Morning Report: First quarter GDP falls on a big increase in imports

Posted on April 30, 2025 by Brent Nyitray

Vital Statistics:

Stocks are lower after some weaker-than-expected economic data. Bonds and MBS are flat.

First quarter GDP fell 0.3% which was lower than the 0.2% Street expectation. The decrease was attributable to a larger-than-expected increase in imports. Consumer spending and investment were additions to GDP while government spending was modestly negative and imports were a big drag.

It looks like the GDP numbers were highly influenced by tariffs: the big increase in investment was primarily attributable to inventory build, while the increase in imports (from $4.1T to $4.6T) was probably driven by businesses trying to get ahead of tariffs. Note these are annualized numbers.

The drop in government spending was primarily attributable to defense.

More evidence the labor market is softening: Private sector employment rose by 62,000 last month, according to the ADP Employment Report. “Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data,” said Dr. Nela Richardson, chief economist, ADP. “It can be difficult to make hiring decisions in such an environment.”

We saw wages increase 4.5% on average, a slight deceleration from March. Leisure / hospitality, construction, and finance saw the biggest increases in payrolls, while education / health and IT fell.

The Street is looking for 125k private payrolls on Friday, so this report portends a miss.

Consumer confidence fell in April, according to the Conference Board. The Present Situation index was marginally lower, but the expectations index hit a 13 year low. “Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The decline was largely driven by consumers’ expectations. The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future. Notably, the share of consumers expecting fewer jobs in the next six months (32.1%) was nearly as high as in April 2009, in the middle of the Great Recession. In addition, expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations. However, consumers’ views of the present have held up, containing the overall decline in the Index.”

The view of current business conditions actually improved, however consumer views of the current labor market were lower. The conference board index comports with the University of Michigan numbers. The stock market decline is certainly weighing on sentiment, as is the uncertainty over tariffs.

Job openings fell to 7.2 million in March, according to BLS. February’s number was revised downward to 7.5 million. The quits rate ticked up to 2.1%, which was flat on a year-over-year basis. Job openings shot up in the aftermath of the COVID pandemic and began to fall starting in 2022. We are now almost back to pre-pandemic levels.

Filed under: Economy |

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61 Responses

  1. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on April 30, 2025 at 9:16 am said:

    Exposing this kind of shit is the true genius of Doge. There are literally thousands of such agencies funded by the government. I’m as cynical as they come when it comes to government spending and even I am shocked at the sheer massiveness of this abuse.

    Ultimately, I suspect that 99% or this stuff survives, as Congresspeople and their families and army of allies feed off this.

    The US, sadly, is a blue whale carcass slowly rotting and being fed on, it’s huge so it takes a while to fully disappear. To paraphrase Johnny Rotten talking about the Sex Pistols, “{The US} is dead and we are feeding off its corpse .”

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    • jnc4p's avatar
      jnc4p, on May 1, 2025 at 9:22 am said:

      It’s unfortunate that DOGE has been badly mishandled to date as it was clearly needed.

      Like

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      • Let the mutherfuker burn!'s avatar
        Let the mutherfuker burn!, on May 1, 2025 at 9:54 am said:

        I’m am sure it could have been handled better, most things can, with the benefit of hindsight, or even more thoughtful planning. The problem as I see it though is the disconnect between Congress and the electorate. Enough elected Congress people benefit financially from every increasing spending and ever increasing opacity that there is a huge incentive for those people to fight tooth and nail any and all spending cuts, restraints or streamlining. Until that dynamic changes, and I don’t see how, it wont. The best anyone tasked with this impossible endeavor to cut or at least streamline spending can hope to accomplish will be exposure, which I thing DOGE was initially VERY effective at and recently, less so. I suspect the assault on Elon and the Doge team, which I think has come equally from both sides, just less visibly on the right than the left, has squashed and further effort at exposure and reform.

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        • jnc4p's avatar
          jnc4p, on May 2, 2025 at 10:24 am said:

          I also think they over-promised initially and have undelivered to date.

