Morning Brew Daily

US Economy Shrinks 0.3% & Starbucks’ Turnaround Plan Gets Bumpy

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May 1, 2025
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INSIGHT

Q1 GDP Shrinkage Distorted

  • US GDP contracted by 0.3% in Q1 mainly due to import surges ahead of tariffs.
  • The drop distorts economic health perception as imports are subtracted from GDP totals.
INSIGHT

Underlying Economy Holds Steady

  • Final sales to private domestic purchasers rose 3% in Q1, showing underlying demand holds steady.
  • Despite headline GDP contraction, core consumer and business spending remains strong.
INSIGHT

Fed Faces Inflation and Jobs Dilemma

  • Core inflation rose 3.6% in Q1 but slowed to 2.3% year-over-year by March.
  • The Fed faces tough decisions with inflation still elevated and job growth slowing.
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