Key Points
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US GDP data for Q1 2025 just came out, and it showed a 0.3% decline.
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The stock market has reacted negatively, especially as the labor market is now worse than expected.
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A slew of other important macro data has come in today.
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Pessimism on Wall Street has increased since the Q1 GDP report showed that the erratic trade policy caused productivity to slide farther than expected. The slowdown is being blamed on a surge in imports ahead of U.S. tariffs, and this was expected. Even then, there was some optimism that the economy could turn out to be more resilient than expected. After all, a technical recession in 2022 didn’t cause much pain as the labor market remained tight.
The GDP report now confirms that the economy is declining due to tariff-related actions, and although this was due to a bump in imports, it could likely continue if tariffs stick around. Yesterday, the JOLTS Job Openings data also missed considerably and came in at 7.19 million vs. the 7.5 million expected. One more quarter of negative growth means a technical recession, and this time, it could come with empty shelves and a bad job market.
Here’s a market update as of 10:30 A.M (ET) today.
- The S&P 500 is down 78.95 points, or 1.42%.
- The Nasdaq Composite is down 324.6 points, or 1.85%.
- The Dow Jones Industrial Average is down 458.17 points, or 1.13%.
Economic Data
The macro data that came in yesterday was more on the bearish side, but investors were waiting for a possible surprise in the data today. Unfortunately, the data has been nudged bearish once more today due to negative GDP.
- US Q1 GDP fell 0.3% (annualized) in Q1 vs. the estimate of -0.2%. In Q4, it was 2.4%. Short-term interest-rate futures have slipped after the data came in.
- US ADP Employment Change at 62,000 vs the 115,000 forecast. This implies the labor market is slowing down substantially.
- US Core PCE Prices Advance came in at 3.5% vs. 3.1% expected.
- US Core PCE Price Index year-over-year at 2.6% vs. 2.6% expected.
- US Real Personal Consumption month-over-month came in at 0.7% vs. the 0.5% forecast.
- US Personal Income month-over-month came in at 0.5% vs. 0.4% expected.
- US Pending Home Sales Change month-over-month at 6.1% vs. the 1% forecast.
- US PCE Price Index month-over-month flat at 0%.
Comments From the Administration
President Donald Trump said on Truth Social:
- “This is Biden’s Stock Market, not Trump’s. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden ‘Overhang.’ This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other.”
Trump Trade Adviser Peter Navarro also went on CNBC today. Here are some notable comments from him:
- “This was the best negative print for GDP I’ve seen.”
- “There’s an extraordinary import surge, the world [is] trying to sell to us.”
- “It is very doable for Apple to move manufacturing to the US.”
“The best way to negotiate with China is very quietly.” - “GDP was dragged down, and this won’t be the case next quarter.”
- “Navarro: Markets need to look beneath the surface.”
Treasury Update
- US to sell $58 billion 3-year notes on May 05, to settle on May 15.
- US to sell $42 billion 10-year notes on May 06, to settle on May 15.
- US to sell $25 billion 30-year bonds on May 08, to settle on May 15.
Other Assets
- Gold prices are down 0.4% to $3,320.
- Crude Oil Futures are down 1.4% to $59.59.
- Natural Gas Futures are down 2.42% to $3.3.
- Bitcoin is down 0.3% to $94.171.
The image featured at the top of this post is ©Openverse.