The absolute key to the first quarter GDP result is to remember that ‘imports‘ are a deduction in the economic equation of Gross Domestic Product. The GDP is the valuation of all goods and services produced in the USA *minus* the value of imports.
The Bureau of Economic Analysis (BEA) releases the results of the first quarter GDP. The overall economic growth seems low at –0.3% until you look at how U.S. companies responded in February and March to the tariff announcement.
Companies proactively purchased massive amounts of products in advance of the tariffs leading to an overall increase in imports of 41.3%. Which results in a 5.3% deduction to GDP. Every dollar of those imports is a deduction to the GDP equation, giving the false appearance of lower domestic production.
There was a massive surge in import goods purchases of 50.9% versus the prior period [Table 1, line 20]. That’s the largest periodic increase in import purchases I have ever seen. Simultaneously, fixed asset investment in equipment for domestic production surged 22.5% [Table 1, line 11].
Put both of these metrics together and what you see are U.S. companies building consumer inventory from overseas (imports) while simultaneously preparing themselves to shift production into the USA. The massive import purchases are a bridge to cover the time needed to shift the manufacturing from overseas to the USA. This is exactly what we want to see.
To give more detail to the economic shift, we turn to Table 2 and look at the contribution impact to the GDP equation.
Here we can see that imports surged and led to a 5.03% deduction to the GDP equation. Meaning if all things were equal without the Q1 surge in import purchases the GDP would have been +5.0%.
Meanwhile the impact of federal spending decreased 0.33% as President Trump makes the federal government smaller, and federal spending contribution less. The federal government is getting smaller as a percentage of GDP. Again, a very positive sign.
Investment in the USA is high. MAGA working.
Imports are temporarily high, as companies prepare to purchase less from overseas. MAGA working.
Following the increase in U.S. investment and following the increase in equipment purchasing; we will see an increase in jobs as a result of hiring Americans to use the equipment and create the products. If the workforce tightens up (illegal alien deportation continues) and unemployment lessens, then pressure is created on wage rates as companies compete for workers. Main Street starts winning again.
Attach welfare support to employment efforts and the dependency model shrinks.
This is very good news all around.
“The absolute key to the first quarter GDP result is to remember that ‘imports‘ are a deduction in the economic equation of Gross Domestic Product. The GDP is the valuation of all goods and services produced in the USA *minus* the value of imports.”
Not surprisingly, our PravdaGanda MSM conveniently leave out this fact when they try to use 0.3% number as a talking point.
“Here we can see that imports surged and led to a 5.03% deduction to the GDP equation. Meaning if all things were equal without the Q1 surge in import purchases the GDP would have been +5.06%.”
More to the point by Sundance that you highlighted, Robert.
PDJT Medicine for American Economy is Tough on Pain, Gentle on Your Stomach…
Well they would, wouldn’t they!
Frankly, they don’t understand it either.
Two reasons for their messaging. 1 – they are too stupid to understand, and if they weren’t, 2 – they are too dishonest to report it.
MSM always ignores the details behind the numbers. Their mission is to advance their narrative not to inform.
It is just like how the MSM always ignored the details behind Biden’s GDP, because the details made it clear Biden was puffing up GDP by massively increasing government spending and puffing up employment numbers by hiring hordes of new government employees and illegals working low-wage part-time gigs.
Now the MSM will be ignoring the real positive momentum under Trump. They will cherry-pick or blur out selective parts of the story to always paint the economy in the worst possible light.
MSM: We are in a recession. People just don’t notice it. Wash, rinse, repeat.
As Rush Limbaugh once said, I refuse to participate in their recession.
We’ve been in a recession since 2021, we just papered it over with debt. And now that the wallet is filled with Biden’s IOUs, it’s time to pay the piper.
and yet, POTUS Trump has managed to create growth and reduce the inflation [clean up the mess] in 100 days of leadership.
