GDP Declines - Real Or A Head Fake?

2025-04-30 10:40:00 ET

Summary

• The advance estimate for real GDP growth fell at an annualized pace of 0.3 percent in the first quarter.
• All of the decline can be attributed to a surge in imports in advance of tariffs.
• With underlying growth still solid and inflation not yet rising, the Fed is very likely to keep monetary policy unchanged.

The advance estimate for real GDP growth fell at an annualized pace of 0.3 percent in the first quarter. All (plus more) of the decline can be attributed to a surge in imports in advance of tariffs. Importantly, core growth (final sales to private domestic purchasers, FSPDP) grew by 3.0 percent, showing that consumer spending and ( especially ) business fixed investment continued to be solid. This better measure of core growth strongly suggests that there was no recession in the first quarter, or even a slowdown in underling growth....

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