From Quiver Quantitative: 2025-04-30 22:30:00

The U.S. economy contracted by 0.3% in the first quarter due to a surge in imports driven by looming tariffs, resulting in a record trade deficit. Despite this, consumer spending increased by 1.8% and business equipment investment by 22.5%. However, core PCE inflation accelerated to 3.5%, above the Fed’s target of 2%. Looking ahead, Q2 growth may rebound as trade activity normalizes, but ongoing tariff uncertainty remains a concern.

The GDP contraction was temporary due to import front-loading, suggesting a rebound in Q2. However, the economy faces risks from trade tensions and inflationary pressures. Policymakers and investors are monitoring employment and inflation reports to guide future decisions on rate cuts and tariffs.



Read more at Quiver Quantitative: Tariff Front-Loading Drives Q1 GDP Contraction Despite Underlying Demand