          I also think they should have tried to work with the existing inspectors general first before summarily firing them.

          I suspect there was a whole lot of waste that was an open secret that they could have been pointed to and taken credit for.

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  2. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on April 30, 2025 at 9:18 am said:

    Brent, what do you think the revision on Q1 GDP will look like?

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  3. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on April 30, 2025 at 3:20 pm said:

    What I find fascinating in this post is the absolute faith in the media that the narrative carries the day and influences the entire electorate. Hence the belief that Democrat losses must equal a loss of media control. There is no consideration that the media is not particularly influential for either party.

    https://www.dailykos.com/story/2025/4/29/2319543/-losing-the-break-room#comment_91205697

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  4. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on April 30, 2025 at 6:35 pm said:

    And, no due process!

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  5. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on April 30, 2025 at 10:19 pm said:

    Did the ADHD make him tranny?

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  6. jnc4p's avatar
    jnc4p, on May 1, 2025 at 9:24 am said:

    Interesting analogy:

    “The first 100 days of President Trump’s second term have done more damage to American democracy than anything else since the demise of Reconstruction.”

    https://www.nytimes.com/2025/05/01/opinion/trump-100-days-opposition.html

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  7. Brent Nyitray's avatar
    Brent Nyitray, on May 1, 2025 at 10:52 am said:

    Sounds like Waltz is out.

    The left is spitting mad it isn’t Hegseth.

    Jeffrey Goldberg aimed for Hegseth and shot his BFF Waltz.

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    • Let the mutherfuker burn!'s avatar
      Let the mutherfuker burn!, on May 1, 2025 at 11:10 am said:

      I love the fact that the deeps state and Democrats (BIRM) are so ham-handed and bubbled that they actually thought it would work rather than exposing their internal conduit. I’m guessing Trump didn’t buy the “mystery” of how Goldberg’s contact got it either Walz or Wong’s phone.

      Have you seen Trump’s ABC interview? It’s hilarious – at one point Terry Moran asks him if he’s 100% behind Hegseth and Trump essentially said that he’s not 100% sure of anything, including not being 100% sure he is going to finish the interview!

      I’m still somewhat mystified over the DS/Democrat hatred of Hegseth. What’s he done re Pentagon spending, which is what I suspect they really care about?

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      • Brent Nyitray's avatar
        Brent Nyitray, on May 1, 2025 at 11:11 am said:

        The left hates him because he is going to “erase” the “gains” made by the left with respect to women in combat and trans by re-instating physical standards and requiring that everyone meet them.

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        • Let the mutherfuker burn!'s avatar
          Let the mutherfuker burn!, on May 1, 2025 at 11:34 am said:

          I see your point, it just seems to be such a weird hill to die on. Maybe it’s because I’m not a lefty and don’t perceive how inequitable society is, but I also don’t think the deep staters and elected democrats think that either. I go back to money and grift and the close to a trillion dollar a year DoD spending.

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        • Brent Nyitray's avatar
          Brent Nyitray, on May 1, 2025 at 11:41 am said:

          Feminism is the North Star of the Democrat party.

          Nothing is more important.

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        • jnc4p's avatar
          jnc4p, on May 2, 2025 at 3:30 pm said:

          You sure that trans rights don’t trump feminism now?

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    • jnc4p's avatar
      jnc4p, on May 2, 2025 at 10:26 am said:

      The annoying thing is that they gave up a seat in the House for all this drama.

      And now the Democrats have a forum to air grievances with his UN nomination. We’ll see if they overreach there.

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      • Let the mutherfuker burn!'s avatar
        Let the mutherfuker burn!, on May 2, 2025 at 10:28 am said:

        A Republican won the seat, so while it was vacant for a while it’s still in Republican hands. Ditto Gaetz’s seat.

        Re, hearings drama, how impactful with the electorate are they, really? Won’t the distraction help as they work on the big, beautiful bill? Finally, do they really want to hurt Walz if he or his close aides are their conduits?

