FOX Business host Larry Kudlow analyzed the GDP report on his show, “Kudlow.” According to Kudlow, liberal media and some on Wall Street are speculating about a recession, citing a slight decline of three-tenths of one percent in the first quarter of 2025 GDP. Critics, affected by what Kudlow describes as “Trump derangement syndrome,” are predicting a recession in the second quarter. However, a deeper analysis of the GDP numbers reveals a robust economy with growth around 3%.
Kudlow noted that under President Donald Trump’s second term, core GDP—which excludes volatile trade import numbers due to tariff anticipation and focuses on private sector consumption and investment—highlighted a 3% increase in the first-quarter economy. Moreover, private business investment rose significantly while government spending decreased. Business fixed investment climbed nearly 10% annually in the first quarter, and investments in business equipment and machinery soared 22.5%, indicating positive trends in productivity, job growth, and wages.
Kudlow questioned why some analysts are forecasting a recession, suggesting they have overlooked important factors. He speculated about the President’s upcoming bill expected to pass Congress by July, which promises a 100% expensing write-off for business investment and immediate depreciation for factory investment and construction, retroactive to January 2025. Additionally, the corporate tax rate for domestically produced goods is anticipated to drop from 21% to 15%.
This positive outlook is tied to anticipated business tax cuts and new personal tax cuts, which Kudlow argues will outweigh any tariff-related downturn. He highlighted a 0.0% personal consumption deflator and a decrease in the consumer price index in March, suggesting these inflation figures could lead to a Federal Reserve rate cut.
Kudlow also pointed to a significant mathematical discrepancy in the GDP numbers. Despite a $333 billion surge in imports during the first quarter, inventories rose only by $140 billion, leaving $193 billion unaccounted. He proposed adding this missing amount back into GDP calculations, as he believes it was erroneously omitted, resulting in real GDP growth of 3.2% for Q1 2025. He concludes that this sets the stage for an economy enhanced by tax cuts and deregulation, potentially experiencing robust growth in the latter half of the year and into 2026.
