In recent weeks, I have been shocked, shocked, I tell you, not by the tariff-induced stock market crash or the $7 trillion in wealth that disappeared as a result, but by the realization that I find myself agreeing with a couple of people with whom I seldom agree.
For context, today, we learned that the economy contracted in the first quarter of this year. This was the first negative economic growth since 2022. Adjusted for inflation, gross domestic product, or GDP, fell at an annualized rate of 0.3% in the first quarter, compared to the average growth of around 3% in the prior two years. Unsurprisingly, the economic slide was driven by a surge in pre-tariff imports and consumer belt-tightening. Since Biden was only in office for a few weeks in January, this is our first look at the effects of Trump 2.0 vis-à-vis U.S. trade policy.
To give you a taste of the cognitive dissonance I’m accustomed to hearing from Republicans, just listen to how Justin Wolfers, professor of economics at the University of Michigan, describes today’s GDP news:
Now listen to the Trump administration’s senior counselor for trade and manufacturing, Peter Navarro, an economist who this time last year was a resident of the federal penal system, spout a mouthful of doublespeak to convince us that the economy is hunky-dory:
While Navarro puts forth the kind of nonsensical gobbledygook I’ve come to expect from Republicans, given the absolute disaster of Trump’s “Liberation Day,” a few Republicans have begun to face the economic reality. I noticed this phenomenon when I came across this clip of Republican Senator Rand Paul (R-KY) underscoring the lunacy of tying tariffs to trade imbalances in this interview with CNBC’s Joe Kernan:
Unlike Rand Paul, whom I generally ignore, I’ve had plenty to say about how Larry Kudlow, who doesn’t believe systemic racism is a thing, is wrong almost every time he opens his mouth. So imagine my surprise when I found myself nodding in agreement as he gently educated Treasury Secretary Scott Bessent on the lunacy of pegging tariffs to trade deficits:
Robert Torricelli, the former Democratic congressman from New Jersey, once said, “If you live long enough, you'll experience everything.” I don’t about “everything,” but agreeing with both Kudlow and Paul has to get me pretty damn close.
Excellent article. Ali Velshi sat in for Nicole on Deadline Whitehouse 4/30/25. The 1st 1/2 hour includes Justin Wolfers (quoted above) & provides an excellent description of where we are, will be & why. They also explain how stagflation happens & how it flusters the FED. Few mainstream reporters have Velshi’s ability to explain the complex to non-economists. Available on YouTube & via podcast like most MSNBC content.
I'll give Kudlow 1 out of 3. He and I disagree on deregulation and tax cuts supercharging growth, but as for not relying on trade deficits as a metric, yup.