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National News See other National News Articles Title: lowest and first negative GDP reading since Q2 2022. The Kobeissi Letter @KobeissiLetter BREAKING: Preliminary US Q1 2025 GDP growth comes in at -0.3%, below expectations of +0.3%. This marks the lowest and first negative GDP reading since Q2 2022. U.S. GDP Contraction Begins: A Structural Signal, Not a Statistical Fluke On April 30, 2025, the Bureau of Economic Analysis released preliminary Q1 GDP data showing that the U.S. economy contracted by -0.3%, marking the first negative GDP print since Q2 2022. This reading was not only below consensus expectations of +0.3%, but also confirms what leading macro indicators have been signaling for months: the real economy is slipping into contraction despite nominal strength in asset markets. Why It Matters This print is not isolated. It intersects with: •The weakest ADP private payrolls since July 2024 (62k jobs added), •The largest inflows into cash-like ETFs in history (SGOV/BIL inflows surpassing $10B), •A flatlining M2 money supply that remains fragile post-contraction, and •Rising Treasury issuance that has failed to stimulate growth despite massive fiscal efforts. Cross-Referenced Signals from Our Strategic Framework 1.Labor Market Cracks: The private sector’s ability to hire is waning both in trend and in breadth. Historically, payroll drops precede broader unemployment spikes by 1–2 quarters. We’re at the early inflection point. 2.Liquidity Behavior: The historic shift into short-duration Treasuries is not yield-seeking; it is solvency-preserving. It’s consistent with market behavior just before the GFC (2007), March 2020, and the repo crisis of September 2019. Liquidity preference rising while GDP contracts is not a coincidence it’s a warning. 3.Credit-Led Growth Exhaustion: A -0.3% GDP print in the face of still- loose financial conditions implies the private sector’s debt-carrying capacity is saturated. The Fed’s recent dovish hints may come too late to prevent credit tightening from snowballing into insolvency pressure. 4.Historical Echo: This mirrors the 2001 and 2007 onset phases modest GDP contractions initially dismissed as “technical,” until feedback loops from labor, earnings, and credit broke the surface narrative. By the time the second contraction prints, markets are typically in drawdown. Where the Framing Might Collapse The Fed could intervene forcefully (e.g. surprise rate cut, liquidity injections) and reignite risk assets temporarily. However, if the structural base private sector labor income and consumption is eroding, short-term reflation may only accelerate capital flight into gold, cash, or strategic assets. Highest-Conviction Synthesis This is not a growth scare. It is the first structural rollover in U.S. real output under the weight of sustained monetary tightening, rising debt servicing costs, and fiscal exhaustion. Market participants dismissing it as a soft patch may be missing the onset of the next phase of the business cycle: contraction. The second negative print will confirm recession. By then, it may already be too late to hedge. Poster Comment: We are in an over populated country with a debt based currency that starved 3 to 4 million Americans to death in the 1930s. Our manufacturing base was sent overseas under NAFTA. Post Comment Private Reply Ignore Thread
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