Import tsunami sinks US GDP in first quarter

US real gross domestic product (GDP) shrank at a 1.5% annual rate during the first quarter, more than the preliminary estimate of -1.3%, the Commerce Department reported on May 26. The worst trade performance on record took 3.2% off GDP, more than accounting for the entire drop. Nothing like this has happened before.

Personal consumption rose at a 3.1% annual rate but the additional demand was more than met by increased imports.

America’s trade deficit in goods spiked to $128 billion in March, or an annual rate of 1.54 trillion, while US manufacturers’ sales plunged after adjustment for inflation. In real terms, US factory sales have fallen by nearly 10% since 2018, and by nearly 20% since 2007.

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