GDP Data Is Not Always What It Seems

The Q1 GDP decline is not a sign of immediate weakness, Kostohryz explains. It was mainly caused by a spike in imports, which are subtracted from GDP. Ironically, this indicates strong consumer and business demand, not a contraction.

The real strength came from a 20% surge in equipment investment, but much of this was likely "pulled forward" to beat upcoming tariffs. This could lead to a slowdown in later quarters as that demand has already been met.

Consumer spending is starting to soften, in line with gloomy consumer sentiment. While not recessionary yet, it’s an early warning sign.