Wall Street Breakfast U.S. GDP contracts for first time since 2022
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Apr 30, 2025 The U.S. GDP has contracted for the first time since 2022, driven by rising imports amid tariffs. Despite this dip, underlying consumer spending shows resilience. Inflation data is also cooling, creating a nuanced economic picture. Taco Bell shines in Yum! Brands' earnings report, proving there's still appetite for fast food. The podcast dives into financial projections by Wells Fargo, along with a proposed electric vehicle road tax by House Republicans, raising questions about future infrastructure funding.
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Tariff Front-Loading Impacts GDP
- The U.S. economy contracted in Q1 due to tariff front-loading, marking the first GDP contraction in nearly three years.
- Core GDP, excluding tariffs impact, actually grew at a healthy 3% annual rate, showing underlying economic strength.
Inflation Eases According to Fed Measure
- The Fed's preferred inflation measure, the core PCE price index, showed cooling as it remained flat in March and declined on a yearly basis to 2.6%.
- This is the lowest year-on-year inflation rate for this index since March 2021, indicating easing inflationary pressures.
Seasonality Affects Inflation Readings
- Residual seasonal factors continue to affect the core PCE deflator, causing volatility in quarterly trends.
- Analysts suggest the recent rise in Q1 inflation should not concern the Federal Open Market Committee much.