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The U.S. economy shrank at a 0.5% annual pace from January through March as President Donald Trumps trade wars disrupted business, the Commerce Department reported Thursday in an unexpected deterioration of earlier estimates. First-quarter growth was weighed down by a surge of imports as U.S. companies, and households, rushed to buy foreign goods before Trump could impose tariffs on them. The Commerce Department previously estimated that the economy fell 0.2% in the first quarter. Economists had forecast no change in the department’s third and final estimate. The January-March drop in gross domestic product the nations output of goods and services reversed a 2.4% increase in the last three months of 2024 and marked the first time in three years that the economy contracted. Imports expanded 37.9%, fastest since 2020, and pushed GDP down by nearly 4.7 percentage points. Consumer spending also slowed sharply, expanding just 0.5%, down from a robust 4% in the fourth-quarter of last year. It is a significant downgrade from the Commerce Department’s previous estimate. Consumers have turned jittery since Trump started plastering big taxes on imports, anticipating that the tariffs will impact their finances directly. And the Conference Board reported this week that Americans view of the U.S. economy worsened in June, resuming a downward slide that had dragged consumer confidence in April to its lowest level since the COVID-19 pandemic five years ago. The Conference Board said Tuesday that its consumer confidence index slid to 93 in June, down 5.4 points from 98.4 last month. A measure of Americans short-term expectations for their income, business conditions and the job market fell 4.6 points to 69. Thats well below 80, the marker that can signal a recession ahead. Former Federal Reserve economist Claudia Sahm said the downward revision to consumer spending today is a potential red flag.” Sahm, now chief economist at New Century Advisors, noted that Commerce downgraded spending on recreation services and foreign travel which could have reflect great consumer pessimism and uncertainty.” A category within the GDP data that measures the economys underlying strength rose at a 1.9% annual rate from January through March. It’s a decent number, but down from 2.9% in the fourth quarter of 2024 and from the Commerce Department’s previous estimate of 2.5% January-March growth. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending. And federal government spending fell at a 4.6% annual pace, the biggest drop since 2022. In another sign that Trump’s policies are disrupting trade, Trade deficits reduce GDP. But thats just a matter of mathematics. GDP is supposed to count only whats produced domestically, not stuff that comes in from abroad. So imports which show up in the GDP report as consumer spending or business investment have to be subtracted out to keep them from artificially inflating domestic production. The first-quarter import influx likely wont be repeated in the April-June quarter and therefore shouldnt weigh on GDP. In fact, economists expect second-quarter growth to bounce back to 3% in the second quarter, according to a survey of forecasters by the data firm FactSet. The first look at April-June GDP growth is due July 30. ____ This story has been corrected to show that the drop in federal spending was the biggest since 2022, not 1986. Paul Wiseman, AP economics writer
Category:
E-Commerce
As Venice readies for Lauren Sánchez and Jeff Bezos’s multi-day wedding extravaganza, it’s no longer just gondolas floating around the city’s famous waterwaysit’s creepy Bezos mannequins as well. The long-awaited nuptials of the Amazon founder and the journalist is bringing flocks of celebrities including Oprah Winfrey, Ivanka Trump, and the Kardashians to the small city, booking most of the city’s elite water taxis, gondolas, and docks. While Venice has hosted star-studded weddings in the pastincluding that of Amal and George Clooneynone have drawn as much criticism, due in part to the event’s extravagant nature. For instance, just days before the wedding, the couple celebrated a foam party aboard their $500 million super yacht. Locals and internet activists have been rallying in protest of not just the wedding, but of Amazon’s labor practices, its founder’s mass accumulation of wealth, overtourism, and the disruption of daily lives for locals. As a result, organized efforts are giving the wedding party a not-so-warm welcome along the way. To keep up with the chaos, Fast Company rounded up some of the pre-wedding protests, breaking down some of the strange yet somewhat successful efforts. “No Space for Bezos” A nod to Bezos and Sánchez’s now infamous space-travel pursuits, “No Space for Bezos” is the unifying movement for activists opposing the local government’s alleged prioritization of tourism above local residents. The movement gained traction following a now viral stunt, draping St. Mark’s Square with a