The first quarter economic results have been announced. The headlines from the legacy media are shouting out the US economy is shrinking. According to the media mavens, Trump’s trade wars are causing this. The “R” word is now going to be in the lexicon of the woke leftists on Capitol Hill. One can expect the Democrats to be shouting recession as loud as they can. They have nothing else they can do.
What are the real facts here and not some emotionally-driven fake narrative? As Sundance has said many times, one must always remember that imports are a deduction to the GDP which is the Gross DomesticProduct. The GDP is the valuation of all goods and services produced in the USA *minus* the value of imports.
So what happened during the first quarter? The Bureau of Economic Analysis (BEA) released a report showing overall economic growth at –0.3%. That cannot be good, can it?
As it turns out, it is very good news when one dives into the numbers behind the report.
Courtesy of CTH
Any well-managed, large company is always looking ahead assessing economic conditions. There are people in such companies who have been modeling potential tariff scenarios for months. These tariffs will directly and indirectly affect sourcing of parts and resources. Many companies in the US did massive importing of goods during the first quarter to cushion the uncertainty of the tariff wars.
This massive surge in import goods purchases was up 50.9% versus the prior period [Table 1, line 20]. According to some experts, that’s the largest periodic increase in import purchases ever. This resulted in a 5.03% deduction to GDP numbers. Despite this huge drag because of massive importing, the GDP only declined by 0.3%. Why?
It turns out that there are some real gems in this report. Line 11 shows a very significant increase in fixed asset equipment purchases (22.5%). This would indicate that many companies are preparing to shift production to America. I am certain that the White House is quite pleased with this report.
One other note of some significance is that spending by the federal government declined by 0.33%. This is the opposite of the Biden administration. Biden massively increased government spending in order to avoid the dreaded “R” word. Without that the technical definition of a recession would have been met many times over. Even with the massive spending that went on, the technical definition was met but ignored by the legacy (lying) media. Again, these numbers are a very positive sign.
Sundance notes:
Investment in the USA is high. MAGA working.
Imports are temporarily high, as companies prepare to purchase less from overseas. MAGA working.
Following the increase in U.S. investment and following the increase in equipment purchasing; we will see an increase in jobs as a result of hiring Americans to use the equipment and create the products. If the workforce tightens up (illegal alien deportation continues) and unemployment lessens, then pressure is created on wage rates as companies compete for workers. Main Street starts winning again.
Attach welfare support to employment efforts and the dependency model shrinks.
This is very good news all around.
The actual economy is fine. The statistical anomaly for the 1st quarter is just that, a statistical anomaly. We should see a very significant rebound in the GDP number during the coming months.
