There will be no Briefing over the May Day weekend. But as a bonus you are getting your Friday Essays on a Wednesday.

If you've looked at the news this morning, you will have seen that the US economy experienced its first contraction in three years during the first quarter of 2025, with the latest data showing a decline that surprised most economists and market watchers. Real GDP decreased at an annualized rate of 0.3% in the first quarter of 2025. This represents a significant reversal from the 2.4% growth recorded in the fourth quarter of 2024.

The contraction was worse than analyst expectations, as economists had generally forecast modest growth of approximately 0.3%, though some had revised their expectations downward in recent days.

Many people are now worrying about the Trump Administration starting with an economic recession, as tariffs, which were implemented after Q1, are likely to take a bite out of GDP. The technical definition of a recession is two consecutive quarters of negative GDP growth.

However, the Q1 numbers are not as bad as the headline make it seem. There seem to be two main factors.

The most significant drag on GDP came from a massive surge in imports, which are subtracted in GDP calculations: imports increased at an annual rate of 41.3% in the first quarter, with goods imports alone rising by 50.9%. This import spike subtracted more than five percentage points from headline GDP growth. In other words, many businesses rushed to import goods before the implementation of tariffs, which created a one-time negative shock to the GDP calculation. But this, in itself, is not an indication of underlying economic weakness.

The other drag was the DOGE-driven reduction in spending. Federal government spending fell 5.1%, and this overall decline in government spending subtracted approximately 0.3 percentage points from GDP. Reductions in government spending are bad for the economy in the short run, but, of course, good for growth in the long run.

Less important, but more worrying, consumer spending, while still positive, showed signs of deceleration. Personal consumption expenditures (PCE) increased at a rate of 1.8% in Q1 2025, significantly down from the 4% growth recorded in Q4 2024; this represented the slowest pace of consumer spending growth since mid-2023. The consumer spending component still contributed positively to GDP (+1.21 percentage points) but was notably weaker than in previous quarters.

There is positive news, however: private domestic investment surged 21.9% in the quarter, driven largely by a 22.5% rise in equipment spending. However, some economists worry that this just reflects companies front-loading capital expenditures before tariffs took effect.

Of course, one quarter's numbers don't tell us much. And with tariffs, we are in unprecedented territory when it comes to economic forecasting. We are simply running an unprecedented experiment. But these new numbers, while not great, are also far from a catastrophe. They mostly reflect idiosyncratic events rather than some strong weakening in the productivity or strength of the American economy…at least for now.

Policy News You Need To Know

#FamilyPolicy — EPPC's Patrick T. Brown has come out with his own version of a baby bonus proposal. "The pro-family party should aim for policies that send an unmistakable signal that it’s better for moms and babies to have a committed, married father in the house around childbirth."

#Tariffs #Chyna — Tariffs will undoubtedly cause at least short-term pain to the American economy, but it's worth noting that there's more to the story. Bloomberg: "China’s factory activity slipped into the worst contraction since December 2023"

#BigTech — R Street has an update on the Google antitrust search case, squarely from a pro-Google/pro-consumer welfare standard perspective. Here's what grabbed our eye, however: "the DOJ submitted a list of proposed remedies […] In addition to banning all current and future default-placement contracts for Google’s search engine, the government proposes forcing Google to sell off its Chrome browser (and possibly the Android mobile operating system) and allow competitors to access its search data."

#HigherEd — Harvard has released its long-expected anti-semitism task force report. If you want to read all 300 pages of it, here it is, knock yourself out. Or you can just read the writeup by the Washington Free Beacon, whose reporting on these types of issues has been nonpareil, "Scathing Harvard Report Details Pervasive Anti-Semitism Driven By 'Politicized Instruction'"

#K12 — At City Journal, Carolyn D. Gorman makes the case for school discipline. You'd think this would be obvious, except that the "equity" mindset has apparently made it necessary to explain the A-B-C's of education all over again.

#Judges — LA Times: "A federal judge ordered the U.S. Border Patrol to halt illegal stops and warrantless arrests in the Central Valley after agents detained and arrested dozens of farmworkers and laborers." The concept of a warrantless arrest of illegal immigrants is nonsensical and makes a mockery of the notion of the rule of law. These types of injunctions need to stop.

#Immigration #Politics — Interesting: according to Adrian Carrasquillo at The Bulwark, Hakeem Jeffries is telling Congressional Democrats to cut it out with the trips to El Salvador.

#Immigration — Yet another example of the deep brokenness of the immigration system given lack of enforcement of basic rules: "USCIS Assists with ICE Investigation that Dismantled a Nationwide Marriage Fraud Operation"

#WeLiveInASociety #NationOfHeretics — Fascinating: "How many people go to church weekly? Surveys say it's about 1 in 5 Americans. Cell phone tracker data say it's actually closer to 1 in 20 Americans." Here's the study, via John B. Holbein. To be taken with a grain of salt, however: some have argued that the cell phone data is flawed as churches can have poor reception (basements, rural areas) and people turn off their phones in church.

#Energy #Greenery — Interior Secretary Doug Burgum halted construction of Equinor’s Empire Wind Project Offshore New York, after reports surfaced that its approval by the Biden administration in 2024 may have been rushed and deficient. More from the Institute for Energy Research: "Empire Wind was part of Biden’s goal of '30 gigawatts of offshore wind' capacity by 2030, providing 816 megawatts of capacity in federal waters off the coast of Long Island. Empire Wind, like other offshore wind projects, has been troubled by much higher costs and sought renegotiation of its contracts, settling for a cost of $150.15 per megawatt-hour, or three times the price of natural gas-fired generation."

Essays

We thought that this weekend's essays could have a theme, in this case, during the Papal Interregnum, the future of the Catholic Church. Thankfully, writer Pavlos Papadopoulos has collected the most interesting ones.

For example, Nathan Pinkoski, writing at Compact, describes “Pope Francis’s Managerial Revolution,” which is a very interesting angle on the legacy of the Francis Papacy.

In a similar vein, Jude Russo of The American Conservative argues that “power, not ideology, was the late pope’s lodestar.”

At The Public Discourse, Jeffrey Pojanowski asks for a Pope who rejects what he calls the "disenchanted angelism" of the present day.

And finally, for a good laugh, do yourself a favor and read through the not-entirely-serious First Things Conclave. "JD Vance, it seems, is responsible for the death of Pope Francis. In this case, I believe that to the victor should go the spoils, and Vance should be the next Roman pontiff."