Main Street Americans were in a recession for the last 4 years….no job growth and wage shrinkage. The only folks that made out like bandits were government workers and illegals. Main Street Americans are seeing wage and job growth. Maybe the government workers, illegals, and Democrat media are experiencing what we had been experiencing………..stagflation.
On average, 1-1/2 – 2% salary raises over the past 10 years.
If a tree falls in the forest, and there is no one there to hear it, does it make a sound?
If the media declares a recession, and there is no one to experience it, is it really a recession?
The answer to both is, “it doesn’t matter.”
When Biden had two consecutive quarters of declining GDP (the textbook definition of a recession) the media turned itself into a pretzel and academia literally changed the hundred-year-old definition just so they could avoid calling that a recession.
For months the media has been loudly proclaiming a dire recession is on the way. Now they will use the top-line number as “proof” while obscuring the background data.
Not according to this SD article you are commenting on.
Psalm 105:37
“And he brought them forth with silver and gold; And there was not one feeble person among his tribes.”
And you are living in the New Exodus, the Golden Age of our Father’s Great Reset–rejoice, brothers and sisters!
“The silver is mine, and the gold is mine, says the LORD of hosts.”
Haggai 2:8
You will own everything…
And be happy.
Personality does not factor in mathematics.
CAPITALISM
The economic condition wherein The People own the “capital” {public Monies}
And
The Government owns the “ism”.
“Stand fast therefore in the Liberty wherewith Christ {Grace} has made US {We The People} free, and be not entangled again with the yoke of bondage {Law}.
Gal 5:1
Liberation Day has freed US {We The People} from the yoke of bondage {indentured servitude} to the corrupt {RICO}, money laundering, currency manipulating {inflation}, enemy aiding and abetting {Chyna} criminal enterprise known as the…
Federal Reserve Bank.
In God We Trust
{All others pay cash}
Trust God
Fear not
Nice one.
In your face, globalist nazis.
“…and ye are complete in him, which is the head of all principality and power…” —Colossians 2:10. Christ my Sustaining Glory, my Excellent Shepherd!
Amen.
Doesn’t chart say GDP is Minus .3 % so no growth?
May just be a typo in headline.
Craig, you are correct – it is not a typo in the chart, as it is shown in the original source. It is a typo in the thread.
Foreign imports are a deduction against GDP. There was an unusually large increase in the purchase of foreign imports in anticipation to the upcoming implementation of tariffs by the Trump Administration. That unusually large amount of increase in imports reduced GDP by 5.3%. So nothing changed except manufacturers and retailers stocked up on goods for the next couple of months.
The only impact will be that GDP number for the next month/quarter will be off the charts high because it won’t have the normal (or even the current exorbitant amount of imported goods from this time) amount of imported goods deducted from the GDP. So guess what, GDP growth is going to exceed all expectations and the stock market is going to rock upward and President Trump is going to look like he’s an economic genius.
That was my understanding as well…
From this morning’s Zerohedge.
https://www.zerohedge.com/economics/us-q1-gdp-contracts-record-imports-shrinking-govt-consumption-comes-stronger-expected
When the dust settles, looking forward to seeing what next month’s revisions tell us.
Government economic data is untrustworthy garbage and I don’t trust it no matter who is theoretically in charge.
I’ve seen an analysis online of upward vs downward revisions which I can’t find right now because it presents an unpopular fact for the markets and is, therefore, rare, but it showed downward revisions after the resulting market PUMP of the previous, too optimistic data far outnumbering the upward revisions. If the data collection and calculation methods were accurate, one should expect an approximately 50/50 split.
Video:
Economic data revisions are ‘consistently negative’: Peter St Onge
https://www.msn.com/en-us/money/markets/economic-data-revisions-are-consistently-negative-peter-st-onge/vi-BB1pusVd
Simplistic garbage:
GDP = C + I + G + NX
G = government spending
C = consumption
I = investment
NX = net exports which are imports minus exports
When G based to a large extent upon borrowed money (i.e. theft from future productivity) which also greatly influences C and I grows to be a large component in that equation, GDP becomes even less of an accurate measure of the true productivity of an economy.
