KPMG Economist Warns War and Supply Chain Shocks Cloud U.S. Growth Outlook

KPMG Chief Economist Diane C. Swonk released a stark assessment of the U.S. growth outlook on April 8, warning that compounding pressures from the Middle East conflict, rising energy costs and escalating tariff volatility could reshape corporate decision-making well before the year's midpoint.

The latest edition of KPMG's Economic Compass, titled "Running on Empty?: War, supply chain shocks & the outlook," frames the risk environment through a historical lens. "History does not repeat, but it often rhymes," Swonk writes, drawing a line between current dynamics and past energy-driven downturns without claiming the situations are identical.

The report's near-term GDP picture is uneven. A stronger first-quarter print, driven partly by temporary factors, is expected to give way to tepid growth in the second quarter as shipping disruption, diesel and bunker fuel costs, and higher import prices accumulate. The compound effect of those pressures interacting with Section 232 tariff policy is what Swonk flags as the more durable concern: not a single shock, but overlapping ones arriving simultaneously.

For KPMG's advisory and deal teams, that overlap is a workload signal. Firms prioritizing execution over strategy in uncertain markets typically accelerate carve-out readiness work, supply-chain resilience projects and operational due diligence. Transaction support, IT carve-out teams, tax structuring and separation planning are the service lines most likely to see short-term capacity pressure as clients move quickly.

Audit and accounting professionals face a different but equally concentrated set of demands. Price volatility directly complicates inventory valuation, fair value estimates and hedging disclosures, raising the documentation standard required at quarterly closes and interim reviews. Audit managers who don't surface those substantive testing requests early risk compressing their teams at exactly the wrong moment in the review cycle.

Tax and trade professionals may feel the most immediate pull. The memo specifically flags executive or congressional actions tied to Section 232 tariffs as carrying near-term compliance and timing implications for clients. Tariff classification, customs valuation, and refund and appeal assignments are the clearest near-term beneficiaries, with cross-border clients managing import cost exposure likely to drive inbound volume.

The staffing consequences cut across all three service lines. If advisory ramps while audit complexity rises simultaneously, utilization tightens. For professionals tracking billable hours heading into mid-year performance assessments, that compression is not incidental; it shapes promotion readiness and review outcomes directly. People leaders who don't document stretch assignments now risk losing that credit later, when performance conversations require evidence of scope.

Swonk's practical guidance in the memo centers on scenario planning, assumption stress-testing and early client communication. The immediate moves are concrete: revalidate client forecast assumptions, surface disclosure and audit implications to engagement quality reviewers before they become late-cycle surprises, and align with people leaders on time-off coverage and backup plans before delivery windows tighten.

The April 8 Economic Compass is calibrated for exactly this kind of market: not a single crisis, but a confluence of pressures that rewards the teams who anticipate the next ask before the client makes it.