Posted on 04/30/2025 2:14:59 PM PDT by SoConPubbie
The absolute key to the first quarter GDP result is to remember that ‘imports‘ are a deduction in the economic equation of Gross Domestic Product. The GDP is the valuation of all goods and services produced in the USA *minus* the value of imports.
The Bureau of Economic Analysis (BEA) releases the results of the first quarter GDP. The overall economic growth seems low at –0.3% until you look at how U.S. companies responded in February and March to the tariff announcement.
Companies proactively purchased massive amounts of products in advance of the tariffs leading to an overall increase in imports of 41.3%. Which results in a 5.3% deduction to GDP. Every dollar of those imports is a deduction to the GDP equation, giving the false appearance of lower domestic production.
There was a massive surge in import goods purchases of 50.9% versus the prior period [Table 1, line 20]. That’s the largest periodic increase in import purchases I have ever seen. Simultaneously, fixed asset investment in equipment for domestic production surged 22.5% [Table 1, line 11].
Put both of these metrics together and what you see are U.S. companies building consumer inventory from overseas (imports) while simultaneously preparing themselves to shift production into the USA. The massive import purchases are a bridge to cover the time needed to shift the manufacturing from overseas to the USA. This is exactly what we want to see.
To give more detail to the economic shift, we turn to Table 2 and look at the contribution impact to the GDP equation.
Here we can see that imports surged and led to a 5.03% deduction to the GDP equation. Meaning if all things were equal without the Q1 surge in import purchases the GDP would have been +5.0%.
Meanwhile the impact of federal spending decreased 0.33% as President Trump makes the federal government smaller, and federal spending contribution less. The federal government is getting smaller as a percentage of GDP. Again, a very positive sign.
Investment in the USA is high. MAGA working.
Imports are temporarily high, as companies prepare to purchase less from overseas. MAGA working.
Following the increase in U.S. investment and following the increase in equipment purchasing; we will see an increase in jobs as a result of hiring Americans to use the equipment and create the products. If the workforce tightens up (illegal alien deportation continues) and unemployment lessens, then pressure is created on wage rates as companies compete for workers. Main Street starts winning again.
Attach welfare support to employment efforts and the dependency model shrinks.
This is very good news all around.
Please translate for we who are macroeconomic-ignorant.
OK, I have taken the time to read and digest what he is saying.
Overall, he is saying we are looking really good, it’s just that businesses prepared for the Tariffs by front-loading imports in the 1st quarter so they would have product on the shelfs at the lower prices so they could switch gears in the 2nd quarter and beyond to manufacturing those same products in the USA and other inexpensive countries.
Corporate TDS media will explain this connection to their audience .... NEVER!
I think it translates to we are in fine shape. but economists would say,’ On the other hand...’.
The one-time “stock-up” of imported goods in the first quarter is counted as a deduction from the 1st qtr GDP. So 1st quarter GDP growth is actually very postive. Doesn’t matter much how the press spins this - MAGAnomics are building momentum the normal American will feel soon enough
Trump is the best “Educator in Chief” America has ever known, by his sure transparency. Speaking on any subject he teaches.
Miraculously, the Conservative media, and his entire administration, have
their act together and perform like
the proverbial, well-oiled-Machine!
Thanks for a very important post. I can trust The Last Refuge. Great break down.
Trump is the best “Educator in Chief” America has ever known, by his sure transparency. Speaking on any subject he teaches.
Miraculously, the Conservative media, and his entire administration, have
their act together and perform like
the proverbial, well-oiled-Machine!
🎈🎉Thanks for a very important post.
I can trust this source— The Last Refuge, and his sources. Great break down.
Simple - it’s crap. They can’t possibly measure it.
All depends on the criteria THEY choose. Just like unemployment figures or inflation numbers.
In Econ grad school we called it an agenda.
Macroeconomics is stupid.
Thanks, everyone. I’m educated in a lot of things but macroeconomics is definitely not one of them.
Interesting take. Thanks!
I wasn’t popular in grad school.
I argued the Phillips curve was wrong and it wasn’t taken well by old profs.
I agreed with the Laffer Curve and was called an idiot. 3 years later (80s) I was proven right.
Looks like Federal government expenditures are down.
This is probably the first accurate report in four years. Remember the “experts” over at the government agencies were just making stuff up and lying through their teeth.
This article is silly. The tariffs have had very little impact thus far. Need to wait until August or so. Tariffs on high end equipment are hurting small business in a big way. U.S. manufactures very little equipment that is high tech, which is what we need to grow. It won’t change in a matter of a few years either.
Trump is the best “Educator in Chief” America has ever known, by his sure transparency. Speaking on any subject he teaches.
—————————
I’m glad Trump is President. He is awful at articulating a conservative message though.
I understand the real data. The media on the other hand threw out that the negative growth is going to lead to economic Trump Armageddon. We are losing the narrative and information war to most independents and non political people. That is all the Democrats need to snipe seats in the Midterms.
Don’t be silly. The midterms are not tomorrow, but you’re right that they’ll hang themselves out over it and 3 months later never admit they said any such thing but Orange Man Bad because something else.
IMO if these tactics worked you’d be reading about how many millions of illegals came across this month under Camel-A and how they’re already helping themselves to free everything and voting rights.
GDP numbers includes government spending. With so many federal employees laid off, and so many spending projects eliminated by DOGE, those numbers could easily reduce GDP numbers.
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