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    • jnc4p's avatar
      jnc4p, on May 2, 2025 at 10:33 am said:

      This caught my attention:

      Because on the one hand, they say that the dollar should be weaker and it should somehow also be the complete unquestioned reserve currency. They want the dollar to be weaker and stronger at the same time.

      The Miran plan — there’s this thing called the Mar-a-Lago Accord, which tries to parallel the Plaza Accord of the 1980s. It actually tells China: OK, we’re going to give you a hundred-year bond. And we’re going to pick the interest rate on them, and you’re not going to be able to sell them to anyone, and you’re going to love us. And by the way, that’s what you have to do. We’re going to do that to our friends, our enemies, to everyone. We want the dollar to be dominant. We want you to supplicate.

      Needless to say, that’s a recipe for blowing up the global financial system, not for having stability. I’m just giving their contradictions. They say they want to be the reserve currency. But we’re willing to be the reserve currency if we don’t have to pay any interest. You can’t do anything with the money. And we’re basically defaulting. It is a partial default. It is a spectacular default.

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      • Brent Nyitray's avatar
        Brent Nyitray, on May 2, 2025 at 11:34 am said:

        I think the Miran plan is just a thought exercise, not actual policy. The bottom line is that no other country has the liquidity to be the reserve currency, and China will never permit its markets to have the openness to be a reserve currency.

        As Bill Gross is fond of saying: The US is the cleanest dirty shirt in the bunch.

        Also, the US and the UK have the highest short term rates (4.5%) of the major economies. The Eurozone is 2.4%. Japan is 0.5%. Canada is 2.75%. China is 3.1%. Switzerland is 0.25%. South Korea is 2.75%. The idea that we have excessively low borrowing costs due to the status as a reserve currency is nonsense.

        You want to weaken the dollar, cut rates.

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  10. jnc4p's avatar
    jnc4p, on May 2, 2025 at 1:27 pm said:

    Oh, it will be so hilarious if the Democrats start saying nice things about Charles Koch.

    https://time.com/7282130/charles-koch-speech-trump-tariffs/

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  11. jnc4p's avatar
    jnc4p, on May 2, 2025 at 1:54 pm said:

    Worth a read:

    Come Visit Late-Weimar California For a Virtual Hour, and Leave Feeling Ashamed and Disgusted

    Chris Bray

    May 01, 2025

    https://chrisbray.substack.com/p/come-visit-late-weimar-california

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    • Let the mutherfuker burn!'s avatar
      Let the mutherfuker burn!, on May 2, 2025 at 2:59 pm said:

      I did read that piece and it was hilarious! The butthurt going on with his staff is wild. Is there a reason he keeps them around? I mean, for reasons other than he likes to fuck with them? The other option is he tells them to bad mouth him to media to keep their options open in the progressive protection racket job market.

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      • jnc4p's avatar
        jnc4p, on May 2, 2025 at 3:12 pm said:

        I think most are ex-staff. What it shows clearly is how the “groups” in the Democratic Party believe that they run the show instead of the actual elected office holders.

        Of course, it helps when you have a party that is so geriatric this is often a practical necessity brought to it’s apotheosis with Biden himself.

        What’s really amusing is to watch them now trot out the arguments that the Republicans were using against Biden and against Fetterman himself during his campaign after all the deflection they did at the time. And after attacking anyone in the media who questioned his fitness after the stroke announcement but before he won the election.

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  13. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on May 2, 2025 at 3:03 pm said:

    Curious how much Senator Wicker thinks the DoD budget should be? It’s already above $1 Trillion.

    Insatiable n

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  14. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on May 2, 2025 at 3:10 pm said:

    I cannot decide which is better, that it’s trolling or it’s true.

    https://www.axios.com/2025/05/02/stephen-miller-national-security-adviser-candidate

    The hearings will be epic! It will make the Clarence Thomas or Ollie North hearings appear downright quaint.

