The first quarter of 2025 ended on March 31, as first quarters tend to do, but, more importantly, it ended before April 2, “liberation day.” As a result, the GDP data for the three months just passed are an unusually unreliable guide to what lies ahead. That said, the tariff ratchet was turning during the first quarter. It was also known that more (if not how much more) was on the way. One or two signs of trouble to come can already be seen in the numbers.

There was an enormous surge in imports in the first quarter, leading some to blame imports for the 0.3 percent overall decline in GDP, since the GDP accounting equation subtracts imports (it’s a measure of domestic production, after all). The subtraction is only to prevent double-counting, though, since those purchases are already covered in the other terms of the equation. More important was the reason for the surge: importers shipping in supplies before the tariff ratchet turned further. Something similar lies behind strong car sales, a stand-out amid relatively subdued consumer spending growth (1.8 percent), the lowest number for a year or so, and in purchases of capital equipment. Fast-forwarding spending, or stockpiling, is like pulling down the shutters ahead of a hurricane (in the event this particular hurricane was much worse than feared). It is not what the dawn of a “golden age” is meant to look like.

Consumer spending accounts for around 70 percent of U.S. GDP. It’s not reassuring that the slackening pace in the first quarter has been echoed in the deteriorating sentiment reflected in findings such as those on consumer expectations gathered by the Conference Board in April. These date from after America’s “liberation” and generated a reading of 54.4, the lowest since 2011, and well below 80, the figure that the Conference Board typically regards as a warning of recession.

The Conference Board’s findings are by no means an outlier, and are unlikely to be offset by the fall in the PCE inflation rate (the measure preferred by the Fed) from 2.7 percent in February to 2.3 percent in March. That decline would normally soothe consumer worries were it not for the widespread recognition (from the Fed down) that higher tariffs will push up prices. In theory, this will be a one-off hit and should not have more than a “transitory” inflationary effect. But reality has a way of ignoring theory, and there are good reasons to think that, unless the final tariffs end up far below what is currently still proposed, the price shock will be longer lasting and wider reaching than optimists currently believe, especially if, as (based on freight data) seems increasingly likely, certain products start to start disappearing from stores. That, in no small part, reflects a dependence on Chinese goods that the administration is right to see as unhealthy, but correcting that is work for a scalpel, not a chainsaw, and needs common sense too. It is counterproductive to slap high tariffs on goods from suppliers that compete with China. Inflationary expectations will not be eased by the toll taken by tariffs at the supermarket, not least on products such as coffee, which are, for practical purposes (the weather, mainly), impossible to “reshore” in sufficient quantities.

Fear of rising prices (even more so after the recent experience of Bidenflation) makes consumers feel poorer in advance and more inclined to cut back. So too does fear of unemployment, which has been growing, despite a generally healthy jobs market as of March. In a possible warning of future lay-offs, April’s ADP (private payroll) numbers came out Wednesday. Only 62,000 jobs were added against expectations of 120,000. Many consumers, of course, may already be feeling poorer on the back of this year’s gyrating stock markets (the S&P is down around 5 percent year to date), even if their losses are unrealized and — human nature is what it is — dwarfed by the gains of the previous years.

Then there is uncertainty. As in other areas of this administration’s first 100 days, the execution of tariff policy has been chaotic and poorly thought through, leading to conflicting messaging and backpedaling. Even if that backpedaling or even “pausing” is better than ploughing on regardless, it has added to the uncertainty hanging over the economy. No one really knows how high or low the tariffs will go (or what retaliation they will provoke), and until that is known, there is no serious way of calculating their effects and how to react to them. This uncertainty is something else encouraging consumers to pull in their horns. It also encourages companies to postpone or even cancel their spending plans, decisions made easier by the higher interest rates that have prevailed since “liberation” day.

In conclusion, there is not too much that we can deduce from the latest data. All that really can be said is that, here and there, they add further evidence of pessimism about the outlook for the economy. Pessimism can be a self-fulfilling prophecy, although in this case, given the current level of uncertainty, the dangers of trade war(s), and the likelihood that some significantly higher tariffs will survive, that seems superfluous. The IMF recently cut its forecast of 2025 U.S. GDP growth from 2.7 percent to 1.8 percent. That may well be optimistic.