U.S. Gross Domestic Product fell by 0.3% during the first quarter of 2025, the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce reported in its first “Estimated” report on April 30.
This report, though not meeting the criteria of Donald Trump’s cheer-leading forecast of a “great economy,” is also distorted. The sharp GDP decline was due to a surge in U.S. imports during the first quarter by a huge 41.3%, according to BEA figures. What happened is that, in anticipation that Trump would impose tariffs during the first quarter, businesses “front-loaded” their imports so that they would arrive before Trump imposed tariffs. The way GDP is calculated, the import surge contracts GDP (through intermediary steps). On May 1, the New York Times reported, “That [import] surge shaved nearly five percentage points off GDP growth in the first quarter.” Other publications reported approximately the same figure. Personal consumption expenditures and so-called components of GDP, rose during the first quarter. As for the future, shrinking transportation bookings and other developments, may indicate inflation, austerity against consumption, and declining employment.
The overarching problem is that GDP does not measure the real economy or human existence. By the standpoint of Lyndon LaRouche’s potential relative population-density, the only actual measure of economic growth (or decline), the U.S. physical economy has been contracting for more than four decades, a point LaRouche repeatedly stated. The U.S. economy is so reduced that only 21% of the U.S. economy is now productive; 79% is non-productive. GDP makes no such distinction, but lumps them together. GDP excludes, by its own construction, infrastructure, one of the most crucial elements of an economy. In the United States, increasingly, families are pushed below the level of human existence; homelessness and drug addiction abound; water management systems, transport networks, power generation collapse. GDP will not measure that (except in a tertiary way).
If a society starts from the conceptual framework of potential relative population-density, it has the ability to correct the real problems, and thrive again.
