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

(apnews.com)
355 points Aloisius | 4 comments | 26 Jun 25 19:23 UTC | HN request time: 0s | source
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trhway ◴[26 Jun 25 21:48 UTC] No.44391823[source]▶
Foundation of US economy is domestic consumption. The current administration has significantly increased taxes - in the form of tariffs - on that consumption. So, the results are and are going to be as expected by any economy textbook.

Additional obvious effect of tariffs is introducing friction, to say the least, into supply chains, similar to how pandemics did at the beginning with about the same result - inflation and loss of productivity.

I personally have no panic here though - during my quarter of century here i noticed that US economy is extremely resilient and can take a lot of hits and damage, can even get knocked down, yet nothing can get it knocked out, and it would always come back even more roaring. It is though very hard on those who gets the sharp end of stick here, i'd wish that the society would get a bit more empathetic to them.

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gotoeleven ◴[26 Jun 25 22:49 UTC] No.44392225[source]▶
The hope, at least, is that the tariffs will encourage the creation of more, better, jobs in the US through re-shoring. This would, in theory, also increase domestic consumption though the time frame is longer.
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trhway ◴[26 Jun 25 23:06 UTC] No.44392314[source]▶
>the tariffs will encourage the creation of more, better, jobs in the US through re-shoring

that isn't possible for any production other than a primitive one. The modern production is very complicated, and in particular contains long lists of components, materials, tools, technological stages of production and engineering services. I.e. it is a pyramid with very wide base. Even large country like US is too small to maintain all what is required for any even moderately complicated product. Tariffs are kind of shrinking the pyramid's base - the result is lower pyramid so to speak.

Of course, you and anybody welcome to bring counter-examples.

>This would, in theory, also increase domestic consumption

It would increase prices, and decrease productivity thus resulting in lower consumption.

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gotoeleven ◴[27 Jun 25 00:24 UTC] No.44392759[source]▶
Dell used to make computers in the US. Then they moved manufacturing to China. You're saying Dell can't make computers in the US ever again? If the economic incentives are there then the supply chains can be (re-)built, right?
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myvoiceismypass ◴[27 Jun 25 01:10 UTC] No.44392975[source]▶
> You're saying Dell can't make computers in the US ever again?

The person you are replying to said no such thing.

Yes, of course, in isolation, some manufacturers can build new factories. Not overnight. Not in a year, if the supply chain is remotely complicated.

Okay, lets say Dell, who moved their manufacturing out of the US nearly two decades ago, succeeds with their factory building and starts building here. Great! What are they building? Are they fabbing 100% of the components that are going into these computers they are building? Absolutely not.

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1. gotoeleven ◴[27 Jun 25 12:43 UTC] No.44396368{3}[source]▶
I said: >the tariffs will encourage the creation of more, better, jobs in the US through re-shoring

they said: >that isn't possible for any production other than a primitive one.

What I find bizarre in this discussion is the refusal to even acknowledge that there are other economic effects at play besides the first order effect of tariffs increasing the cost of imports. A second order effect is to make building things domestically relatively cheaper, all other things being equal, because those things won't be subject to the tariff. Will the net effect be positive or negative? Who knows. But people refusing to even acknowledge that there are effects that cut both ways tells me that they are dishonest or stupid and you probably can't have much of a conversation with them.

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2. trhway ◴[27 Jun 25 18:06 UTC] No.44398921[source]▶
> A second order effect is to make building things domestically relatively cheaper, all other things being equal, because those things won't be subject to the tariff.

that is just opposite of reality. Several people explained that to you here, yet you state :

>But people refusing to even acknowledge that there are effects that cut both ways tells me that they are dishonest or stupid and you probably can't have much of a conversation with them.

People brought you a ton of arguments, yet you haven't addressed any of them, haven't produced any counter-example, and instead shouted that bizarre statement.

3. ◴[27 Jun 25 18:32 UTC] No.44399105[source]▶
4. gopher_space ◴[27 Jun 25 19:30 UTC] No.44399561[source]▶
The reason you don't hear much about positive knock-on effects is that their time frames stretch beyond anyone's planning horizon. The only immediate effects will be losses, and they'll be around for a while.

There's no existential threat compelling enough to shut down trade for the generation or two it would take to see real benefits, and those benefits could be realized within the same time frame through other means.

This turns conversation around positive effects into a thought experiment people might not find germane to a current discussion. The tariffs simply won't be in place long enough.