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US economy shrank 0.5% in the first quarter, worse than earlier estimates

(apnews.com)
355 points Aloisius | 6 comments | 26 Jun 25 19:23 UTC | HN request time: 0.204s | source | bottom
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Aloisius ◴[26 Jun 25 19:30 UTC] No.44390494[source]▶
I'm a bit confused about the bit about the "Imports expanded 37.9%, fastest since 2020, and pushed GDP down by nearly 4.7 percentage points" bit.

Presumably when they calculated GDP previously, they hadn't seen quite as much imports, but had seen higher spending, thus they misattributed some of it to domestic products rather than imports, though I'm a bit confused as to how they underestimated imports given everything is declared. Perhaps some changes in the price index?

Though other articles talk about the expected GDP next quarter being higher because they don't expect a surge of imports to continue, which makes no sense to me unless one assumes spending remains the same with or without imports.

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iamtheworstdev ◴[26 Jun 25 20:06 UTC] No.44390776[source]▶
stolen from investopedia: The GDP formula is commonly expressed as GDP = C + I + G + (X - M), where C is consumer spending, I is business investment, G is government spending, and (X - M) represents net exports (exports minus imports). This formula helps measure the total economic output of a country during a specific period.

Our tariffs are tampering with the intelligent monitoring of GDP growth. When the USA expanded tariffs to 155% with China it was effectively an embargo, so imports went away (but exports didn't) and our GDP looked amazing. When the tariffs were brought back to previous rates of 55%, companies bought every import they could (or had them released from bonded warehouses) which has pumped the GDP in the other direction. And it'll likely be the same situation next month because Chinese ports are seeing record numbers as US companies try to buy every piece of inventory they can before these tariffs go back up.

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1. czhu12 ◴[26 Jun 25 21:25 UTC] No.44391587[source]▶
From what I understand from Econ 101, this is not true. The only reason you subtract imports is to avoid double counting because presumably the import was done by C, G or I.

The point of subtracting imports is so that it doesn't count as domestic production, and effectively zeros out the portion of C + G + I that was not produced domestically, but thats independent of how much is in exports.

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2. digitalPhonix ◴[26 Jun 25 21:43 UTC] No.44391779[source]▶
That’s true (analogy - you can find out how much the clothes you’re wearing weigh by weighing each piece individually or weighing yourself wearing them and subtracting your weight).

But you can’t change the process mid way through your measurement. We don’t have a way of measuring “consumption of domestic products” so we just measure consumption and subtract the imports afterwards.

X-M is an accounting trick, but when you’re using this model you have to stick with it.

The idea that imports were deferred causes this accounting trick to show its weakness. (Presumably, looking at the data for all of 2025 when it’s available will “low pass” the deferred imports)

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3. Aloisius ◴[26 Jun 25 21:57 UTC] No.44391893[source]▶
I'm not sure I understand. What process is changing? The "accounting trick" doesn't stop working.

Let's try a very simple example of buying all our inventory in one quarter and selling it in another - what is supposedly behind our GDP woes.

Let's say in Q1, the only spending was on $1 trillion of imports into private inventories, thus: I=$1 trillion, C=$0, G=$0, X=$0, M=$1 trillion. That gives us a GDP of $0.

Next quarter, flush with product there's no need to import anymore and the entire inventory is somehow sold domestically, thus: I=-$1 trillion, C=$1 trillion, G=$0, X=$0, M=$0. That gives us again, a GDP of $0.

Yet articles claim that the GDP in Q2 would be higher due to the drop in imports and was reduced in Q1 due to an increase in imports.

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4. dylan604 ◴[26 Jun 25 22:16 UTC] No.44392027[source]▶
> (analogy - you can find out how much the clothes you’re wearing weigh by weighing each piece individually or weighing yourself wearing them and subtracting your weight)

damn, my clothes are heavy, because I know how much I weigh.

5. lesuorac ◴[26 Jun 25 23:09 UTC] No.44392340{3}[source]▶
Don't you always measure GDP using spending (for convince / accuracy of price) so if you import $1 trillion and don't sell it then the GDP is $-1 trillion?

So Q1 is $-1 trillion and Q2 is $1 trillion?

IIRC, Investment is more of I bought machinery to make socks not I have 100 nintendo switches.

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6. Aloisius ◴[26 Jun 25 23:26 UTC] No.44392446{4}[source]▶
I (investment) in the GDP includes changes in private inventory, not just spending on fixed assets, so the 100 nintendo switches should be in there.

That's why in my example Q2 investment goes negative since inventories get depleted when they are sold.