The US economy contracted for the first time in three years to start 2025, as a surge in imports dragged down GDP and prices increased more than forecast.
No one saw that coming.
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By no one, I’m assuming you mean everyone. Maybe you mean no one saw this coming so fast? It will be interesting to see how they spin this.
The surge in imports pulled it down quite a bit. It seems likely that reduced consumption, investment, and government spending will all have their turn at dragging down GDP.
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Trump on January 19, 2025”
“Everyone is calling it the — I don’t want to say this. It’s too braggadocious, but we’ll say it anyway — the Trump effect. It’s you. You’re the effect. Since the election, the stock market has surged, and small business optimism has soared, a record 41 points to a 39-year high.”
Trump on April 30, 2025:
“This is Biden’s stock market.”
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Re: no one saw it coming
News reports say one bank expected a 1.5% decline.
We know west coast container arrivals are way down as importers work off their inventory and wait for new developments with tariff negotiations.
Looks like the odds of official recession next quarter are high.
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Stop measuring it. Then there will be no recession.
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It is Biden’s fault, If he wouldn’t have left the country with such a terrible economy. 
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The Atlanta Fed GDPNow has had a negative forecast for first quarter GDP for weeks now. Wendy has mentioned it several times in her weekly control panel posts.
A couple of line items are worth noting in addition to the huge import numbers:
- Investment in equipment (think capex) was up a whopping 22%.
- Federal government spending was down 5%.
DB2
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With the GDP dropping 2.7 percent and being negative that pretty much says it all. The economy has been driven into the ditch and the driver still has his foot on the gas. Next quarter is going to be really ugly because the consumer is slowing down.Edit: Look at the import of Goods that was huge. Must be a lot of pull forward in that.
Edit: It looks like the investment was mostly in Information processing equipemnt IE Data Centers? Industrial Equipment actually shrank (Page 9)
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Wow, got another “Nice Post, the community liked your topic… yada, yada…” and over ten thumbs up.
Then, Poof! It disappeared. because it’s considered off-topic. Huh?
All I mentioned was, “ … an infinite capacity for self delusion,” and “a massive con job.”
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One thing about today is that we received some terrible news on the economy but the market recovered and came back up. That is usually a bullish sign when the market ends up on bad news.Pretty impressive. Now if we can make it over the 50sma on the Nasdaq and the S&P500, that would be some good news. (The red line is the 50sma)
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Except that it doesn’t say it all. Without the surge in pull-forward imports the GDP print would have been positive.
DB2
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Except if you didn’t have that you wouldn’t have had more consumer spending either. We also do not know if the Industrial investment is a one time thing either. What if all of that is just pull forward and next quarter everything stops? The Tariffs make everything cloudy and they are saying we will not have a clear picture till the 4th quarter. I hope that isn’t true but who knows. Edit: Meta and Msft are saying they are going full bore on AI spending so it looks like Data centers should be a bright spot. I noticed NVDA is up but SMCI reported early and guided soft so that doesn’t make sense.
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LOL! I read that this morning and, swear to god, I immediately thought THAT would be the talking point on the right-leaning media.
Be honest, did you discover this yourself or was I prescient? 
Edit:
Except that it doesn’t say it all. Without the surge in pull-forward imports the GDP print would have been positive.
Valid.
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On a related tangent, Mexico GDP was positive in the first quarter.
Hawkwin
Just poking the Orangutan
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It was all over the right wing media today. LOL but digging deeper it wasn’t the capex they would have wanted. Like in industrial plants, it was just the same old AI build out.
I disagree. The pull forward could have been in everything including the investment in equipment. How many people did we hear saying you better buy a car before the tariffs?
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So was Canada.
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Yes, but I am pretty sure that would be reflected in consumer spending. Imports were up 50% - that is massive. The disparity between imports and the anemic exports was 4% of GDP. It clearly was a major factor in the negative number. There is no way it could not be with that much disparity.
But the imports were all part of that. Buy your stuff now because here comes the Tariffs. The whole report is wacked because of the influence of the tariffs. Next quarter we will see all of this go down because people are starting to stop spending.
Actually, I heard it discussed on CNBC first not long after the GDP report was released. But you are still da man, Hawk.
DB2
Let’s add another cherry to our basket.
GDP would have been more negative without pull forward of inventory and equipment purchases.