large banner reading “If you can rent Venice for your wedding, you can pay more tax.” Below the text was a large image of Bezos laughing. [Photo: Stefano Rellandini/AFP via Getty Images] Since then, grassroots efforts have plastered the city with banners across famous sites, and have gained the support of larger organizations like Greenpeace and U.K. group Everyone Hates Elon. Floating mannequins On the stranger end of protests, several mannequins resembling Bezos and Sánchez have been spotted around the Floating City’s canals. In one, the figures are dressed in wedding attire aboard a gondola, with a cardboard sign featuring Amazon’s logo. “The live versions are creepier,” one user commented on the TikTok video. Another viral video features a man throwing a mannequin held onto an Amazon package box into Venice’s grand canal. The mannequin appears to be wearing a blue suit resembling the one used on the infamous space mission, and is holding fake dollar bills. Online mockery Beyond the more organized protests, countless people have taken social media to mock the event, particularly a now leaked image of the wedding’s invitation. While the invitation asks guests not to bring giftsbut rather provide donations to Venice-related causes, including UNESCO Venice, CORILA, and Venice International Universityit gained attention due to its kitschy design. On the r/CrappyDesign subreddit, a now-deleted post of the invite drew ridicule and criticism, with one user commenting, “Youve got all the money in the world and you do an invite that looks like it was designed by a 10-year-old on MS Paint.” Another user on TikTok commented on the invitation, making a video saying, “You are shitting money every two seconds, I was expecting some Ambani-level shit, I was expecting opulence.” She added, “I need rich people to rich right.” What have the wedding planners said about the backlash? Reached for comment by Fast Company earlier this week, the events team that is organizing the wedding said it has aimed to minimize disruptions. It also emphasized that it has overwhelmingly hired locals to staff the event.
Category:
E-Commerce
Federal Reserve Bank of Richmond President Thomas Barkin said on Thursday tariffs are very likely to push inflation up over coming months, in remarks that said U.S. central bank policy is where it needs to be to deal with what lies ahead. I do believe we will see pressure on prices, Barkin told a gathering of the New York Association for Business Economics. When it comes to tariffs and their impact on price pressures, to date, these increases have had only modest effects on measured inflation, but I anticipate more pressure is coming, amid comments from businesses that they expect to pass at least some of the rise in import taxes imposed by President Donald Trump. That said, I dont expect the impact on inflation to be anywhere near as significant as what we just experienced during the pandemic and there are signs that consumers will try to move away from tariffed goods, which could limit some of the upsides for higher inflation. Last week, the Feds most recent gathering of the rate-setting Federal Open Market Committee saw officials leave their overnight target rate unchanged at between 4.25% and 4.5%. Uncertainty over the outlook is keeping the central bank on the sidelines amid expectations the tariffs will push up inflation this year while depressing growth and hiring. In his remarks, Barkin noted the Fed is facing risks on both its job and inflation mandates. Citing the uncertainty of the outlook, Barkin declined to say where monetary policy is heading, while cautioning there are a number of scenarios in play for the central bank’s interest rate target and the exact timing of a rate move matter much less than many expect. While most Fed officials are in a wait-and-see mode and Fed Chair Jerome Powell reiterated that message this week in testimony before Congress, some officials on the Board of Governors have said they view tariffs as a one-time price increase and are open to cutting short-term interest rates at the late July FOMC meeting. Futures markets believe the Fed will cut rates at the September FOMC meeting. Barkin told reporters after his speech that policymakers should never take any action off the table, while adding he’s still seeking data to know what to do with interest rate policy. “Given the strength in todays economy, we have time to track developments patiently and allow the visibility to improve, Barkin said, adding, when it does, we are well positioned to address whatever the economy will require. Barkin also said that given inflation had been on a cooling trend at the onset of the tariff regime, hiking rates to contain price pressures “doesn’t seem like the topic of the day.” Barkin said that as the economy now stands things look pretty good and recent inflation data was encouraging. He said job growth has been healthy. Michael S. Derby, Reuters
Category:
E-Commerce
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