The 0.3% annualised decline in first-quarter GDP was entirely due to a pre-tariff 41.3% annualised surge in imports, with net exports subtracting a massive 4.8% points from GDP. This surge now appears to be going into reverse, however, and should boost second-quarter GDP. The decline in first-quarter GDP was actually smaller than the 2.0% contraction we were expecting following the big jump in goods imports in March reported yesterday. As it turns out, although it didn’t show up in the monthly data, that surge in imports was partly offset by a much bigger-than-expected 2.3% point boost from stronger inventory accumulation.
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