US first quarter GDP – “smoke and mirrors” – the second quarter will be worse and “it just doesn’t matter” because it is not “real”.
According to the Bureau of Economic Analysis, the US economy contracted at an annual rate of 0.3% in the first quarter of 2025 – which means it was flat over the quarter. “Un-annualize the data to get to a quarterly number of 0.3% divided by 4!
It takes a few months to compile quarterly GDP data, so that data is gathered 6 weeks BEFORE the end of the quarter. So, for example, data for the first quarter of any year, is based on data collected between 15 November and 15 February.
Trump was inaugurated on 20 January 2025, so you can see why his first reaction was that this was a Biden Administration number.
The Biden junta had been “pissing in the pool” for years. No—one is talking about the impact on GDP of “throwing gold bars off the Titanic” over his term in office.
How much was GDP impacted over the 2021-2024 period by, not just the direct impact of spending by government agencies and “Executive Orders”, but activity endorsed by federal government guarantees that facilitated economic activity – all bogus and wasteful but included in the GDP numbers.
US GDP is calculated on an “expenditure” basis.
Consumption + Investment + Government + (Exports less Imports)
There are many sub-components in each of these categories.
The next quarter – 2q2005 will measure the first impacts of Trump’s policies, though not the impact.
Tariffs are NOT tazes, unless they are on essential goods,
The majority of US goods and services are traded internally. Here’s the external data in the (x-m) component, per Brave AI:
“U.S. imports of goods and services grew by 6.6% to a record $4.1 trillion, while U.S. exports of goods and services also hit a record, reaching $3.2 trillion in 2024”.
US GDP is around 29 trillion bucks, so the “external” sector accounts for around 25% (7.3/29) of the overall economic activity.
75% of US activity is generated in the US. How much of imported goods are non-discretionary – and not substitutable by domestic, US sourced, production?
Trump has an uphill battle getting US employers to compete with overseas workers that do not incur the exorbitant health care costs and regulations of US workers – but he is aware.
There was no impact on first quarter GDP from the trade deficit of 1.2 trillion bucks.
Uncertainty yes – actual data in the GDP numbers, not so much. Trump did not announce tariffs until outside the measurement period from 15 November 2024 to 15 February 2025.
Trump’s tariffs mostly impact trade with China, per Brave AI:
“The United States recorded a trade deficit with China of $295.4 billion in 2024, according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau.”
There are anecdotal reports of a 40% drop in incoming container ships from China – turning around mid-Pacific.
No doubt, that 40% will increase to maybe 100% as the 145% tariffs kick-in.
“As of April 10, 2025, the United States imposed a tariff rate of 145% on Chinese goods. This rate includes a preexisting 20% tax on goods, with the additional 125% tariff announced by President Trump.”
Then there’s the trade deficit with the EU – a broadly similar economy - -per Brave AI:
“In 2024, the United States recorded a goods trade deficit with the European Union (EU) of $235.6 billion, a 12.9 percent increase from the previous year. U.S. goods exports to the EU were $370.2 billion, up 0.7 percent from 2023, while goods imports from the EU totaled $605.8 billion, up 5.1 percent from 2023.”
Just 60 billion less than China and the EU is also playing “dirty pool”.
(100) EU rewrites every trade deal it has with the entire world via its new compliance directive
““On 25 July 2024, the Directive on corporate sustainability due diligence (Directive 2024/1760) entered into force. The aim of this Directive is to foster sustainable and responsible corporate behaviour in companies’ operations and across their global value chains. The new rules will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe.”
In other words, the “Net Zero” agenda.
It is one of the idiosyncrasies of the GDP calculation that a reduction in the trade deficit (X-M), results in an increase in GDP. There is also an accounting identity with the twin deficits of government and trade, As goes one up or down in size, so goes the other. A rise in the government deficit causes a rise in the trade deficit and vice versa.
Biden spent 100’s of billions on bogus “net zero”, DEI and open borders – Trump has reversed these. We will not see an improvement in the 1.9 trillion-dollar fiscal deficit this year which ends in just 5 months on 30 September 2025.
DOGE has found around 150 billion dollars in waste, fraud and corruption out of a targeted 2 trillion - its work is not yet done but will continue.
Another component of GDP is “investment”. Pledges for 5 trillion bucks have been made spanning ten years. Housing construction and starts are key.
Which brings us to the last component – Consumption.
This is a function of employment and income. The “golden age” will evolve as labour force participation increases from around 62% to well in excess of 70%. Should 10% of the labour force switch from drawing welfare to paying taxes, the impact will be immense.
Imagine if 10% of the US labour force of 170 million – 17 million people – switched from receiving benefits of 40,000 a year, to paying taxes of 20,000 a year. A swing of 60,000 dollars for 17 million people.
17 million times 60,000 = a little over a trillion bucks – half the annual fiscal deficit that will push debt past 40 trillion in a few years and half the annual interest bill on that debt of over a trillion bucks a year.
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Onwards!!!