U.S. economy shrank 0.3% in the first quarter as Trump policy uncertainty weighed on businesses

[Bluetus]

13. The argument about imports is really fishy

Imports and GDP are not directly related. But I guess economists use trade deficits to adjust total economic activity to net out the domestic product. The argument is that there was pre-loading of imports to try to beat the Trump tariffs, and that arithmetic will go the other direction next quarter.

But actual domestic production will not go up much, if at all. We can't set up manufacturing for all these goods in a quarter, or a decade, for that matter. Plus, we don't have the labor force. Trump is scaring away the people who do much of "our labor" for us.

It seems more likely that GDP will continue to go down, even with this adjustment. During the next 90 days, we will start seeing more commentary about the "wealth effect" disappearing. Since the flood of cash was pumped into the global economies in 2008, the markets have been white hot. Anybody who owns some equities thinks they are stinkin' rich, and they will spend their money loosely. But the tariffs are already starting to cause layoffs. The wealth effect can evaporate almost overnight. You see your neighbors losing their jobs, and suddenly you decide you really don't need that 60" teevee after all.

Remember, one more down GDP quarter and we will officially be in recession.