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"The increase in consumption exactly cancels out the fall in net exports" The increase in consumption does not happen at the same time as the fall in net expor

"The increase in consumption exactly cancels out the fall in net exports" The increase in consumption does not happen at the same time as the fall in net exports. Imports have increased in advance of tariffs. The imports are happening before the consumption. The imports that happen before the consumption of those imports subtract from GDP. Yes that is a reason GDP might fall. In this quarter, if tariffs aren't revoked, we will consume the imports that happened to front run the tariffs. That will increase GDP in this quarter. Noah Smith is not stupid. Noah Smith knows this. The questions for me are "Given that Noah Smith knows this, why does he write the article he does" and "Given that Noah Smith knows this, why would anyone rely on Noah Smith for their economic news". That's what I'm curious about.

orangecat 1y ago
He addresses this scenario: Let’s take another example, which is more like what actually happened in Q1. Suppose an American company, Best Buy, decides to buy a Chinese TV and put it in a warehouse, because it knows that tariffs are coming soon. That purchase counts as inventory investment. So investment goes up by $1000. And just like in the previous example, net exports go down by $1000. The two cancel out, and the total contribution of the imported TV to U.S. GDP is zero.
- rufus_foreman 1y ago
  From the BEA, "The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP" Bureau of Economic Analysis is wrong here?
  - kspacewalk2 1y ago
    Yes.
  - satanfirst 1y ago
    You skipped the next sentence where these are partially canceled out by investment, consumer spending, etc. Not wrong, deceiving. Real GDP is down because of some factors that cancel out and because the President sucks. Is the correct way to read that executive approved message. https://en.wikipedia.org/wiki/Howard_Lutnick https://en.wikipedia.org/wiki/Howard_Lutnick https://www.bea.gov/ https://www.bea.gov/ "These movements were partly offset by increases in investment, consumer spending, and exports." You can't make someone understand what that investment and consumer spending is if their job depends on not understanding it.
deleted 1y ago
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orangecat 1y ago

He addresses this scenario: Let’s take another example, which is more like what actually happened in Q1. Suppose an American company, Best Buy, decides to buy a Chinese TV and put it in a warehouse, because it knows that tariffs are coming soon. That purchase counts as inventory investment. So investment goes up by $1000. And just like in the previous example, net exports go down by $1000. The two cancel out, and the total contribution of the imported TV to U.S. GDP is zero.

rufus_foreman 1y ago
From the BEA, "The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP" Bureau of Economic Analysis is wrong here?
- kspacewalk2 1y ago
  Yes.
- satanfirst 1y ago
  You skipped the next sentence where these are partially canceled out by investment, consumer spending, etc. Not wrong, deceiving. Real GDP is down because of some factors that cancel out and because the President sucks. Is the correct way to read that executive approved message. https://en.wikipedia.org/wiki/Howard_Lutnick https://en.wikipedia.org/wiki/Howard_Lutnick https://www.bea.gov/ https://www.bea.gov/ "These movements were partly offset by increases in investment, consumer spending, and exports." You can't make someone understand what that investment and consumer spending is if their job depends on not understanding it.

deleted 1y ago

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