GDP Whacked By Massive Spike In Imports On Frontrunning Of Tariffs; Consumer Spending Grew, Business Investment Soared

Summary

• US GDP dipped by an annualized rate of 0.3%, adjusted for inflation (“real GDP”), after growth rates of 2.4% in Q4, 3.1% in Q3, and 3.0% in Q2.
• A massive spike in imports, by far the worst ever, on tariff-frontrunning subtracted 5.0 percentage points from GDP growth (adjusted for inflation), turning it negative.
• A decline in government spending subtracted another 0.25 percentage points and turned GDP growth to -0.3%, despite decent growth in consumer spending (+1.8%) and a huge surge in gross private domestic investment (+21.9%).
• Adjusted for inflation, final sales to private domestic purchasers jumped by an annual rate of 3.0% in Q1 to $20.7 trillion, up from 2.9% Q4, attesting to the strength of private domestic demand and investments by consumers and businesses.

Dilok Klaisataporn

“Final sales to private domestic purchasers” jumped by 3.0%, on strength in the private economy of businesses and consumers.

A massive spike in imports, by far the worst ever, on tariff-frontrunning subtracted 5.0 percentage points from GDP growth (adjusted for