←back to thread

362 points Aloisius | 1 comments | | HN request time: 0.246s | source
Show context
Aloisius ◴[] 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.

replies(6): >>44390709 #>>44390776 #>>44390974 #>>44391023 #>>44391344 #>>44392093 #
iamtheworstdev ◴[] 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.

replies(7): >>44391013 #>>44391098 #>>44391341 #>>44391430 #>>44391587 #>>44391691 #>>44392544 #
1. Aurornis ◴[] No.44392544[source]
> 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).

Imports don't actually subtract from GDP. They are subtracted inside the GDP formula to make sure they aren't counted toward the country's production, basically.

Logically it makes sense: If you import something, it was not produced within the country. Therefore you need to make sure it's not counted in GDP. However, the starting values for GDP calculation are sum total type numbers, so you have to manually subtract out imports.

This proves endlessly confusing for journalists and even politicians who see the subtraction sign and conclude that "imports subtract from GDP"