All the imports that surged in ahead of tariffs turn economic growth into contraction.

I'm David Brancaccio in Los Angeles. There's news this morning that a key measure of the U.S. economy has a negative sign in front of it, not growth, but a drop of three-tenths of, January to March, for gross domestic product.

Now, some growth was expected, but no, this is the first growthless quarter since pandemic recovery, early 2022.

Susan Schmidt is portfolio manager at Exchange Capital Resources.

Morning.

Good morning.

I mean, you have to understand that dynamics of trade to understand this contraction that was recorded through GDP just now, right? A lot of people knew August 2nd, higher tariffs. It was well advertised. So they took action during the first quarter.

Yes. Remember, the GDP is a net number. So we're talking about how much we export and sell outside

and offsetting that is how much we buy in. People know that tariffs are coming. There was a big

jump in the amount of goods purchased. That's a negative contributor to GDP in this last quarter.

That caused the negative number for GDP headline at negative 0.3%. It does show that

people are nervous about the economy. There is a lot of activity right now, but that's because people

are buying in advance of expectations of increased prices due to tariffs.

All right. And one quarter of contraction does not make a recession. It takes two. We don't have that yet.

That said, we got an early reading on the jobs picture. It was from the payroll company ADP. And job

creation was half what was expected, a meager 62,000. That tells you something. That does tell you

something. It tells you that these private companies are hiring much less than expected.

Management teams are nervous.

They're not sure what the environment is going to bring.

And so they're anxious and nervous about adding on more people.

It does point to general cautiousness in terms of the business community on what they're facing for the back half of this

year. And we're seeing some of that uncertainty expressed in the downturn in stock prices so

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