Most economic forecasters lowered their projections for U.S. economic growth this year and increased the odds of a recession in the wake of President Trump’s “Liberation Day” announcement on Apr. 2. This assessment appeared reasonable, considering the tariff hikes were much larger than expected, and both consumer and business confidence readings had plummeted.

Subsequently, Trump delayed implementation of reciprocal tariffs for 90 days, except in the case of China against whom tariffs were hiked to 145 percent.

The economic data released last week provided the first “hard” evidence about how the economy was faring leading up to April 2 and soon after. They show the economy was on solid footing when the avalanche of tariffs was announced.

Some press reports interpreted the headline number for first quarter real GDP of minus 0.3 percent annualized as a sign of economic weakness. However, that mainly reflected how U.S. businesses anticipated tariff hikes by front-loading imports, an act that reduces net GDP. Imports surged by 41 percent at an annual rate and also showed up as increases in business inventories and equipment purchases.

The jobs report for April provided the initial reading of how the economy had been faring as of mid-April, and it was stronger than expected. Non-farm payrolls increased by 177,000 while the unemployment rate remained unchanged at 4.2 percent.

Amid all of this, the U.S. stock market recouped the losses it had sustained after Apr. 2.

The principal reason is that investors are hopeful that the economy will be........

© The Hill