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Posted on 04/30/2025 5:51:35 AM PDT by karpov
The U.S. economy contracted in the first three months of 2025, as businesses rushed to stock up on imports ahead of tariffs and consumers eased their pace of spending.
The Commerce Department said U.S. gross domestic product—the value of all goods and services produced across the economy—fell at a seasonally and inflation adjusted 0.3% annual rate in the first quarter. That was the steepest decline since the first quarter of 2022.
The reading fell short of the 0.4% growth that economists surveyed by The Wall Street Journal expected.
The decline in GDP in the first quarter reflected front-running ahead of tariffs that began to come into effect during the first three months of the year and were dramatically increased in the current, second quarter. Imports rose at a 41.3% pace. Exports rose more slowly, at a 1.8% pace in the first quarter.
The GDP report is the first major economic scorecard for the January-to-March quarter, a period in which the White House changed hands from President Joe Biden to President Trump. January—most of which was before Trump took office—was hit by wildfires in Los Angeles and disruptive winter storms in many parts of the country.
The new Trump administration quickly announced levies on Mexico and Canada, which it later paused, as well as tariffs on Chinese imports. The “Liberation Day” announcement of far broader tariffs came on April 2, at the beginning of the second quarter.
President Trump has made tariffs a cornerstone of his economic agenda, saying that they will in the long term make America richer and bring back manufacturing jobs. In March, the trade deficit in goods hit a record as businesses stocked up to get ahead of tariffs.
(Excerpt) Read more at wsj.com ...
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Not good.
I was expecting consumer buying splurges ahead of the tariffs - I know I went on a bit of a spree replacing some appliances and electronics figuring they would get more expensive and I know from the data I wasn’t alone - to save the day and keep us in positive territory... Q2 is going to be ugly.
No, I think it will turn around
Better to get a good recession out of the way early in the term—if real systemic improvements are being made.
You do know that the "contraction" is due to less federal funny money being stolen and spent by marxists and their pet bureaucrat, right?
Can’t make a cake without breaking some eggs. I don’t like it much, my IRA doesn’t like it much, but it’s important and necessary. I’m fine with it.
It’s too bad the legacy media is all about generating fear in the masses.
In fact, federal spending was *up* YoY in Q1...
Maybe people will wake up and realize that they don’t need so much stuff.
Blame tariffs and not Biden?
The first two years under Reagan were pretty bad as well, it will take time to turn around.
That’s not a winning political message.
Sad but true.
Only 1/7 of GDP is from imports. Saying buying less imports is contracting GDP is like saying going on a diet puts people at risk of needing new belts and pants.
“Forget it, Jake. It’s Karpov.”
Has the socialist money laundry of USAID been shut down? Yes.
Has the leftist indoctrination industry been hamstrung by the virtual elimiation of the federal dDepartment of Education? Yes.
Has the open borders for illegals policy of the Democrat Party been killed? Yes.
Tese sorts of things matter. Fluctuating markets are transitory.
The number will be revised upward. This is what the deep state always does to Republican presidents. They do the opposite for democRAT presidents whose numbers are often quietly revised downward at a later date.
first quarter is last of Biden’s doings up to date date not in yet.
Panic light not blinking.
yes
I’d rather shake out the froth in the economy / stock market now, and in a year the economy will be really humming along with the new manufacturing jobs and plenty of room to grow after this initial pullback. Would much rather see this than constant unrealistic growth in the market for the next 1 1/2 years, then bam, the bubble pops right before the midterms. This takes away the deep state’s ability to pop the bubble when they want - right before the election.
It’s like the old Fram commercial, “You can pay me now, or you can pay me later.”
Calculating GDP is a really byzantine process - but this is https://x.com/MacroMicroMe/status/1917562218755023217 is probably a good reason why...
Businesses *did* try to get ahead of tariffs - inventories spiked (that’s good!). But imports spiked more - and in essence? Consumers didn’t buy enough to offset. PCE couldn’t quite keep up.
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