Economic forecast remains uncertain heading toward year’s end  

Although talk of a recession was nearly absent from yesterday’s Springfield Area Chamber of Commerce annual Economic Outlook, an economist from the Federal Reserve Bank of St. Louis told attendees that economic uncertainty remains elevated as trade wars stretch into late summer. 

Financial stress experienced in early April, which occurred after the Trump administration announced a rollout of tariffs against many U.S. trading partners, has largely dissipated but still carries a potential to impact consumer spending and business investment, said Kathleen Navin, senior business economist with the St. Louis Fed.   

While the U.S.’s gross domestic product growth rate last year was 2.8%, according to the U.S. Bureau of Economic Analysis, the average of the first two quarters of this year is around 1.2%, Navin said. 

“Now what we’ve seen in the last few quarters is a lot of volatility,” she said, noting Q1 GDP fell 0.5% before rebounding to 3% growth in the second quarter. “Pretty subdued growth over the first half of the year.” 

Navin said a drag from net exports in the first quarter of the year was the result of imports surging, as people tried to get ahead of the anticipated tariffs.  

“You saw that especially in businesses,” she said, adding that resulted in a buildup of inventories. “After the surge in imports in the first quarter, they fell off in the second quarter.” 

Navin said the core of U.S. GDP is made up of three main components: Consumer spending, business fixed investment and residential investment in housing.  

“What you see in the first quarter is that while we did get a healthy contribution from business fixed investment in the first quarter, a lot of that was pulled forward ahead of tariffs,” she said, adding that housing declined in both quarters.  

While consumer spending has been solid the last two years, Navin said data indicates those healthy contributions to the economy are waning. 

“We’re seeing a consumer that is more cautious, maybe sitting on the sidelines when looking at certain purchases, trying to build a little more clarity around the economic outlook,” she said. “When I look at these numbers, when I see that we are seeing growth softening, and we’re also seeing consumer spending softening, that gives me a little pause when thinking about the U.S. economy.” 

Noting state and local data lags behind national figures, Navin said Missouri’s GDP rose 2.2% in Q1 from the same period a year prior. The U.S. economy over that same timeframe was about 2%. 

Navin spoke at the annual Economic Outlook event, which is organized by the Springfield Business Development Corp., the chamber’s economic development arm. Attendance at the Oasis Hotel & Convention Center was 400, down from 425 at last year’s event, chamber officials said. 

The chamber’s annual series continues with the Nonprofit Outlook, which is set for Nov. 12 at White River Conference Center. 

An expanded version of this article is scheduled to be published in Springfield Business Journal’s Aug. 11 issue.