How U.S. economic strength was a drag on Q1 GDP π€―
U.S. imports outpaced exports to weaker trading partners πΊπΈ
Exactly two years ago, I wrote: How U.S. economic strength caused GDP to decline in Q1 π€―.
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
, author of Apricitas Economics.![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F4dfc9fd1-3d5c-41ef-bd42-60ed4f269eab_2886x1843.png)
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.
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