SOMETIMES…THE LESS NOTICED IS THE MOST


IMPORTANT IN U.S. GDP! The hush coming from Personal Consumption… is probably the thing we should notice most closely


US GDP fell in Q1; it was -0.5%, quarter on quarter annualized basis. It happens!


GDP is negative every once in a while…but sometimes that sort of result is not particularly upsetting. For instance, in the last decade and a half the GDP was negative on a one- off basis in three different quarters, with no foreshadowing on the way into the quarter and no hangover on the way out. For one thing it could be a first quarter-thing. Aside from the last two recessions, the Pandemic and Great Recession, the last three stand-alone negative GDP results were all in Q1 and so too is this latest example. Maybe it’s the changing of the calendar that plays havoc with seasonal adjustments; but then again, it’s not every year that Q1 GDP is weak. Additionally, the reasons for a negative result may have very little to do with a halt in businesses investing in the economy or with consumers no longer consuming. The latest quarterly result is a perfect example of that. President Trump was clear as a bell that he was going to raise tariffs soon after he was back in the Oval Office. Within a few weeks of his return Trump directed his staff to look into the details of trade barriers imposed by foreign countries and develop reciprocal tariffs to level the playing field. Then April 2, Liberation Day, was added to the event calendar. Chart 1.


Chart 1. Source: Bloomberg Finance L.P.


PERSONAL CONSUMPTION ACCOUNTS FOR ABOUT SEVENTY PERCENT OF THE GDP.


32 | ADMISI - The Ghost In The Machine | Q3 Edition 2025


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