At 8:30 am ET, the Bureau of Economic Analysis released their best guess (after all they're experts), suggesting that GDP in the US contracted at an annualized rate of -0.3%, the contraction below the top ten lowest Wall Street estimates but far better than the latest Atlanta Fed's GDPNow estimate of -2.7%.
Wall Street analysts' range of -0.4 to +1.4 came in at the low end of those estimates, a condition that falls very much in line with the ongoing mainstream media belittling and denigration of President Trump's first 100 days in office.
Stock futures went from bad to worse prior to the readout, suggesting that the negative number was somewhat expected or that it had been leaked to select market participants prior to the general public release. For instance, NASDAQ futures were down 219 points just one minute prior to the announcement, and fell further when the actual number was exposed. In the half hour before the release, Dow futures had fallen from +35 at 8:00 am ET to -94 at 8:29 am ET. Minutes later, at 8:45, Dow futures were down 345, NASDAQ futures had shed 375, and S&P futures were losing 75 points.
The negative GDP figure puts somwhat of a lie to the recent six-day rally on the S&P and Dow as well as the general "we've bottomed" narrative that had been in vogue the past few weeks. The GDP number, which is likely fudged to some degree in an attempt to soften the blow that the U.S. economy is a less than perfect, turns sentiment deeper into the negative, though it is worth noting that a surge in imports accounted for most of the drop-off. For what it's worth, the U.S. economy may be far stronger than the headline number suggests. Time will tell, with revisions in the second and third estimates late May and June, followed by second and third quarter results, the result could easily become one of strength once the tariff trauma is over, millions of illegals are deported and government downsized sufficiently.
Prior to the GDP announcement, ADP released its April Employment Report, showing U.S. public sector job growth of 62,000, the lowest since July 2024, and well below trend dating back to the secondary low of December 2022. All three months - February, March, April - since Trump was inaugurated have been well below the big numbers reported during the Biden administration. The media is certain to portray this, along with Friday's Non-farm Payroll data and today's GDP slump as the President doing a "very, very, very bad job on the economy, hurting millions of Americans."
The alternative reality upon which the MSM thrives runs counter to the general understanding that between tariffs, downsizing government (DOGE is saving taxpayers roughly $1.6 billion per week), and deporting illegals, the obvious effect was going to be a healthy degree of disinflationary pain, weaning the U.S. economy off the easy money from the Fed and government handouts to citizens and non-citizens alike, the effective "sugar high" in economic data.
Elsewhere, Starbucks (SBUX) showed a big EPS miss for the first quarter, posting 0.41 on expectations of 0.48 per share. Same store sales in the U.S. and China were both down for the quarter as the company continues to try to resurrect the brand that brought overprice coffee drinks to the public over the past 25 years. Shares are down more than 10% in pre-market trading.
Other companies reporting after the close Tuesday and early Wednesday include:
- Snapchat (SNAP), down 15% pre-market, pulling forward guidance
- Visa (V), EPS beat, revenue up, down 2% pre-market
- Hess (HES), down 2% pre-market
- Caterpillar (CAT), EPS miss, up 2% pre-market
- Humana (HUM), EPS beat, up 6% pre-market
Having fun yet?
At the Close, Tuesday, April 29, 2025:
Dow: 40,527.62, +300.03 (+0.75%)
NASDAQ: 17,461.32, +95.19 (+0.55%)
S&P 500: 5,560.83, +32.08 (+0.58%)
NYSE Composite: 19,089.21, +117.48 (+0.62%)
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