stagflation

Economic Data Disconnect

• ⚠️ A disconnect between soft and hard economic data is currently being observed, with consumer confidence hitting a 12-year low.
• 📊 Simultaneously, durable goods orders have shown strength, indicating a complex economic picture.

Q1 Growth and Consumer Spending

• 📉 Consumer spending growth is decelerating, particularly in sectors like airlines and lodging, following a strong December.
• 📈 Durable goods orders, however, have risen for two consecutive months, suggesting some resilience.
• 🎯 The overall expectation for Q1 GDP growth is around 1%, with some adjustments for specific import data.

Stagflationary Environment

• 💡 Diane Swonk describes the current economic climate as a mild form of stagflation.
• 📈 This is characterized by slow overall growth (around 1.1% for Q4 to Q4) and a creeping increase in the unemployment rate.
• 📉 Inflation is also noted as being on an upward trend, though expected to taper off later in the year.

Business Adaptation to Tariffs

• 🤝 KPMG is actively working with clients to help them navigate and hedge against the impact of tariffs.
• 🔍 Businesses are seeking ways to mitigate tariff effects and find potential relief or clawbacks.