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KEY POINTS
  • Gross domestic product fell at a 0.3% annualized pace, largely pushed by a surge in imports ahead of President Donald Trump's tariffs.
  • Imports soared 41.3%, driven by a 50.9% increase in goods. Imports subtract from GDP, so the contraction in growth may not be viewed as negatively given the potential for the trend to reverse.
  • The report provided cross signals for the Fed. While the negative growth number might push the central bank to consider lowering interest rates, inflation readings could give policymakers pause.
That's an interesting point about the import surge possibly creating a misleading picture. If it is just displaced spending, then next month will look artificially good.
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Definitely. Imports soared because all are trying to profit out of Trump's tariff talks (yes they are only talks). Till next month this whole drama will calm down and the GDP numbers will again be estimated in positive by them.
I believe this (0.3%) estimation isn't correct. GDP can't go that worse suddenly only on the basis of more imports. US is still producing the same amounts of goods or it isn't?
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A lot of business activity paused last quarter, I presume to get a feel for what the policy environment will be like under Trump.
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The condition of economy had already worsened under Biden. If Trump's taking these measures to overcome a possible recession, this downturn is not a bad sign. I'm sure US will see a dramatic economic turnaround under Trump. Afterall he himself is a businessman..
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From what I understand, his negotiating strategy is fairly chaotic. I'm not sure he appreciates the importance of certainty in economic activity.
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