Net Exports was a drag of 4.61% on the GDP as a whole, while Inventory Accumulation was a benefit for the Q1 GDP of 2.59%. Personal Consumption was up in the quarter, so was Fixed Investment and that combination reduced the GDP loss resulting from the sum of the Net Exports and Inventories.


Neither of the components that were the most specatacular movers in Q1 are likely to follow through in the same direction in Q2. Chart 5.


Certainly, a sharp reversal seems the almost assured for the Net Exports. The US Trade deficit in April was $61 billion, that’s less than half the monthly average seen in the first three months of the year. Therefore, with a couple months of data yet to go, there is a really good chance Net Exports are a big help to Q2 GDP.


Inventories will probably not add to the accumulation at the same rate as it did in the first three months of the year, but whether or not this component is significant in the same manner it was in the opening quarter is an open question. Overall the second quarter growth is anticipated to be above trend/strong. So, Q1 GDP is easily forgiven, because the Q2 result should send the negativity right down the memory hole.


Chart 3. Source: Bloomberg Finance L.P.


Chart 4. Source: Bloomberg Finance L.P.


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


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