Economic Update on GDP and Tariffs
On Wednesday, CNBC editor Rick Santelli addressed the recent “liberation date” tariffs announced by President Donald Trump. He highlighted that, despite concerns, the gross domestic product (GDP) growth was “better than expected.”
The Bureau of Economic Analysis reported a GDP increase of about 3%, which also contributed to a decrease in imports. Santelli remarked that these figures have surpassed many forecasts. He noted that while there are upfront costs associated with these tariffs, the anticipated growth rate was around 2.5%. Interestingly, the previous quarter saw just half that rate.
He pointed out that the last quarter of 2022 was particularly lackluster, marking the weakest performance since early 2022. Looking at consumption, which had an estimated increase of 1.4%, he contrasted this with the drastic drop during the toughest days of the COVID pandemic, when consumption fell by 30%.
“Outside of the COVID context, when was the last time consumption was this low?” he wondered, tracing it back to June 2011. He added a note regarding pricing, mentioning that the inflation index was below expectations. The core personal consumption expenditure price index is projected to hover around 2.3%, which, he said, appears slightly high at 2.5% for that quarter.
During an event in the Rose Garden on April 2, Trump introduced tariffs aimed at rectifying trade imbalances. Joe Kernen, the host of “Squawk Box,” noted that some critics of Trump might focus on extreme cases to suggest that the economy is struggling. He cited Senator Elizabeth Warren, who argues that inflation is spiraling out of control due to these tariffs.
Santelli criticized those who suggest serious economic issues, emphasizing that, despite alarmist rhetoric, inflation hasn’t reached disastrous levels. “It’s fascinating how they keep discussing impending doom when, really, those issues haven’t manifested,” he said, reflecting on how these narratives persist.
In closing, Santelli advised caution, humorously stating, “Don’t choose a House member as your money manager. That’s my takeaway.”
