The first point to remember is that this is the advance report. The numbers are often revised considerably in the two reports that will be issued for the first quarter in May and June. The story may look very different at that point, especially when we have such erratic movements reported for imports and inventories. (Subsequent comprehensive revisions can further change the story.) Nonetheless, this is the data we have now.

1. It is striking to see the economy flip from solid 2.4 percent growth in the fourth quarter to -0.3 percent growth in this quarter. That doesn’t happen often.

2. The tendency of many analysts to look at the healthy growth of core GDP (consumption, investment, and government) and say things look fine is misleading. Many of the imports that they exclude showed up as consumption and investment. Business purchases of computers grew at 112.8 percent annual rate. Does anyone want to say with a straight face this was not connected with the import surge?

Consumption and investment growth was clearly far stronger in the quarter because of the big jump in imports. We will need to see more months data to know how much, but to pretend these components were unaffected by the surge is simply not serious.

3. It looks like productivity growth for the quarter will be close to zero and possibly negative. The data on both sides of this calculation (output and hours) are subject to large revisions. Furthermore, productivity data are notoriously erratic. Nonetheless this is still a bad sign.

Productivity growth had been very strong under Biden, averaging 1.9 percent from the last quarter before the pandemic. If we see a substantial slowing it will be a bad story both the standpoint of real wage growth and inflation.

4. The factory boom from the Biden years seems to be winding down. After more than doubling from 2019 to 2024, factory construction fell at a 4.5 percent annual rate in the first quarter. This will likely trail off further in the quarters ahead.

5. One of our largest exports is tourism. Foreigners visiting the US for tourism or as students spent $215.3 billion last year, 30 percent more than our food exports. Real spending by foreigners fell at a 5.2 percent annual rate in the first quarter. Harsh treatment of travelers by immigration officers, coupled with the seemingly arbitrary handling of student visas, is virtually certain to push this sum lower in future quarters.

6. Real restaurant spending fell at a 3.0 percent annual rate. Real spending in fast food restaurants fell at a 3.6 percent rate. This suggests that households are seriously cutting back on discretionary spending.

The first quarter report is definitely difficult to read given the huge surge in imports, which subtracted 5.03 percentage points from GDP growth, and the jump in inventories, which added 2.25 percentage points to GDP. One thing we can be certain about is that we have been knocked off the growth path we had in the last two years of the Biden administration. Whether we can still sustain modest growth or face a recession, and possibly a serious one, remains to be seen.