US Gross Domestic Product (GDP) retreated in the first three months of this year at a rate of -0.3%. Economists had expected our economy to grow at a positive rate of 0.4%.
This was the steepest decline we’ve had in GDP since the First Quarter of 2022, but the numbers look a lot worse than they actually are.
US Companies significantly increased their imports during the period, trying to get ahead of the tariffs that went into effect. The resulting import activity grew at a rate of 41.3% during the period.
A trade imbalance resulted that threw the numbers into the negative. Overall, underlying demand for our goods and services in the First Quarter was still strong.
Stocks fell sharply in morning trading.
Let me leave you with this…
Don’t let the statement about demand still being solid diminish my overall message. Inflationary difficulties from these tariffs are coming.
It’s certainly true that the White House put the majority of the reciprocal tariffs on a 90 day hold. It’s also true that they’re currently negotiating with many countries to reduce the overall tariff effect on our economy.
We can only hope that those negotiations are going well.
But please don’t forget that an across the board 10% tariff on all imports is in place, not forgetting the various other tariff increases that were also instituted.
As discussed in prior columns, this will affect what you pay for both goods and services. The only way you’ll be able to maintain your profits and margins will be to raise your prices in response.
Your monthly financial statements are extremely important. This is one of the ways you’ll be able to gauge the underlying pricing pressures.
Don’t stick your head in the sand expecting this threat to vanish on its own. It’s coming, and the only thing any of us will be able to do is to respond.
Again, this isn’t a political statement. Where you land on this issue depends entirely on your individual political beliefs.
I can’t do anything about the overall economy. I don’t create policy.
The only thing I can do is to help all of you through this difficulty.
Don’t kid yourselves, my Brothers and Sisters. It’s coming.
And your response may be the only thing that keeps your doors open.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
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