Imports surge while exports record big drag on US GDP

As expected, US real gross domestic product (GDP) for Q1 2025 was negative, modestly surprising to the downside at -0.3% vs. -0.2%. This marks the first negative print since Q1 2022. The big news from Q1 GDP data: imports. “Imports surged 41.3% quarter-over-quarter annualized, driven by a massive 50.9% spike in goods imports as businesses scrambled to build up tariff-free stockpiles. While exports only rose 1.8%. The net effect was the largest drag on GDP by net exports on record to the tune of -4.8%,” said Garrett Melson, CFA^®, Portfolio Strategist, Natixis Investment Managers Solutions.^*

Net exports contribution to real GDP growth 6/30/47 - 3/31/25

Bar chart showing the probability of a recession from mild to average to deep

* Source: Bloomberg

The import surge was a function of inventory building. While that didn’t show up in the monthly inventory data, it showed up in inventory investment booked into GDP.

Inventories contributed 2.3% to real GDP growth, helping to offset nearly half of the drag from net exports.^*

Imports may have helped support growth in Q1, but it’s likely to represent a headwind in subsequent quarters, warned Melson, as it is not a sustainable source of growth. A sequential downside could be large in Q2 as we hit a potential air-pocket in import activity.

Real GDP: an inflation-adjusted measure of the value of all goods and services produced in an economy.

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