US economy shrank much faster in 1st quarter than previously reported

[edbermac]

Washington
CNN
—
The US economy contracted in the beginning of the year at a much faster pace than previously reported, as tariff fears took a much greater toll on economic growth.

Gross domestic product, the broadest measure of economic output, registered an annualized rate of -0.5% from January through March, the Commerce Department said Thursday in its third and final estimate. That’s worse than the 0.2% decline reported in the second estimate. GDP is adjusted for seasonal swings and inflation.

https://www.cnn.com/2025/06/26/economy/us-gdp-q1-final

[OC375]

1. I Can Tell!

When you don't spend, it shows... I have more in my savings account and less junk in my house. We did books this year for birthdays instead of electronics and nick-nacks. Baked a cake instead of bought one.

[Johnny2X2X]

2. People are terrified of what's happening

Scared people don't spend, they save.

His tariffs' effects still haven't been realized as some people spent on big ticket items to try to get prices before the tariffs were locked in.

[617Blue]

3. Atlanta Fed had an estimate at like negative 2.5. They'll be cooking the Q2 books

because another negative quarter is recession. Hard to see how this quarter will be better than last but they'll cook the books.

[FBaggins]

14. It isn't uncommon for GDPNOW to be way off

As a point of comparison - the current "blue chip" consensus for this quarter is almost 2% grown (annualized of course) with a range of estimates from just barely positive to 3.5%... yet GDPNOW just a few weeks ago was at almost 5%.

When it comes in well below what Atlanta was predicting... will you think they're cooking the books?

[617Blue]

15. The neg 2.5 was for Q1. My assumption

Was that it couldn't possibly be that bad and it wasn't, although we did have neg growth. It would be odd to me if Q2 was better...

[progree]

18. Interesting. Here's a snapshot from March 26 of GDPNow and the Blue-chip consensus of *Q1* GDP

I got this from Web Archive
https://web.archive.org/web/20250326134352/https://www.atlantafed.org/cqer/research/gdpnow

[617Blue]

20. It was pretty eye popping. nt

[Farmer-Rick]

4. And is this the truth?

I didn't see your post when I posted 617blue but great minds think alike.

I mean was it true when they previously reported as being much better or is this new reporting the truth? I know, I know, the Commerce Department gives out 3 estimates as a matter of routine. But ......................

Can we really trust anything the current administration is reporting? They have put in Nazis throughout the government and fired honest capable people. How deep does the rot go? How easily do Nazis lie for their dystopia?

Trump appointed his own Nazi as head of the Commerce Department. (Glad they stopped calling it the Department of Commerce and Labor, they never gave a crap about labor)

The current department secretary, Lutnick, was a fundraiser for Donald Trump's 2020 and 2024 presidential campaigns, as well as a vocal proponent of Trump's proposal to implement broad tariffs.

So....take whatever his department reports with a big grain of salt. Yes, they will lie for their ideology to look good. If they are reporting this downturn, how bad must it be for real?

[Ritabert]

5. I've stopped buying anything but food and gas

[llmart]

21. That's about all I spend on also.

I'm retired and in my 70's, so what on earth would I need at this late stage of my life? I have always hated shopping anyway and adopted a lifestyle of frugality and voluntary simplicity starting in my 50's. Now I don't want to leave a huge nightmare for my son to deal with if and when I leave this world. I've seen too many of my senior neighbors and other acquaintances whose grown children are consumed with spending days and days dealing with a house loaded with stuff.

[Ritabert]

23. Exactly. I have more clothes than I need ...

...and make trips to our local animal shelter resale shop with extras. I don't need a new cellphone. I use them til they die.

[Gimpyknee]

6. It's Biden's fault.

[markodochartaigh]

13. If every quarter during Trump's entire term

is negative, there is still about one third of this country who will believe it when reich-wing propaganda tells them that it is President Biden's fault.

[Bev54]

7. You know who's economy did not shrink in the first quarter?

Canada's; it grew by 2.2% in the first quarter, after Trump's tariffs. It is likely going to be short lived because people and companies were stockpiling but we will brag where we can.

[moniss]

8. Also the Canadian 2nd quarter will

be good to go along with the new agreements from countries to buy Canadian steel rather than steel from the US.

[Exp]

9. And likely to get much. much worse. Scared consumers, gov't spending / research cuts, healthcare cuts, lots of

indicators pointing in the wrong direction.

[jgmiller]

10. The odds of Q2 being up are pretty slim

So that means an official recession. Actually officially The Trump Recession!

Of course Trump will get his wish and the fed will cut rates but that's just to try and slow down the slide that he started.

[progree]

11. Correcting some misinformation in some replies. Two negative quarters is NOT the official definition of a recession

https://www.democraticunderground.com/10143450417#post20

The NBER (National Bureau of Economic Research) is the official determiner of recessions, not Internet memes and myths, no matter how popular and widespread, and no matter how much we wish, and no matter how often cable news talking heads repeat it.

As for what the Atlanta Fed's GDP Now model is predicting:
https://www.atlantafed.org/cqer/research/gdpnow

I occasionally look at it, and I haven't seen anything negative or close to negative predicted for Q2.

Currently its +3.4% for Q2 (seasonally adjusted annual rate).
Separately the blue-chip consensus is slightly below +2.0%.

[North Coast Lawyer]

12. Meh

GDP is a terrible metric. It mostly tells us how the rich and large corporations are doing. For the last five decades GDP has increased benefiting the the top 10% (and really benefiting the top 1%) while ordinary people at best treaded water (many sank).

Democrats cheered as GDP rose under Biden without stopping to consider who was benefiting (hint, it was seldom ordinary workers). Two things can be simultaneously true. GDP can soar while the ordinary people see their economic position erode at the same time.

[Ol Janx Spirit]

16. And because of this an administration can convince itself that it is doing a good job...

...of shepherding the economy for all Americans--only to be shocked when a large enough percentage of the voting population vote against them because their personal economy doesn't look so great.

If Democrats are able to run in and win elections ever again they need to come up with an AVP--Average Voter Product--to focus on. Carville was right about one thing: it's the economy stupid....

[ProfessorGAC]

17. Huh?

That makes no sense.
GDP is based on spending at the final transaction level.
Billionaires don't spend all their income on goods & services.
Normal people spend a far higher % of their available income on such goods & services.
How can GDP be reflective of only the rich when they aren't spending but a fraction of all the money?

[Bernardo de La Paz]

22. GDP includes investment which means salaries and capital expenditures.

As to the rich, GDP is an overall measure, so one part of the economy can be roaring (like say cap-ex on AI data centres) while other parts are contracting (like fruits and berries).

[North Coast Lawyer]

24. Makes Perfect Sense

GDP measures the size/productive capacity of an economy. It says nothing about inequality. A country (i.e. the USA) can have a large per capita GDP and at the same time have a huge underclass.

https://hbr.org/2019/10/gdp-is-not-a-measure-of-human-well-being

[Karasu]

19. Gee. I wonder why.