About that pull forward…again
Behind the 0.3% contraction in GDP [in Q1] were numbers economists called “extreme” and “weird.”
businesses hastily moved to get ahead of new levies and bring goods into the US.
2.2 percentage points of that investment gain was due to companies boosting their inventories to beat tariffs. Consumers, meanwhile, spent on big ticket items like cars, motivated by the same forces.
This was before all the April Liberation Day related shenanigans too.
The theme of Q1: buy and hold.
How much spending potential is left?
via The Daily Upside
Again, about that pull forward…
From The Daily Upside:
To prepare for a slowdown of global trade, US retailers have spent months stocking up, building a massive inventory of products. It’s all in fear of the ultimate retail boogeyman: empty shelves.
This will either delay the supply shock or, if avoided, dampen future purchasing activity until inventory normalizes.
Or, we’re in for some crazy sales as retailers try to catch up to “normal” and liquidate overstock.
It’s a little paradoxical, but good ads simultaneously tell us two things: (1) you won’t be a total weirdo if you buy this product because others are using it too, and (2) this product will make you stand out from everybody else.
David Perell is right.
People want to be unique. “Authentic” to themselves.
But only in a way that is socially acceptable within their tribe.
Fitting in by standing out.
Ads usually boil down to selling a spot at the cool kids’ table.
Or, as Seth says, “people like us do things like this.”
Of course, you have to be right about the “people”, “things”, and “us”.
While I expect the tariff strong arm to be walked back to some degree, predicting anything right now is a fool’s errand. Which means Memorial Day could be 2025’s Black Friday.
Or, as Apollo’s Chief Economist says:
tariffs have been implemented in a way that has not been effective, and there is now a 90% chance of what can be called a Voluntary Trade Reset Recession (“VTRR”)
The bottom line: If the current level of tariffs continues, a sharp slowdown in the US economy is coming.
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