GDP
One of the items that we monitor is GDP growth. This data point tells us whether or not we are headed for a recession.
As expected, tariffs are already beginning to have an impact on economic growth. A report released in Q1 2025 GDP showed the economy shrinking during the quarter.
The reason why we have a diversified strategy as we do is for risk mitigation purposes, as well as making sure that that we are positioned correctly for current economic conditions. Extending duration in fixed income assets is one of the adjustments we are making in many portfolio strategies to factor in the trajectory of US economic growth.
Listed below are excerpts from a recent article highlighting GDP first quarter data. I think you find it interesting.
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“The U.S. economy contracted for the first time in three years in the first quarter, swamped by a flood of imports as businesses raced to avoid higher costs from tariffs.
The Commerce Department's advance gross domestic product (GDP) report on Wednesday, however, grossly exaggerated the economy's fading prospects. Though consumer spending slowed considerably from the fourth quarter, the pace of growth remained healthy. Businesses also boosted investment in equipment, mostly information processing and transportation.
Nonetheless, both consumer and business spending likely reflected front-loading before the import duties kicked in.
Consumer confidence is near five-year lows and business sentiment has tanked, while airlines have pulled their 2025 financial forecasts, citing uncertainty over spending on nonessential travel because of tariffs, which economists said will raise costs for companies and households.
Economists anticipated the economy would rebound in the second quarter as the drag from imports fades, but probably not enough to avoid a recession or a period of tepid growth and high inflation, commonly referred to as stagflation.”
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Lastly, congratulations on seeing past the headlines and staying focused on your long-term portfolio and planning goals. If I feel the need, I'll send special updates. As always feel free to reach out if there's any concerns or thoughts.
