More from the article...

... The U.S. economy shrank at a 0.3% annual pace from January through March, first drop in three years. It was slowed by a surge in imports as companies in the United States tried to bring in foreign goods before President Donald Trump imposed massive tariffs.

The January-March expansion in gross domestic product -- the nation's output of goods and services -- was down from 2.4% in the last three months of 2024. Imports shaved 5 percentage points off first-quarter growth. Consumer spending also slowed sharply. Federal government spending plunged 5.1%.

But business investment rose at a 21.9% clip as companies poured money into equipment. And a category within the GDP data that measures the economy's underlying strength rose at a healthy 3% annual rate from January through March, up from 2.9% in the fourth quarter of 2024. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.

Trump inherited a solid economy that had grown steadily despite high interest rates imposed by the Federal Reserve to fight inflation.

His erratic trade policies -- including 145% tariffs on China -- have paralyzed businesses and threatened to raise prices and hurt consumers. ...

@#2

thx, I didn't see that in my quick scan.

More from the cited article...

... Indeed, imports soared 41.3% for the quarter, 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 in subsequent quarters. Imports took more than 5 percentage points off the headline reading. Exports rose 1.8%.

A slowdown in consumer spending and a sharp decline in federal outlays also contributed to the weak GDP number amid Elon Musk's efforts at the Department of Government Efficiency.

"Maybe some of this negativity is due to a rush to bring in imports before the tariffs go up, but there is simply no way for policy advisors to sugar-coat this. Growth has simply vanished," said Chris Rupkey, chief economist at Fwdbonds.

Consumer spending slowed during the period but was still positive. Personal consumption expenditures increased 1.8% for the period, the slowest quarterly gain since Q2 of 2023 and down from a 4% gain in the prior quarter. However, a separate report showed that spending was up 0.7% in March, higher than the 0.5% estimate.

Moreover, private domestic investment soared during the period, rising 21.9%, primarily driven by a 22.5% surge in equipment spending that also could have been tariff driven. ...

@#5

This part stuck out for me ...

... Indeed, imports soared 41.3% for the quarter, 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 in subsequent quarters. Imports took more than 5 percentage points off the headline reading. ...

There's a better thread on this topic on the Back Page ...

@#14

thx for merging them.

@#17

@#24 ... The stock market didn't seem to care (aka people with skin in the game) it closed up yesterday. ...

Nah, that's not the reason why the stock market did not seem to care.

The reason, from what I've seen, is that the shrinking of the economy was due a lot to the ratcheting up of imports trying to get ahead of and counter the Trump tariffs.

@#29

OK, that makes me ask the following ...

The report of the next quarter... will there be a similar surge in imports to drag down the economy?

My guess would be... no.

So then, without that dragging down of the economy by companies acting in a preemptive manner, will the economy grow or shrink?

Time will tell.

@#31 .. the result will be Stagflation. ...

While I do hope that is not the end result, I wish I could be more confident that it won't be.

Stagflation is brutal to resolve. The tools used to resolve problems in the economy seem to work against each other in a stagflation environment.

I lived through stagflation once.

Hopefully, I won't have to live through it again.