How U.S. economic strength was a drag on Q1 GDP 🤯

U.S. imports outpaced exports to weaker trading partners 🇺🇸

Exactly two years ago, I wrote: How U.S. economic strength caused GDP to decline in Q1 🤯.

It appears the economy and the data are once again portraying a similarly confounding dynamic.

According to preliminary Bureau of Economic Analysis (BEA) data released on Thursday, U.S. GDP grew at an annual rate of 1.6% in Q1. This is down significantly from the 3.4% rate in Q4.

However, this sharp slowdown belies the underlying strength of the U.S. economy.

Much of the story can be explained by a single stat: Net exports subtracted 0.9 percentage points from GDP.

The magnitude of the impact is illustrated nicely by the red bar in the chart below from

Joseph Politano

, author of Apricitas Economics.

Net exports were a big drag on GDP. (Source: @JosephPolitano, BEA)

When net exports are negative, it means U.S. import growth is outpacing its export growth. Indeed, imports jumped 7.2%, while exports grew at a more modest 0.9%. Maybe the U.S. economy is just a lot stronger than its international trading partners.