Orders of durable goods surged by 9.2% in March, driven mostly by new orders for Boeing aircraft, a tactic that many countries have used to negotiate new trade deals under the threat of new tariffs from the United States.
But when we take away those new deals, American businesses’ new spending on equipment looked weak in March as uncertainty around trade policy heightened.
Because of this rising uncertainty, business confidence has plummeted since March, according to our estimate. The new data on capital good orders in March was the first sign of the tariffs’ impact on real business spending.
With volatility in trade policy and markets only increasing in April, we should expect even more businesses to stay on the sidelines for the time being.
Beyond the data on orders placed in March, shipments of core capital goods ordered months ago, when tariffs were not as big of a factor, were strong in the first quarter. That should be a positive contribution to overall gross domestic product in the first quarter, which is expected to weaken.
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