What's going on with the GDP reading?

Summary

Marketplace Morning Report Summary

Episode: What's Going on with the GDP Reading?
Release Date: April 30, 2025
Host: David Brancaccio
Source: Marketplace

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1. US GDP Shows Unexpected Contraction

The episode begins with David Brancaccio announcing a surprising economic downturn:

"Not growth, but a drop of 0.3% January to March for gross domestic product." (00:01).

Susan Schmidt, Portfolio Manager at Exchange Capital Resources, explains the factors behind this contraction:

"We're talking about how much we export and sell outside, and offsetting that is how much we buy in. People are buying in advance of expectations of increased prices due to tariffs." (00:49).

This negative GDP figure marks the first growthless quarter since the early stages of the pandemic recovery in 2022.

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2. The Role of Tariffs in Economic Contraction

Brancaccio links the GDP decline to recent tariff implementations:

"All the imports that surged in ahead of tariffs turn economic growth into contraction." (00:01).

Schmidt elaborates on consumer behavior in response to tariffs:

"There was a big, big jump in the amount of goods purchased. That's a negative contributor to GDP in this last quarter." (00:49).

This surge in preemptive purchasing reflects consumer anxiety over potential price increases due to impending tariffs.

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3. Sluggish Job Creation Signals Business Caution

The report touches on the labor market, citing ADP data:

"Job creation was half what was expected. A meager 62,000." (01:23).

Schmidt interprets this as a sign of:

"Management teams are nervous. They're not sure what the environment is going to bring." (01:41).

The subdued hiring indicates a cautious approach from businesses anticipating economic uncertainty in the latter half of the year.

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4. Corporate Guidance Suspensions Amid Tariff Uncertainty

David Brancaccio discusses how major automakers are responding to tariff-related uncertainties:

"Stellantis is among firms to suspend guidance... because of the uncertainty of shifting tariff policies." (02:50).

Nova Safo from Marketplace details Stellantis' situation:

"Stellantis had been expecting a recovery this year after profits plunged more than 60% last year." (03:18).

Similar actions have been taken by General Motors, with expectations that Ford will follow suit, underscoring widespread industry unease.

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5. Amazon Reverses Plan to Display Tariff Costs

Under pressure from the White House, Amazon has withdrawn its initiative to show tariff costs on product listings:

"President Trump says he complained to Amazon founder and executive chair Jeff Bezos..." (04:06).

Nancy Marshall Genser reports:

"Amazon issued a statement saying its low-cost Amazon haul store was just considering the idea... this was never approved and is not going to happen." (04:18).

The reversal comes as tariff exemptions for small packages from China are set to expire, potentially increasing costs for Amazon.

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6. UK's Tax Reform: Abolishing the Non-Dom Status

A significant portion of the episode is dedicated to the UK’s efforts to eliminate the non-domiciled (non-dom) tax status, which has allowed wealthy individuals to avoid UK taxes on overseas income.

Rachel Reeves, the UK Finance Minister, outlines the government's stance:

"Make Britain your home, you should pay your taxes here too." (06:27).

Chris Ball of Hoxton Wealth discusses the potential exodus of high net worth individuals:

"We're seeing people go to the Middle East, Dubai, we're seeing people look at Italy." (07:11).

Despite fears of capital flight, there are incentives for some to stay or return:

"Non doms now have longer four years to bring their money onshore tax free... it could also tempt Brits living abroad to move back home." (08:13).

Joe Bateson from Mercer and Hall adds:

"The new regime is really attractive for a kind of a typical entrepreneurial client." (08:22).

The policy aims to balance tax fairness with maintaining the UK’s attractiveness to affluent individuals.

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7. Market Implications and Closing Remarks

Brancaccio concludes by summarizing the economic indicators:

"Stock futures are down, interest rates are up. With news the U.S. economy stopped growing as measured by GDP." (08:53).

He also promotes Marketplace's related podcast:

"Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money..." (09:06).

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Notable Quotes

• David Brancaccio
  "Not growth, but a drop of 0.3% January to March for gross domestic product." (00:01)

• Susan Schmidt
  "People are buying in advance of expectations of increased prices due to tariffs." (00:49)
  "Management teams are nervous. They're not sure what the environment is going to bring." (01:41)

• Rachel Reeves
  "Make Britain your home, you should pay your taxes here too." (06:27)

• Chris Ball
  "We're seeing people go to the Middle East, Dubai, we're seeing people look at Italy." (07:11)
  "The new regime is really attractive for a kind of a typical entrepreneurial client." (08:22)

• Nancy Marshall Genser
  "This was never approved and is not going to happen." (04:34)
  "We've been sold quite a long time. What I would say is a fairy story of trickle down wealth..." (08:02)

