Unhedged GDP goes negative
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May 1, 2025 The hosts dissect a surprising dip in GDP, revealing the complexities behind the negative growth figure. They explore the disconnect between consumer spending and economic data, highlighting the K-shaped recovery’s impact on different income levels. Discussions also touch on the repercussions of declining oil prices and reduced imports on both consumption and production. Tariff strategies and their influence on the economy, especially for low-income Americans, take center stage, making for a nuanced look at current market dynamics.
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GDP Dip Masks Domestic Strength
- US GDP showed a slight contraction driven mainly by large import surges ahead of tariffs.
- Consumption and business investment remain strong despite the headline negative GDP figure.
Tariffs Distort GDP Numbers
- Imports surged 41% as businesses pulled demand forward to avoid tariffs.
- This timing distortion causes GDP to appear to shrink even as economic activity stays robust.
Consumption Holds Despite Bad Sentiment
- Consumer sentiment is poor but hard spending data shows momentum holds.
- Visa data indicate an uptick in spending into April despite fears of slowdown.