The US economy shrank in Q1 2025, but is this really that bad?

Is the US economy in a recession?

On Wednesday, April 30, the Commerce Department released its initial estimate for the US Q1 2025 GDP growth number.

According to its report, the world’s largest economy contracted at an annualized 0.3% rate from the previous quarter, above expectations of a 0.2% decline, marking the first contraction since Q1 2022.

The biggest negative contribution was imports, which skyrocketed due to firm front-running tariffs. As a reminder, GDP = Consumption + Investment + Government Spending + Net Exports (exports minus imports).

The narrative here is this drop in GDP is going to unwind in Q2 and Q3. More explanation on how this import contribution works and why there were a lot of gold imports in it can be found in the following article.

🚨What is happening with the US consumer sentiment?

Americans' economic outlook is rapidly shifting, and this is not a good sign

globalmarketsinvestor.beehiiv.com/p/what-is-happening-with-the-us-consumer-sentiment

However, is this only imports? How to exactly interpret this? What is the actual shape of the US economy? What is the true financial shape of US consumers, the largest GDP contributor?

How could this potentially affect the US stock market?

Find out in the following analysis.

⚠️CHART OF THE WEEK: US bankruptcies hit a 15-year high

In Q1, 188 big companies declared a bankruptcy in the US

globalmarketsinvestor.beehiiv.com/p/chart-of-the-week-us-bankruptcies-hit-a-15-year-high

⚠️CHART OF THE WEEK: US businesses have never been more pessimistic about the economic outlook

US manufacturing and services surveys point to a rapid deterioration in economic activity

globalmarketsinvestor.beehiiv.com/p/chart-of-the-week-us-businesses-have-never-been-more-pessimistic-about-the-economic-outlook

THIS IS NOT ONLY COMPANIES FRONT-RUNNING TARIFFS

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