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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 U.S. economy has a negative sign in front of it. Not growth, but a drop of three-tenths of a percent 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 Capital Resources. Morning.
Good morning. 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 2nd, higher tariffs. It was well advertised. So they took action during the first quarter.
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 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 point three percent. 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. 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. 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. And we're seeing some of that uncertainty expressed in the downturn in stock prices so far this morning. But we'll have more coming.
CEOs reporting their quarterly profits today, tomorrow and beyond, and they have to dance around this somewhat. 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. 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. Thank you.
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. Stalantis says it's about the uncertainty of shifting tariff policies. Marketplace's Nova Safo reports.
Stellantis had been 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 vehicles Stellantis sells in the U.S. 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 Neva Safo for Marketplace.
Following pressure from the White House, Amazon is 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-Genzer has that. President Trump says he complained to Amazon founder and executive chair Jeff Bezos after Punchbowl News said Amazon would start listing tariff costs next to the total price. Trump told reporters... Jeff Bezos was very nice.
He was terrific. He solved the problem very quickly.
And he did the right thing, and he's a good guy. 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. Haul will take a hit when a tariff exemption for small packages from China ends this Friday. I'm Nancy Marshall-Genzer for Marketplace.
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 Labour 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.
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, Aksharta 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. I have always said that if you make Britain your home, you should pay your taxes here too.
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.
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. And Chris thinks that the US is also becoming an attractive option.
I think this administration is very pro-people with money residing in the US. Our view is that they're trying to make it easier for them to come over and gain residence and gain citizenship. One person who says she'll leave the UK is Magda Wierszczycka, founder of financial services firm Signia.
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. But Julia Davis, an angel investor and co-founder of a group called Patriotic Millionaires UK, supports the change.
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 the UK, it's going to be good for everyone. But it hasn't turned out that way. But while some wealthy people might leave, others could be attracted by that four-year tax break, says Jo Bateson, a tax lawyer at Mercer & Hole. The new regime is really attractive for a kind of a typical entrepreneurial client. The UK is still a good place to be.
And Joe says it could also tempt Brits living abroad to move back home.
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. 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. Stock futures are down, interest rates are up. With news the US economy stopped growing as measured by GDP...
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