Below is 2 minute, 48 second video clearly exposing the simplistic garbage economic theory which is allowed to persist because those in a position to fix it, banks, the extremely wealthy, and pols greatly benefit from it.
The banks benefit through usury on money created through the issuance of credit (the creation of debt), the wealthy through the two steps forward, one step back for them boom/bust upward ratcheting process where REAL assets (land, corporations, etc.) can be bought at fire sale prices during the bust, and pols who can promise more than they can pay for though tax receipts.
This I know, Winston. And yes, I know there are elements within the bureaucratic system which seek to undermine any positive news coming from the corrective works President Trump is managing to accomplish in spite of them.
I, too, have never trusted figures which can be manipulated to give a false picture of the economy at any particular moment, for whatever ideological or political purpose those who issue them intend.
As the old saying goes, figures lie and liars figure…
I would hope that Secretary Bessent, understanding this dynamic, will give a thorough once over each month’s statistics before they are released.
Let’s hope that as time marches on the economy gets rosier and rosier… so rosy in fact that there will be no wiggle room for anyone to try to negate the incredible success of the master builder who sits in the White House and is working for all he is worth to deliver better times for the citizens of the America he loves.
Thank you for the link, my friend.
This I know, Winston.
I figured you did.
I used to have a link to a great graph clearly showing this boom/bust upward ratcheting effect for the ultra wealthy, but lost it and for the same reason I can’t find the revision downward bias data because it is an unpopular fact for the markets, I can’t find the graph showing this fact which I pointed out above. The *** emphasis is mine:
DDG AI answer: The boom-bust cycle often benefits the wealthy by inflating asset prices during booms, allowing them to accumulate more wealth, while the subsequent busts create opportunities for them to purchase assets at lower prices. ***This cycle can lead to a significant transfer of wealth from the general population to the elite.***
The more I learn, the more I take this attitude about ANYTHING in the news relating to accepted narratives. Language warning.
“It’s time to call bulls**t.” Mark Baum in “The Big Short” (20 second clip)
Here’s a thing…
Time was when we had sound money, saving was considered a virtue. This virtue was drilled into me from my younger days by my father, and I have followed it, expecting that since gambling in the Wall Street casino has never been appealing to me (I want to put my head on the pillow at night and not worry that one morning I might wake up to a 2007 scenario, especially at my age).
President Trump is impatient for interest rates to come down, and I understand why…though historically the rates as they have been I’d hardly describe as “high” and have afforded us a reasonable return on our savings after a decade of negative rates (add inflation, and well…).
Essentially free money allowed the wealthy to increase their net worth exponentially. That’s just a fact.
And so as we start to go back down, we are adjusting our expectations and tightening our belts once again, hoping that we aren’t hit once more with the double edged sword of low rates on our accumulated “virtue” and another bout of inflation with no way to offset it. As seniors that would be the worst.
My go to is Art Laffer on all things economic.
https://www.foxbusiness.com/economy/inflation-long-term-problem-if-fed-doesnt-wake-up-smell-the-coffee-laffer
That clip is from the biden years. My memory tells me that during the begining of the trump years they were always upward revisions. Derp state gotta Derp State.
Year end 2024 Job revision 800k+ DOWN
Hilarious ma’am. Thank you, lol.
It would still be right at 5% domestic growth. Plus or minus hardly matters, it’s still a solid Q1.
Wait until next quarter. The numbers are gonna be off the charts and in reality it will just be makeup from the prior quarter.
https://mishtalk.com/economics/real-gdp-down-0-3-percent-real-final-sales-down-2-5-percent-inventories-soar/
Yes.
And it is not a typo.
