https://www.cnn.com/2025/05/01/economy/us-gdp-economy-weaker-than-it-appears President Donald Trump’s aggressive tariff plan was largely expected to impact the US economy’s first-quarter performance as companies loaded up on imported goods ahead of higher levies. But what few failed to anticipate was how much worse off the economy would have appeared without stockpiling. “People are stockpiling now. That’s helping the economy now — and then they’re going to spend even less,” said Ryan Young, senior economist at the Competitive Enterprise Institute, a libertarian-leaning think tank. GDP, or gross domestic product, which measures all the goods and services produced in the economy, fell to an annualized rate of -0.3% in the first quarter of this year, according to Commerce Department data released Wednesday. That remarkable drop from the prior 2.4% rate pushed stocks lower, ignited talk of a recession and underscored why Americans’ confidence in the economic outlook fell this week to the lowest level in 13 years. The core of last quarter’s decline was the rush to get ahead of Trump’s forthcoming tariffs. That pushed up goods imports by 51% in the first quarter, the fastest pace since 2020 when the US economy was reopening after Covid-related lockdowns. But, absent that surge in goods, the latest GDP report could have been even uglier. Trump made no secret of the fact that he was going to announce higher tariffs for all US trading partners as of April 2, a date he refers to as “Liberation Day.” But the question for businesses and consumers was: How high would those new tariffs be? Waiting to find out could be costly. So businesses clamored to stockpile ahead of time and consumers moved up purchases, especially big-ticket items. Because of the way GDP is calculated, increases in imports relative to exports put a drag on the economy. But at the same time, the uptick in imports fed right into a huge increase in business investments. All else being equal, higher investment levels boost GDP. In this case, it wasn’t enough to overcome the negative impact of imports, however. The 22% increase in business investment was enough for White House senior trade adviser Peter Navarro on Wednesday to call the GDP report “the best negative print I have ever seen in my life.” However, he failed to mention that much of the increase in investment came from businesses buying up inventory. The other factor that prevented GDP from declining further was the 1.8% increase in consumer spending last quarter. But once again, that traces back to pre-tariff moves. “Stockpiling is making things look better than they actually are,” said Young. “And the flip side of that is that it’s going to slow down once that midnight rush is over.” “The second-quarter GDP numbers could be brutal,” he added. Gregory Daco, chief economist at Ernst & Young, said the data was largely emblematic of “an artificial pull-forward in demand — and what often lies beyond these pull-forward effects is a cliff.” “We may actually see that in the second quarter, consumer spending, activity, business investment and inventories are all major drags on growth,” Daco told CNN. Not everyone is on the same page Some economists read Wednesday’s GDP report with a slightly more sanguine tone. “This report is almost exactly what an otherwise-healthy economy looks like *anticipating* — but not yet directly hurt by — tariffs,” Ernie Tedeschi, director of economics at the Budget Lab at Yale University and a former top economist in the Biden White House, said in a post on X. Brian Rose, senior US economist at UBS, went further, saying he saw the GDP reading as a sign “that the underlying business cycle remains healthy.” “We are not overly concerned about the negative GDP print,” he said in a note on Wednesday, pointing to the fact that the US economy contracted in the first quarter of 2022 and quickly pivoted back to growth. However, this year’s second-quarter GDP report is unlikely to improve as the effects of Trump’s levies — the highest in the developed world — become more pronounced, he said.
democrats maybe even more stupid than previously thought. maybe even more dumb than people who chase price moves buying options.
I wonder why NFP is steady but the GDP is going lower & economic confidence is collapsing? It's kind of a mystery. I guess the NFP is a lagging indicator so maybe it will also collapse later.
Don't worry people got that fomo feeling...they are buying more of everything today than mid april when equities were 20 to 40% lower...
Wallstreet doesn't care anymore about missed or lower gdp...even unemployment gets brushed aside....even if unemployment skyrockets they will print money and lower rates to 0%. Always a quick fix to be had on Wallstreet
and obviously with 26,000 post and only 3,200 likes no one gives a flying fuck about anything you have to say about anything, right?
agree. back in the days when i was there, morning calls there were firm’s macro economists/strategists briefing on overnight and expected news. these days i gather traders just look at the technical charts.
Politics, news and stuff is like high school drama. Don't get involved in it. Just keep your head out of that nonsense and remember why you're here. Remain neutral and objective because that's the only way you're going to survive in this life