Imports do not subtract from GDP

The most common error in economics journalism.

 
This morning I noticed that the New York Times blamed rising imports for the fall in U.S. GDP in the first quarter of 2022:

The ballooning trade deficit, meanwhile, took more than three percentage points away from G.D.P. growth in the first quarter. Imports, which are subtracted from gross domestic product because they are produced abroad, have soared in recent months as U.S. consumers have kept spending. But exports, which add to G.D.P., have lagged in part because of weaker economic growth abroad. (emphasis mine)

The part in bold is not right. In fact, it’s the most common mistake in economics journalism. And it’s a mistake that helped to fuel Donald Trump’s midguided trade policies.

Now, most of what the NYT wrote in the paragraph above is correct. It’s certainly true that exports are counted in GDP. And it’s certainly true that slowing export growth reduces the rate of GDP growth. And it’s true that export growth slowed in the first quarter:

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Πηγή: noahpinion.substack.com