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  15. jnc4p's avatar
    jnc4p, on May 2, 2025 at 4:20 pm said:

    Wow

    “Trump administration plans major downsizing at U.S. spy agencies

    The CIA plans to cut 1,200 positions, along with thousands more from other parts of the U.S. intelligence community.

    May 2, 2025 at 4:39 p.m. EDT”

    https://www.washingtonpost.com/national-security/2025/05/02/cia-layoffs-trump-administration/

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  17. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on May 3, 2025 at 4:21 pm said:

    I believe the response to this hypocrisy is “false equivalence”.

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  18. jnc4p's avatar
    jnc4p, on May 3, 2025 at 10:36 pm said:

    The full extent of the COVID lying is finally becoming known:

    An important part of the argument is that there was a disjunction between what health officials like Anthony Fauci and Birx were saying in private and what they were saying in public. Can you give me examples?

    Well, in her memoir, Deborah Birx is quite frank, that two weeks to slow the spread was just a pretext and it was just an effort to get Trump on board for initial closures and that, “As soon as those closures were in place,” she says, “we immediately began to look for ways to extend them.”

    https://www.vox.com/the-gray-area/411193/politics-covid-frances-lee-partisan-divide

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  19. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on May 5, 2025 at 9:56 am said:

    Still the GOAT of Tweets.

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  21. jnc4p's avatar
    jnc4p, on May 6, 2025 at 9:35 am said:

    Good interview:

    Talking to folks back home who really don’t care at all about most politics, they have very sophisticated views on Canadian lumber-dumping practice — we lost seven mills in my area last year. I think it’s about seven.

    We want domestic manufacturing. We want self-sufficiency. We want the ability to make things ourselves. I think it’s a mistake to defend our identity around being just consumers and not producers, as well.

    https://www.nytimes.com/2025/05/06/opinion/ezra-klein-podcast-marie-gluesenkamp-perez.html

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  22. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on May 6, 2025 at 10:04 am said:

    And I think the question is not what the nominal picture of wealth in these terms are, but how much economic agency and self-determination we have. Do you have the power to stay home and spend time with your family? Or are you working three jobs? Are you able to own a home, to own land, own farmland? Or are you stuck in a cycle of perpetual running that you don’t want to be in? Do you have the right to make your own stuff? Do you have a level playing field to start your own business? Those are the questions.

    To me, this is an argument for overturning Wickard v Filburn. I would love to hear her position on that.

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    • Let the mutherfuker burn!'s avatar
      Let the mutherfuker burn!, on May 6, 2025 at 3:14 pm said:

      From the same article,

      My dad used to say: You can talk about your values all day long, but you see somebody’s tax returns and you know what they really think.

      I have no idea what this is supposed to mean. Is it some sort of heuristic that paying as much taxes as possible is morally good? Considering all the immoral things the government spends money on, that’s dubious at best. Is it saying that taking every advantage in the tax laws one can is morally good? That’s sounds reasonable to me as you are encouraging compliance with the law.

      I suspect it’s the usual liberal horseshit libs say to themselves while taking advantage of what they call loopholes when Republicans take advantage of it.

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  23. jnc4p's avatar
    jnc4p, on May 6, 2025 at 10:49 am said:

    Sounds like Medicaid fraud to me:

    G.O.P. Targets a Medicaid Loophole Used by 49 States to Grab Federal Money

    States have long used taxes on hospitals and nursing homes to increase federal matching funds. If Republicans end the tactic, red states could feel the most pain.

    By Margot Sanger-Katz and Sarah Kliff

    May 6, 2025

    Updated 9:39 a.m. ET

    In 1989, New Hampshire’s Republican governor, Judd Gregg, had a gaping budget hole he didn’t know how to fill. His health secretary came up with a solution: a tax maneuver he’d learned through the grapevine that would force Washington to send the state millions in extra Medicaid funds.

    It was called a Medicaid provider tax, and New Hampshire was among the first states to try it. New Hampshire taxed its hospitals and returned dollars to them as higher payments for Medicaid patients’ care. On paper, the tax inflated the state’s Medicaid spending, allowing it to collect more matching funds from the federal government.