The numbers show that a coiled spring is being compressed. That spring will bounce up next quarter:
Q2’s volume of imports will drop sharply due to the tariffs. Early numbers already show large declines in China manufacturing, in inbound ship traffic, in trucks bringing goods across the northern and southern borders.Companies built up large inventories in Q1 in anticipation of the tariffs hitting. Those inventories will get sold off in Q2. The costs for the build counted against Q1. The profits will be credited against Q2 and later quarters.Trillions of dollars are flooding into the USA to re-shore manufacturing. Those dollars will hit construction spending first (to build factories,) then they will show up in equipment orders (to equip the factories,) then hiring (to staff the factories.) All that will play out over a year or more.Government spending is already coming down. Those cuts will continue rolling out if Congress enacts cuts to make-permanent Trump’s DOGE’s cuts and reorganizations. Remember many federal employees took buyouts and are still getting extended severance pay. When those employees finally drop off the payrolls for good it will show up as really big drops in government spending.
Keep in mind that “The Economy” did not really shrink. What did shrink was the statistical estimate of the economy (ie the made-up number called GDP.) The measurement shrank. The actual economy is fine.
Remember all the “models” that so-called virus experts were tossing around during Covid?
GDP is just a model created by economic so-called experts.
Models are only as good as the assumptions behind them and the data fed into them. Both the assumptions and the data are ALWAYS incomplete (and very often biased.)
Editing comment
Trumpmeister rules.
MSM take: “U.S. economy shrinks 0.3% in first quarter as Trump trade wars disrupt business”
MSM is evil
MSM speak with forked tongue.
It’s -0.3
Yes; Sundance should correct in headline and text of post. Not that it’s a huge deal—just in the interest of accuracy.
Nobody understands it anyway.
MAGAAAA!!!!
Good analysis Sundance. With the increase in inventories, companies have given themselves sometime to wait out the trade agreement negotiations. It looks like SE Asian countries stepped up first to finalize deals – that’s good because that covers much of the consumer good production.
The baseline tarrifs will be easily absorbed on our side through currency revaluations.
If Federal government spending continues to shrink and trade deficits also shrink, the MAGA GDP just gets better.
Christmas goods are already here or on boats. Asia is manufacturing next summer’s goods.
Hoping now for the smaller manufacturers to come back online after being pushed out. Even if they start production again in their garage, or bedroom! Buy American, save America!
Yes, that will be the first surge of new manufacturing production. With our logistics infrastructure new highly specialized component production can break out in garages, shops, empty malls, etc. The elimination of the $800 deminimus will especially create opportunity for small operators.
PT should take this Sundance thread and post it on X and Truth Social as it explains the whole GDP situation better than anyone I have read today including PT’s statement.
Truly, Sundance should be on PT’s inner circle advisory communication team.
Not many folks understand economics. Much of what we were taught by the elite’s philosophy is wrong. The teachings of Sundance and their proving out in the real world is a sight to behold.
Math is hard, economics is harder. Especially when you are corrupt.
Up 0.3%?
I’m seeing down -.3%. What am I missing?
Did you miss the explanation above in the essay by Sundance?
Double negative?
Yer missing the details of how that number was derived.
Personal income increased $116.8 billion (0.5 percent at a monthly rate) in March, according to estimates released today by the U.S. Bureau of Economic Analysis. https://www.bea.gov/
From Grok:
The largest periodic increase in import purchases from the preceding period, as noted in recent data related to the U.S. Bureau of Economic Analysis (BEA) Table 1 Gross Domestic Product and Related Measures Report, occurred in the first quarter of 2025. According to a post on X by Jason Furman, imports increased at a 41.3% annual rate, the fastest pace since 1972 (excluding the pandemic period), contributing a -5.0 percentage point impact to GDP growth. While the BEA’s official reports for Q1 2025 are not directly quoted here, this aligns with the most significant import surge referenced in available sources.
For precise confirmation, you can check the BEA’s latest GDP report (Table 1.1.1 or 1.1.6) for Q1 2025 at http://www.bea.gov, as import data is detailed there quarterly.
Doesn’t that negative sign mean the GDP contracted .3%?
Edit: I should have read the remarks before commenting, because I’m not the first to notice this inaccuracy.
