U.S. economy shrank 0.3% in the first quarter

[Voluntarist]

U.S. economy shrank 0.3% in the first quarter as Trump policy uncertainty weighed on businesses​

The U.S. economy contracted in the first three months of 2025 on an import surge at the start of President Donald Trump’s second term in office as he wages a potentially costly trade war.

Gross domestic product, a sum of all the goods and services produced from January through March, fell at a 0.3% annualized pace, according to a Commerce Department report Wednesday adjusted for seasonal factors and inflation. This was the first quarter of negative growth since Q1 of 2022.

Economists surveyed by Dow Jones had been looking for a gain of 0.4% after GDP rose by 2.4% in the fourth quarter of 2024. However, over the past day or so some Wall Street economists changed their outlook to negative growth, largely because of an unexpected rise in imports as companies and consumers sought to get ahead of the Trump tariffs implemented in early April.

Indeed, imports soared 41.3% for the quarter, driven by a 50.9% increase in goods, for the biggest growth outside the Covid pandemic since 1974. Imports subtract from GDP, so the contraction in growth may not be viewed as negatively given the potential for the trend to reverse in subsequent quarters. Imports took more than 5 percentage points off the headline reading. Exports rose 1.8%.

A slowdown in consumer spending and a sharp decline in federal outlays also contributed to the weak GDP number amid Elon Musk’s efforts at the Department of Government Efficiency.

“Maybe some of this negativity is due to a rush to bring in imports before the tariffs go up, but there is simply no way for policy advisors to sugar-coat this. Growth has simply vanished,” said Chris Rupkey, chief economist at Fwdbonds.

The beginning of the Trump recession??

 

[TheTexan]

Oh no imaginary number is down by 0.3% whatever shall we do

 

[oyarde]

U.S. economy shrank 0.3% in the first quarter as Trump policy uncertainty weighed on businesses​

The beginning of the Trump recession??

Probably know by Aug 01. Unemployment still around 4.2 , Id ave guessed closer to five by now w/ no more fed interest cuts. Still dismal 62.5 percent workforce participation rate in welfare US

 

[TheTexan]

GDP includes government spending in its formula

so the drop in GDP is probably due to Trump's huge cuts in spending

 

[CCTelander]

.

So, tariffs are working then?

 

[Voluntarist]

So, tariffs are working then?

The anticipation of tariffs caused a distortion in GDP in the first quarter. What happened is that there was a surge of imports in order to stockpile goods in anticipation that future tariffs would cause an escalation in prices of imports. What I don't know is how long it's going to take for tariffs to start substantially screwing with the global supply chains that US business depends upon. I imagine that US business is already planning worker layoffs in anticipation of that supply chain disruption - because businesses with over 100 workers have to provide workers with 60 day notices prior to layoff.

US economy shrank 0.3% in Q1 as companies stock up on imports before Trump tariffs​

US economy backtracked in first quarter as Trump tariffs loomed​

 

[CCTelander]

The anticipation of tariffs caused a distortion in GDP in the first quarter. What happened is that there was a surge of imports in order to stockpile goods in anticipation that future tariffs would cause an escalation in prices of imports. What I don't know is how long it's going to take for tariffs to start substantially screwing with the global supply chains that US business depends upon. I imagine that US business is already planning worker layoffs in anticipation of that supply chain disruption - because businesses with over 100 workers have to provide workers with 60 day notices prior to layoff.

US economy shrank 0.3% in Q1 as companies stock up on imports before Trump tariffs​

US economy backtracked in first quarter as Trump tariffs loomed​

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Just FYI, I was being facetious.

But everything you said is, of course, correct.

 

[Madison320]

Oh no imaginary number is down by 0.3% whatever shall we do

I think GDP is a little less made up than stuff like "consumer confidence" and "unemployment", but it's still pretty weak.

I look at the bottom line, the spending and the debt. Let's see where we are in a year.

 

[oyarde]

I think GDP is a little less made up than stuff like "consumer confidence" and "unemployment", but it's still pretty weak.

I look at the bottom line, the spending and the debt. Let's see where we are in a year.

Well we know for 25 yrs inflation numbers were low by more than 2 x avg ( routinely reported as 2 to 3 percent as new home avg increase was 6.67 percent per yr and money supply increased on avg 8 percent per yr ) and we know during biden admin jobs numbers were complete fabrication so yes , none of these numbers should not be suspect , at all. As far as I can tell spending was up about 160 billion ist quarter and doge savings 160 billion so debt looks to be unchanged in as expected advance

 

[Madison320]

Well we know for 25 yrs inflation numbers were low by more than 2 x avg ( routinely reported as 2 to 3 percent as new home avg increase was 6.67 percent per yr and money supply increased on avg 8 percent per yr ) and we know during biden admin jobs numbers were complete fabrication so yes , none of these numbers should not be suspect , at all. As far as I can tell spending was up about 160 billion ist quarter and doge savings 160 billion so debt looks to be unchanged in as expected advance

I agree except I would argue the most important money supply measure is the fed's balance sheet, because it's the base that drives all the other money supply measures in the long run. The balance sheet went from 1 trillion to 7 trillion since 2009 and I haven't checked lately but I don't think the other money supply measures like M1, M2 have come close to catching up to increasing by 7x. And that means maybe half of the inflation from all that QE is still in the pipeline.