    “It was a way of the state basically gaming the federal government, for lack of a better term,” Mr. Gregg said recently.

    https://www.nytimes.com/2025/05/06/upshot/medicaid-hospitals-republicans-cuts.html

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  24. jnc4p's avatar
    jnc4p, on May 6, 2025 at 3:01 pm said:

    I’ll check back on this in 6 – 8 weeks:

    https://substack.com/@kathleenweber/note/c-114853584

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  25. jnc4p's avatar
    jnc4p, on May 6, 2025 at 4:21 pm said:

    Scott – how to game the system to prevent challenges to final deportation orders:

    Pedro Escobar Blanco, one of two hundred and thirty-eight Venezuelans deported by the Trump Administration to a maximum-security prison in El Salvador on March 15th, never met the lawyer who is representing him in U.S. immigration court. They haven’t spoken by phone or texted or communicated through an intermediary. He almost certainly isn’t aware that he’s being represented at all. Yet, a month after he entered Salvadoran custody, an immigration judge in Southern California held a hearing on his asylum case. Escobar Blanco wasn’t in attendance—no one has seen or heard from him since he was sent to El Salvador—and the judge, citing his absence, ordered him removed from the country.

    Judges regularly issue deportation orders in absentia for people who are on what’s called the non-detained docket. These individuals have already been released from detention on the condition that they later appear in immigration court. However, if a person is in the custody of Immigration and Customs Enforcement, as Escobar Blanco had been since October, 2024, he cannot possibly show up for a court date unless the government lets him. The judge’s logic—penalizing him for not being there—made little sense. It also meant that he would be barred from entering the U.S. for the next ten years. “I objected,” Andreana Sarkis, Escobar Blanco’s lawyer, said in a subsequent declaration. “His ‘failure to appear’ was through no fault of his own, but rather through ICE’s failure to produce him.”

    https://www.newyorker.com/news/the-lede/trumps-deportees-to-el-salvador-are-now-ghosts-in-us-courts

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  26. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on May 6, 2025 at 7:27 pm said:

    If Trump wants to get Ed Martin confirmed he needs to let Tom Thilis and Bill Cassidy’s Senate staff staff know that they will not be getting lucrative jobs post government employment. Any former staffers of these two currently in government should be fired and any firms former staffers work at need to be immediately frozen out of any government or Republican Party contracts. Even if Thillis and Cassidy go down fighting, every other Republican Senator will take notice.

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  27. jnc4p's avatar
    jnc4p, on May 7, 2025 at 9:30 am said:

    Brent, this seems excessive for one carrier:

    Second U.S. Navy Jet in 2 Weeks Is Lost Off the U.S.S. Truman

    The aircraft went overboard on Tuesday as it tried to land on the aircraft carrier stationed in the Red Sea. Two pilots suffered minor injuries.

    https://www.nytimes.com/2025/05/07/world/middleeast/us-navy-fighter-jet-truman-carrier-red-sea.html

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    • Brent Nyitray's avatar
      Brent Nyitray, on May 7, 2025 at 10:54 am said:

      sounds like a mechanical issue

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      • jnc4p's avatar
        jnc4p, on May 7, 2025 at 1:38 pm said:

        True, the string of incidents was what I was referring to:

        In addition to the two lost planes, there have been several other major accidents involving the Truman since it deployed to the Middle East in September.

        In February, the carrier collided with a merchant ship near Port Said, Egypt, damaging both vessels. And in December, an F/A-18F Super Hornet flying from the aircraft carrier was shot down by the U.S.S. Gettysburg, a guided-missile cruiser that was accompanying the Truman. The two people aboard the plane were safely recovered.

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  29. jnc4p's avatar
    jnc4p, on May 7, 2025 at 12:06 pm said:

    Good piece on the fight over language.

    https://www.theradicalist.com/p/trans-women-are-trans-women

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