You can’t get anything past this crowd!
Good analysis. Didn’t realize imports reduced GDP by that much but makes sense.
To add some context as to what comprises those imports …. A large portion of those imports are related to the end of the required RETAIL Summer Inventory and the START of building up the FALL-Chrismas RETAIL Inventory.
China Inc. may also be preparing to provide sources OUTSIDE the Chinese Mainland … so they dumped the inventory produced inside China … possibly at a LOSS.
This is a timely CTH article as one of the first questions the ABC Drone asked President Trump, last night, was to explain the -.3% GDP.
Hopefully the Foot Soldiers of President Trump’s economic team use this exact same chart. Liz McDonald’s and Charles Payne’s shows would be a great place to insert this chart on the MSM, they are MAGA friendly.
A small Business related report is also needed for the same reason. The MSM is hammering hard on the negative impact of tariffs on small businesses.
I think it was negative .3.
Off topic but not completely:
Today’s PDJT Cabinet meeting broadcast to the public was awesome!
It should be a mandatory watch for all America.
That won’t happen. All democrats and other weirdos hate PDJT.
Thus they hate Americans getting the word straight from the horse’s mouth, which means they can’t snip/edit/AI the want they want to.
Thank you SD. I hope Sec Bessent sees this.
Always appreciative of insightful deep dives from valued expertise; thank you.
I would say at least part of the import increase can be explained by future demand pulled forwards to avoid import tariffs.
(front loading demand)
This means in the future we could expect to see a drop in purchases (both domestic and import)
If you know your 100 dollar gizmo will be 20 dollars more expensive in a few weeks, you are more likely to buy it now than later, everything being equal.
For some of those things it might be more prudent to wait for some deals.
Keeping a large inventory on hand is taking a risk for retailers. If those products don’t move fast enough, the costs of storing that inventory will eat into their margins.
Listening to the news you would be told that it’s more bad news caused by Trump.
Well of course , do you really think the mainstream media will ever be truthful ? Of course not , even when the country’s doing the best ever the media will say it’s the worst ever , it’s what they do .
Context is King
Q1 2025 gross private domestic investment says it all – other than when the scamdemic stopped, Bidenomics numbers flat out sucked.
The real driving force is interest rates and the Trump administration will do anything to try and keep that down as Americans are at record levels of debt. You can have all of the merchandise in the world on the shelves but without the ability or credit to buy it you are done.
Bessent has been laser focused on the 10 year yield and with the Fed’s reluctance to cut rates coupled with the selloff of treasuries worldwide as weapons against the tariffs you are seeing the gyrations in the markets as President Trump has been juggling his tariff threats back and forth to try to keep this key rate in check. Hopefully, Powell gives in soon to help out and get the ball rolling on liquidity or those new factories aren’t going to be built anytime soon.
Credit card debt is so massive, it’s not going away easily.
Easier to pay off with lower interest than high interest.
Unfortunately, a lot of people, being unsophisticated, are going to see a .3% drop as a negative.
So at the end of the day, the MAGA Q1 GDP number was 5% by just doing some simple addition and subtraction. Great news!
Something very important absent from the GDP report. Line 14 of the first chart above, Change in Private Inventories is completely blank. No gain or decrease in private inventories which affect GDP.
With all the imports counting against GDP, Rising inventories count toward GDP. And yet BEA leaves that category blank.
Correct me if I’m wrong.
The News is making it sound like we are on the verge of a recession….Tariffs bad…Trump’s economy slowing
So how will they explain it when you add regular growth plus the 5% that you didn’t import to the next quarter’s GDP. It’s going to make it look like there was a tremendous turnaround and that Trump’s policies are working. Then they’ll explain. ROFL. This group seems to be willing to play the long game which is good.
It will be interesting to see the performance reports related to the US Economic Sectors for Q2 through Q4.
I consider the Q1 Report as a baseline as it marks a “policy” transition point.
The economic sector reports, especially those based on the S&P 500 are a good place to chart progress.
