A Quick Word on GDP

GDP numbers for the first quarter of 2025 were released today by the Commerce Department. The bad news is that GDP growth turned negative for the quarter, at a -0.3% annualized pace. The good news is that the negative growth number was largely driven by a statistical quirk—an enormous surge in imports, likely due to efforts by businesses and consumers to buy goods ahead of higher tariffs:

Imports subtract from GDP, so we would expect that if imports fall over the coming months, GDP numbers will improve. However, personal consumption expenditures also slowed, increasing just 1.8% for the quarter, down from 4.0% in the previous quarter.

While softening consumer spending is a concern, it’s too soon to say whether a recession is coming. The impact of the Trump tariff regime is likely to be felt more strongly over the coming months; while growth is expected to cool, it’s unclear whether the US economy will experience a slowdown or tip into recession.

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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.