WASHINGTON — The U.S. durable goods orders, a key economic indicator, showed a remarkable rebound in May. However, questions remain about whether this recovery can withstand the chilling effects of ongoing trade tensions.

The U.S. Census Bureau reported Thursday that durable goods orders jumped 16.4% month-over-month in May, significantly exceeding market expectations. This strong performance was primarily driven by a surge in commercial aircraft orders, which provided substantial momentum to the overall data. However, excluding transportation equipment, orders from other sectors remained relatively flat, suggesting continued caution in business investment.

Aircraft Orders Fuel the Surge

Transportation equipment orders soared 48.3%, with commercial aircraft orders skyrocketing 230.8%. Boeing's website revealed the company secured 303 aircraft orders in May, including a 150-plane deal with Qatar Airways finalized during President Trump's visit to the Gulf region. This contrasts sharply with April, when Boeing received only 8 orders.

The picture was less rosy outside the aerospace sector. Core capital goods orders excluding aircraft—a key measure of business spending plans—rose just 1.7% in May after a revised 1.4% decline in April. This modest rebound indicates businesses remain hesitant about major investments.

Trade Policy Uncertainty Weighs on Business Confidence

Economists widely attribute this investment hesitation to the Trump administration's unpredictable trade policies. Existing tariffs have not only increased operational costs but also created concerns about future economic prospects. This uncertainty has made companies more cautious about long-term investment decisions.

The Federal Reserve is closely monitoring how trade policies affect the economy. Chair Jerome Powell told Congress this week that the central bank needs more time to assess whether tariffs will drive inflation higher before considering interest rate cuts. The Fed has maintained its benchmark overnight rate in the 4.25%-4.5% range since December.

Mixed Economic Signals

Additional data showed core capital goods shipments increased 0.5% in May after remaining flat in April. Non-defense capital goods orders surged 49.4% following April's 19.1% plunge, while shipments of these goods held steady after a 3.6% April increase.

First-quarter business equipment spending provided some relief to GDP growth as companies rushed to import goods ahead of tariff implementation. However, this front-loading effect is fading as tariff policies take hold.

The Atlanta Fed projects the U.S. economy will rebound at a 3.4% annualized rate in Q2, largely reflecting import flow reversals. Yet retail sales, housing, and labor market data all point to slowing economic activity. The economy contracted 0.5% in Q1.

Sustainability Concerns

While May's durable goods data appears strong, trade policy uncertainty remains a sword of Damocles hanging over businesses. The economic recovery faces significant challenges amid trade tensions, with government policies, corporate investment decisions, and Fed actions all playing critical roles.

Analysts note that May's order surge was largely driven by Boeing's massive contracts—a single-factor boost that lacks sustainability. The more telling indicator lies in core capital goods orders excluding transportation, which better reflects genuine business investment confidence. Sustainable economic growth ultimately requires consistent increases in business investment.

This mixed report calls for cautious optimism. Trade-related uncertainties remain the greatest challenge to the U.S. economy, and only constructive dialogue to reduce trade barriers can create the stable environment businesses need for long-term planning and growth.