Given Q1 is a transition point and that President Trump has had only 2 months (Feb and March 2025) to generate the numbers covered by Sundance, this is a fabulous report.
Thank you Sundance for such a complete explanation even I could understand. Sharing this!
The boost in purchased equipment I’ll bet occurred because Pres. Trump says he wants 100% expensing of these purchases in 2025 and thereafter, retroactive to his Inauguration. It looks to me like real businesses are taking Trump at his word on tax relief and tariffs.
Meanwhile the financial media whores are united in pushing fear porn and hoping no one notices. However, Main Street has quite the honey badger attitude, so the whores needn’t worry about being called out. No one is paying them any attention.
Perfect response(s) to all the idievil news lefties who are hammering PDJT’s economic/business moves every way they can. incessantly. Raging OCD. “Everybody’s gubmint funds are being cut”, even private industry which (oh so obviously) is NOT FINANCED by the gubmint! Beyond DEI and other leftist junk that is.
Correct me if I’m wrong, but I believe imports DOUBLED during the quarter. Meaning, if all things were equal, imports should have been around a 2.5% deduction to GDP.
Instead, we get a 5% deduction. Taking the 0.3% contraction as is, all things being equal, real GDP would have been (2.5-0.3=2.2) 2.2%.
Am I wrong?
…and you know the donkeys will try to make hay with these numbers while the haymaking is good…leaving road apples everywhere. 🫏🍎
Love it when a plan comes together!
The site would basically cease to exist.
Sundance’s insights are useful, but here’s an important point he seems to believe everyone knows (but they don’t):
– GDP supposedly contracted by an annualized 0.3%.
– That means for the QUARTER, the economy actually only shrank by a barely noticeable 0.075%.
– Sundance must assume we know about these results being annualized. My guess is that he’s only half-right about this audience and 90% wrong about the rest of the US population.
Negative growth next quarter. Big RECESSION headlines.
In 3rd quarter, 1st quarter revised up to 0.2% growth.
That’s just how “they” do it.
Eric Daugherty
@EricLDaugh
BREAKING: AtlantaFed now estimates Q2 GDP growth will be +2.4%.
AtlantaFed estimated a -2.7% GDP for Q1 2025, an underestimation of 2.4 points.
3:06 PM · Apr 30, 2025
Stop the boot licking. Government data BS hasn’t been fixed yet. REAL GDP is down.
https://mishtalk.com/economics/real-gdp-down-0-3-percent-real-final-sales-down-2-5-percent-inventories-soar/
Separately, I have a huge problem with today’s GDP figure of -0.3% (annualized, 0.075% actual for the quarter). Maybe someone can explain why I’m wrong.
The problem is that the “implicit price deflator,” a figure meant to take inflation out of the nominal GDP figures before inflation, came in at 3.7%. 4Q24’s deflator was only 2.3%; 3Q24’s was 1.9%. The last time we saw a deflator as high as 3.7% was 1Q23.
I can see no reason why 1Q25’s deflator is so high compared to the two previous quarters, especially given the first quarter’s relatively slow price rises in general (including a negative 0.1% for consumer prices in March).
If the deflator in 1Q25 was the same as 4Q24, I believe we’d be talking about 1.0% annualized growth instead of a mild contraction.
So what’s the deal with the deflator change, and why isn’t anyone (including Sundance) talking about it?
MAGA!!
Thank you, Sundance, for the analysis and truth!!
MAGA Wolverines!!!
Mr. Sundance sir thank you for the information and explanation.
Thank you SD for your excellent explanation.
At today’s closing, oil finished at 58.23 a barrel. When this lower price makes its way to the gas pump it will help fuel the economy even more. With a -.3 for the baseline in Q1 and without the inflated orders for imports, Q2 may look like the economic growth is on fire. Q3 will be the tell all for the Trump economy.
Keep an on the fed and interest rates. The fed may use Q2 numbers to screw over Q3.
Hats off to Sundance for the skinny.