President Trump’s economy

Daily update

The only certainty economists have about yesterday’s first-quarter GDP data is that it is wrong. Declining survey response rates and economies that structurally change more rapidly than statisticians can measure have conspired to make GDP everywhere subject to more frequent and larger revisions. Nonetheless, broad trends show an economy being rapidly shaped by US President Trump’s policy.
The broad patterns—surging imports, rising inventories, consumer spending spikes—are consistent with US companies and consumers rushing to buy before trade taxes hit. Separate data shows consumers in Democrat states have been more likely to accelerate buying of electronics and furniture than consumers in Republican states (reflecting different narratives in different media bubbles).
Over the past four years, there has been a dramatic increase in US factory building. This reflected localization, and those factories will likely be filled with more robots than people. First-quarter data showed a small but definite slowdown in factory building—perhaps reflecting companies’ uncertainty about erratic policy.
South Korea’s April export data slowed (on a working day adjusted basis). Some exports were strong—there are no new tariffs on trade with Europe. But trade with the US (directly or indirectly) has suffered. UK consumer credit data and US initial jobless claims numbers are scheduled for today.