What an hour ago looked like another positive day in the markets has certainly turned negatively as the latest economic data burning growing stagflation fears.

First up was the ADP job numbers for April. Upcoming two days prior to the government’s own employment data for April, the ADP report showed only 62,000 private sectors created this month, well shy for estimates for 108,000 and March 147,000. It was the weakest pressure since July 2024.

Next, the government’s first estimate of GDP growth in the first quarter came on a negative 0.3% against estimates for positive 0.2%. While the quarter ended in March, financial actors were aware of upcoming tariffs-front-offs imports early in the year. When returning to ECON 101, increasing imports (absent a similar gain in export) are a feature of GDP growth.

In fact, the export import imbalance reduced GDP growth by almost 5% in the first quarter. At work was also the Trump administration’s DODE effort, where the government used a move on GDP for the first time since 2022.

By approaching inflation, the central PCE price index embedded in the GDP report increased 3.5% against estimates for a gain of only 3.1%.

It all adds up to a large fall in US shares, with NASDAQ lower 2% and the S&P 500 by 1.5%. It hits Bitcoin (BTC), which has slid approx. 1% together to $ 94,300.