Bear’s Gonna Eat

GDP, a way of measuring the entire economy, is a formula: C + I + G + (X-M) or, even better, (C + I + G - M) + X

where:

• personal consumption=C
• business investments=I
• government spending=G
• exports=X
• imports=M

Growth is Good

GDP is not a vanity metric. Economic growth – increasing levels of GDP – has created enormous wealth and opportunity.

Buy More, Sell Less

After growing by nearly 7% in Q4 2021, US GDP decreased by almost 2% in Q1 2022.

Despite an overall decline, Q1 saw strong growth in both household consumption and business investments (+3% and +9%, respectively). The biggest drag on an otherwise strong quarter was the not-so-balanced economic relationship between the US and the world.

You see, my countrymen love buying things. Lots and lots of things. From every clime and place. Q1 was no different. Despite significant supply chain challenges, US imports (M) increased by over 17%.

Selling American-made goods to the rest of the world is another story, though. It just ain't really our thing. Following a decades-long pattern, US exports (X) dropped another 10%.

Far from surprising, this is merely the latest chapter in the decades-long story of American growth, trade, and demand.