Waiting for the Supply Shock

[Passages]

Today on TAP: It’s coming, and we know approximately when.

by David Dayen April 30, 2025

Two milestones converged this week that seem important in the moment but in retrospect will be minor blips historically: yesterday’s reaching of the first hundred days of Donald Trump’s second term, and today’s announcement of first-quarter gross domestic product showing the economy contracted by 0.3 percent on an annualized basis.

The former is just a news hook to overlay “what it all means” stories that are as light as air. The second covers the period before the April 2 Liberation Day, though it was influenced by it. The reason the economy contracted is that imports, in the calculation of GDP, take away from economic growth, and companies bulked up imports in anticipation of tariffs. That’s more of a noisy statistical quirk than a recession setting in.

The import surge also shows that Treasury Secretary Scott Bessent wasn’t completely out of his mind the other day when he downplayed incoming supply shocks by saying, “I think retailers have managed their inventory in front of this.”

He was just mostly out of his mind.
https://prospect.org/blogs-and-newsletters/tap/2025-04-30-waiting-for-the-supply-shock/