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Key Takeaways

• Economic Slowdown: The US GDP contracted by 0.3% in the first quarter, the first dip since early 2022.
• Tariff Impact: Anticipated tariffs have led to increased consumer purchasing, negatively affecting GDP.
• Job Market: Job growth is significantly below expectations, indicating business caution.
• Corporate Uncertainty: Major automakers like Stellantis and General Motors are suspending future guidance amid tariff uncertainties.
• Amazon's Tariffs: Amazon has reversed plans to display tariff costs on products due to political pressure.
• UK Tax Reforms: The UK is phasing out the non-dom tax status to increase tax fairness, potentially affecting the residency of high net worth individuals.

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This summary encapsulates the key discussions and insights from the "Marketplace Morning Report" episode titled "What's Going on with the GDP Reading?" released on April 30, 2025. For a more in-depth understanding, listening to the full episode is recommended.

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Timestamps Reference

• 00:01
• 00:49
• 01:23
• 01:41
• 02:50
• 03:18
• 04:06
• 04:18
• 06:27
• 07:11
• 08:13
• 08:22
• 08:34
• 08:53
• 09:06

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Note: Timestamps are provided in MM:SS format corresponding to the transcript segments.

Transcript

[David Brancaccio]

All the imports that surged in ahead of tariffs turn economic growth into contraction. I'm David Brancaccio in Los Angeles. There's news this morning that a key measure of the US Economy has a negative sign in front of it. Not growth, but a drop of 0.3% January to March for gross domestic product. Now, some growth was expected, but no, this is the first growthless quarter since pandemic recovery, early 2022. Susan Schmidt is portfolio manager at Exchange Resources. Morning.

[Susan Schmidt]

Good morning.

[David Brancaccio]

I mean, you have to understand that dynamics of trade to understand this contraction that was recorded through GDP just now. Right. A lot of people knew August 2, higher tariffs. It was well advertised, so they took action during the first quarter.

[Susan Schmidt]

Yes. Remember, the GDP is a net number. So we're talking about how much we export and sell outside, and offsetting that is how much we buy in. People know that tariffs are coming. There was a big, big jump in the amount of goods purchased. That's a negative contributor to GDP in this last quarter. That caused the negative number for GDP headline at negative 0.3%. It does show that people are nervous about the economy. There is a lot of activity right now, but that's because people are buying in advance of expectations of increased prices due to tariffs.

[David Brancaccio]

All right. And one quarter of contraction does not make a recession. It takes two. We don't have that yet. That said, we got an early reading on the jobs picture. It was from the payroll company adp, and job creation was half what was expected. A meager 62,000. That tells you something.

[Susan Schmidt]

That does tell you something. It tells you that these private companies are hiring much less than expected. Management teams are nervous. They're not sure what the environment is going to bring. And so they're anxious and nervous about adding on more people. It does point to general cautiousness in terms of the business community on what they're facing for the back half of this year.

[David Brancaccio]

And we're seeing some of that uncertainty expressed in the downturn in stock prices so far this morning. But we'll have more CEOs reporting their quarterly profits today, tomorrow and beyond. And they have to dance around this somewhat.

[Susan Schmidt]

They do, and that's a tough walk for CEOs right now. They are trying to explain to the street that they don't have a lot of visibility. Shareholders never like that. They want certainty. The poor CEOs aren't really sure what the environment is that they're going to be working with. And at the same time, they're announcing earnings. We're also getting a lot of announcements from the administration as to what potential developments there have been with tariffs. It's going to be a very confusing earnings season right now. Listen to what management teams are saying. I think there's going to be a lot of dialogue and discussion on the back and forth.

[David Brancaccio]

All right. I'm going to go out and look and see if I can actually find a poor CEO, as you put it. But Susan Schmidt is portfolio manager at Exchange Capital Resources. Thank you.

[Susan Schmidt]

Thank you.

[David Brancaccio]

The parent company of Jeep, Chrysler, Dodge and Ram is among firms to suspend guidance. That's Wall street speak for companies normally dropping hints about how they would do in the future. Stellantis says it's about the uncertainty of shifting tariff policies. Marketplaces Novo Safo reports Stellantis had been.

[Nova Safo]

Expecting a recovery this year after profits plunged more than 60% last year and led to the ouster of its CEO. The company in February predicted growing sales. But that was before the Trump administration issued a series of tariffs that impact automakers on steel, aluminum vehicles and auto parts, along with country specific tariffs. Nearly 40% of the vehicle Stellantis sells in the US are imported, mostly from Canada and Mexico. The company said it's engaged with policymakers, but the uncertainties around tariffs and how they might change mean it cannot offer a forecast of what's ahead. Stellantis is not alone. General Motors took the same action yesterday, suspending its guidance and we'll hear from Ford on Monday. I'm Nova Safo for Marketplace.

