{"id":13760,"date":"2025-05-12T19:26:01","date_gmt":"2025-05-12T19:26:01","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13760"},"modified":"2025-05-12T19:26:02","modified_gmt":"2025-05-12T19:26:02","slug":"gdp-declines-but-underlying-data-is-still-solid-all-time-high-trade-deficit-china-services-slip","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/gdp-declines-but-underlying-data-is-still-solid-all-time-high-trade-deficit-china-services-slip\/","title":{"rendered":"GDP Declines But Underlying Data Is Still Solid, All-Time High Trade Deficit, China Services Slip"},"content":{"rendered":"\n<p>In this edition of <em>The Steady Investor<\/em>, we explore the forces investors should be watching closely\u2014such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Job growth remains steady<\/li>\n\n\n\n<li>U.S. trade deficit hits a record<\/li>\n\n\n\n<li>China\u2019s services sector weakens<\/li>\n<\/ul>\n\n\n\n<p><strong>What to Make of the Recent U.S. GDP and Jobs Reports \u2013 <\/strong>A slew of economic data hit the tape last week, and much of it suggested that the U.S. economy held up just fine in the first quarter. The U.S. labor market posted solid gains in April, with employers adding 177,000 jobs. This marks a continuation of stable hiring momentum, with sectors such as health care, transportation, and financial activities leading the way. The unemployment rate held steady at 4.2%. While the jobs market appeared to be holding firm, the U.S. economy experienced a -0.3% annualized contraction in the first quarter, falling short of expectations for a 0.4% increase. The decline was not attributable to a collapse in consumer demand, however, as it was primarily driven by a significant 41.3% annualized rise in imports, which subtracted 5.0 percentage points from the headline GDP figure. The surge in imports was largely driven by businesses accelerating purchases ahead of anticipated tariffs. Government spending also contributed to the GDP decline, reducing growth by 0.25 percentage points. Importantly, however, key private sector components demonstrated resilience. Consumer spending, business investment, and residential investment collectively grew at a 2.6% annualized rate. Business investment rebounded with a 9.8% annualized increase, including a 22.5% rise in equipment spending and gains in structures and research &amp; development. Residential investment posted a positive contribution, marking an improvement after previous periods of contraction. Overall, while the headline GDP number indicates a contraction, underlying private sector activity suggests the economy remained on solid fundamental footing in Q1.<sup>1<\/sup><\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\">Is Your Retirement Built to Withstand the Unexpected?<\/a><\/u><\/strong><\/p>\n\n\n\n<p>You\u2019ve spent decades building your retirement savings\u2014but it only takes one sharp market downturn to put your future at risk. With rising interest rates, persistent inflation, and ongoing volatility, it\u2019s clear: a strong retirement strategy isn\u2019t just about chasing growth\u2014it\u2019s about protecting what you\u2019ve built.<\/p>\n\n\n\n<p>That\u2019s why we created our free guide, <strong><em><u><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\">How Solid Is Your Retirement Strategy?<\/a><\/u><\/em><u><sup><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\">2<\/a><\/sup><\/u><\/strong>, where we break down key strategies that can help you understand:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The importance of flexible portfolio allocation<\/li>\n\n\n\n<li>Why keeping some liquid assets can potentially help you preserve more wealth<\/li>\n\n\n\n<li>Understanding your risk tolerance in case of a market downturn<\/li>\n\n\n\n<li>Plus, more strategies to help you protect your retirement assets<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, download our free guide by clicking on the link below.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\"><u>Get our FREE guide: How Solid Is Your Retirement Strategy?<\/u><\/a><\/strong><sup><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\">2<\/a><\/sup><\/p>\n\n\n\n<p><strong>U.S. Trade Deficit Hits a Record in March<\/strong> \u2013 With imports surging in anticipation of tariffs, the U.S. trade deficit ballooned by 14% to an all-time high of $140.5 billion. According to Census Bureau data, imports reached $346.8 billion, fueled by a $22.5 billion jump in consumer goods\u2014especially pharmaceutical products, which were being eyed for future tariffs. Imports of electronics, vehicles, and automotive parts also contributed to the increase. We would not view this as a trend but rather as a form of \u201cfront running,\u201d where companies accelerated shipments to avoid future costs. Although some firms may have continued stockpiling into April, the intense focus on pharmaceuticals likely crowded out spending on other goods like clothing and toys.<\/p>\n\n\n\n<p>While the goods deficit hit a record $163.5 billion in March alone, it was partially balanced by a $23 billion services trade surplus, with $95 billion in U.S. services exports\u2014such as travel and financial services.<sup>3<\/sup><\/p>\n\n\n\n<p><strong>China\u2019s Services Sector Shows Signs of Weakening \u2013 <\/strong>The world\u2019s second largest economy showed signs of weakening as the effects of 145% tariffs took hold. China\u2019s services sector lost momentum in April, as measured by the Caixin services purchasing managers index, which declined to 50.7 from 51.9 in March. This marked the lowest reading since September 2024 and suggested a slowdown in growth across the nonmanufacturing economy.The decline in the Caixin index was consistent with China\u2019s official nonmanufacturing PMI, which slipped to 50.4 from 50.8. According to Caixin and S&amp;P Global, the growth in new business in the services sector was the weakest in over two years, with export orders rising only modestly. Some companies cited increased tourism demand, but overall business sentiment continued to deteriorate, reaching its second-lowest level since the survey began in 2005.All told, the trade dispute with the U.S. is having effects beyond manufacturing, dampening domestic and global demand in service-related industries as well.<strong><sup>4<\/sup><\/strong><\/p>\n\n\n\n<p><strong>Essential Strategies to Safeguard Your Retirement Portfolio &#8211; <\/strong>Market swings are inevitable, but that doesn&#8217;t mean your retirement savings have to take the hit.<\/p>\n\n\n\n<p>A strong retirement strategy doesn\u2019t just focus on growth\u2014it ensures your assets are shielded from unexpected market shifts. Our free guide, <strong><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\"><em><u>How Solid Is Your Retirement Strategy?<\/u><\/em><\/a><\/strong><sup><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2025_05_11&amp;content=retirement_strategy_guide\">5<\/a><\/sup>, offers in-depth, actionable strategies to help you build a resilient portfolio. You\u2019ll learn:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The importance of flexible portfolio allocation<\/li>\n\n\n\n<li>Why keeping some liquid assets can potentially help you preserve more wealth<\/li>\n\n\n\n<li>Understanding your risk tolerance in case of a market downturn<\/li>\n\n\n\n<li>Plus, more strategies to help you protect your retirement assets<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide by clicking on the link below.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Overall GDP dropped -0.3% in Q1 but spending and business investment is still strong, company stockpiling drives trade deficit, China services sector weakens.<\/p>\n","protected":false},"author":3,"featured_media":13584,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-13760","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13760"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13760\/revisions"}],"predecessor-version":[{"id":13761,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13760\/revisions\/13761"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media\/13584"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}