[David Brancaccio]

Following pressure from the White House, Amazon has backed away from a plan to display the cost of tariffs on individual products so consumers could see how much import taxes are. Adding Marketplace's Nancy Marshall Genser has that.

[Nancy Marshall Genser]

President Trump says he complained to Amazon founder and executive chair Jeff Bezos after Punchbowl News said Amazon would start losing tariff costs next to the total price. Trump told reporters Jeff Bezos was very nice.

[Rachel Reeves]

He was terrific. He solved the problem very quickly and he did the right thing and he's a good guy.

[Nancy Marshall Genser]

Amazon issued a statement saying its low cost Amazon haul store was just considering the idea of listing what it calls import charges on some products. But quote, this was never approved and is not going to happen. Hall will take a hit when a tariff exemption for small packages from China ends this Friday. I'm Nancy Marshall Genser for Marketplace.

[David Brancaccio]

When you study econ, you learn a kind of tango. The more you tax, the more wealthy people adjust or evade. In Britain, there was a long, long standing arrangement where richer people could avoid taxes on overseas assets. Then with support from both labor and Conservatives there that was reined in, leading some taxpayers to warn they might leave Britain. The BBC's James Graham reports the British government is tossing them a bone.

[Rachel Reeves]

For years, the UK has had a controversial tax status known as the non dom. It's short for non domiciled, which meant you could live in the uk but your home for tax purposes was overseas. It's a different concept to the us, where citizens are taxed on income wherever it's earned. This has long been an emotive subject in the UK and there was uproar in 2022 when it emerged that the then Finance Minister's wife, akshata Murthy, was one of 74,000 non doms. A qualifying resident could pay a fee to nominate another country as their permanent home to avoid UK tax on worldwide income. It was widely seen as an anachronism and both major parties had promised reforms.

[Chris Ball]

I have always said that if you.

[Nancy Marshall Genser]

Make Britain your home, you should pay your taxes here too.

[Rachel Reeves]

That's the current Finance Minister, Rachel Reeves, setting out plans to abolish the non dom status. Last October. The government said it wanted to address unfairness in the system and raise money for services. But its position did soften. Non doms now have longer four years in fact, to bring their money onshore tax free. And after that period taxes kick in on worldwide income. The change came after critics said wealthy people would leave the UK and one report found numbers had risen. But those figures have been disputed. Chris Ball advises high net worth individuals at Hoxton Wealth. He says clients are looking at countries with more sympathetic tax policies.

[Chris Ball]

I think a lot of people that this applies to are mobile and they have other options. So we're seeing people go to the Middle East, Dubai, we're seeing people look at Italy.

[Rachel Reeves]

And Chris thinks that the US is also becoming an attractive option.

[Chris Ball]

I think this administration is very pro, people with money residing in the us. Our view is, is that they're trying to make it easier for them to come over and gain residence and gain citizenship.

[Rachel Reeves]

One person who says she'll leave the UK is Magda Vashicka, founder of financial services firm Signia.

[Chris Ball]

You need people, entrepreneurs, people setting up companies to come into UK and pay their fair share of tax, but do so in such a manner that does not discourage wealthy people from coming.

[Rachel Reeves]

But Julia Davies, an angel investor and co founder of a group called Patriotic Millionaires uk, supports the change.

[Nancy Marshall Genser]

We've been sold quite a long time. What I would say is a fairy story of trickle down wealth, as in if there are some people that are doing incredibly wealthy in uk. The UK is going to be good for everyone, but it hasn't turned out that way.

[Rachel Reeves]

But while some wealthy people might leave, others could be attracted by that four year tax break, says Joe Bateson, a tax lawyer at Mercer and Hall.

[Chris Ball]

The new regime is really attractive for a kind of a typical entrepreneurial client. The UK is still a good place.

[Rachel Reeves]

To be, and Joe says it could also tempt Brits living abroad to move back home.

[Chris Ball]

If I'm a Brit who has gone overseas with work or something, maybe living in America for 10 years, I can now come back to the UK and I can get the first four years under this regime.

[Rachel Reeves]

So while some people will feel they're losing out, it may mean home sweet home for some homesick returnees in the UK. I'm the BBC's James Graham for Marketplace.

[David Brancaccio]

Stock futures are down, interest rates are up. With news the U.S. economy stopped growing as measured by GDP. It's the Marketplace Morning Report from APM, American Public Media.

[Janelie Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janelie Espinal, and each week I ask experts important money questions like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcast.