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

[BumRushDaShow]

Source: CNBC

Published Wed, Apr 30 2025 8:30 AM EDT Updated 2 Min Ago


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. 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%.

Read more: https://www.cnbc.com/2025/04/30/gdp-q1-2025-.html

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8:30 AM · Apr 30, 2025

Article updated.

Original article -

Published Wed, Apr 30 2025 8:30 AM EDT Updated 4 Min Ago


The U.S. economy contracted in the first three months of 2025, fueling recession fears 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.

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 due to 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. 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.

[mahatmakanejeeves]

1. I know you're working on PCE.

BEA:

Real gross domestic product (GDP) decreased at an annual rate of 0.3 percent in the first quarter of 2025 (January, February, and March), according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4 percent. The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending. These movements were partly offset by increases in investment, consumer spending, and exports.

[BumRushDaShow]

6. I had installed the Yahoo! Finance app on my idevices a couple weeks ago

and get a flurry of breaking news alerts from them but they hadn't gotten around to the PCE yet (nor had CNBC).

I finally found it on Bloomberg and just posted the OP - https://www.democraticunderground.com/10143450476

(I'm out of Bloomberg gift articles - they only offer 5 a month, but my re-up set will start tomorrow )

[moonshinegnomie]

7. if you want to read more on bloomberg use reader mode on your browser

it works for me

[BumRushDaShow]

10. Oh I know that little trick

I sub to them so reading the site (for myself) is not the problem. It's getting links to it for OPs for others, that can be a concern. I can often find news aggregators (e.g., msn, Aol, Yahoo! News, etc) who will sometimes pick up the Bloomberg wire service articles and will republish without a paywall, and I will often use those links when I find them.

I have refused to use the archive sites because I have been attacked for doing so.

[moniss]

2. It will be even worse for the 2nd quarter numbers

if Crumb The 1st doesn't order them to rig the numbers. As we know 2 negative quarters in a row is the definition of going into a recession. As this article from NBC notes:

"Dr. Antonio Saravia says the “conventional definition” of a recession is when there is negative growth in the GDP in two consecutive quarters."

https://www.nbcchicago.com/news/local/what-is-a-recession-impacts-jobs-real-estate-economy/3693896/

[Prairie Gates]

3. Don't worry, everybody! The economy only contracted due to a massive increase in the trade deficit

That's the tariff plan, after all, right?

Right?



Oh, right. We're in the "transition period." After the "transition period" we will be in Tariff-Generated Paradise of manufacturing jobs where unions are illegal and there is no OSHA, and all the massive tariffs paid by China will fund public schools so we don't have to pay anymore property taxes, and the school cafeteria will have pizza and ice cream for every lunch period, and homework will be banned by Executive Order! Heyoooo!

[Midnight Writer]

4. THE BEST...IS YET...TO COME!!!!

Keep in mind he didn't take office until 20 days into the quarter, and his "policies" did not kick in until later than that, so this shrinkage only reflects a few weeks of Trump's Administration.

Think of what he can do in two full quarters, or a year, or even four years.

[IronLionZion]

5. Make America Grow Negatively Again

MAGNA

[moonshinegnomie]

8. and the moron is blaming biden (of course)

[Bluetus]

13. The argument about imports is really fishy

Imports and GDP are not directly related. But I guess economists use trade deficits to adjust total economic activity to net out the domestic product. The argument is that there was pre-loading of imports to try to beat the Trump tariffs, and that arithmetic will go the other direction next quarter.

But actual domestic production will not go up much, if at all. We can't set up manufacturing for all these goods in a quarter, or a decade, for that matter. Plus, we don't have the labor force. Trump is scaring away the people who do much of "our labor" for us.

It seems more likely that GDP will continue to go down, even with this adjustment. During the next 90 days, we will start seeing more commentary about the "wealth effect" disappearing. Since the flood of cash was pumped into the global economies in 2008, the markets have been white hot. Anybody who owns some equities thinks they are stinkin' rich, and they will spend their money loosely. But the tariffs are already starting to cause layoffs. The wealth effect can evaporate almost overnight. You see your neighbors losing their jobs, and suddenly you decide you really don't need that 60" teevee after all.

Remember, one more down GDP quarter and we will officially be in recession.

[DallasNE]

15. It Is Not The Arithmetic That Will Go In The Other Direction

It will be the emptying of shelves in the stores that will go the other direction. And that means Walmart layoffs and work in a bottoms up fashion.

[Bluetus]

19. I agree with you. The economists have this backwards.

Last edited Wed Apr 30, 2025, 06:25 PM - Edit history (1)

They are reasoning "what goes up must come down" -- that is to say, if our traditional methods require us to make an irrational adjustment this quarter in response to a completely unprecedented set of circumstances, then that arithmetic will automatically fix itself the next quarter.

But as you suggest, there is a psychology setting in. Corporations anticipated this disastrous chaos from Trump and pre-ordered inventory as much as they could. But nobody can stock a year ahead, and Trump seems hellbent on continuing the chaos long past when the pre-shipped inventory runs out. Of course, he is making exceptions every single day now, mostly in response to bribes and tributes, I believe. But if tomorrow morning, Trump said "OK, I'm done with tariffs. Forget I ever brought that up", there has already been enormous damage. In particular, our best partners (Canada, Mexico, Japan, the EU countries) will never trust Trump. They will trade with us as absolutely necessary, but they are already working hard to open new trade partnerships that leave the US out.

The economists are just wrong. This will not snap back to where it was.

[Canada Kid]

11. Why are Americans taking this??

The stock market is tanking, your idiot president blathers BS about how his tariffs will make your lives better, your medicaid, education, cost of living, all being destroyed...and all you Americans seem to be accepting of this. Your lives are being decimated by this scumbag and his cronies, thousands of jobs at risk or already lost. This is acceptable. Where is the outrage? Where are all the rich folks who are bleeding millions of dollars every week? I just don't get it! If this is ok with you...then expect the world to turn it's back on you and do business with everyone but you, as we all like to thrive economically and socially. Be isolated...see how good things won't be!

[chouchou]

18. With all due respect. Keep this in mind ..People who voted for Trump are Trump.

The excuses will fly like a gigantic rocket to deep outer space.

[kimbutgar]

12. And the orange Hitler is blaming President Biden for this!

When he caused and owns this downturn all by himself!

[DallasNE]

14. Translation, If This Growth Trend Continues In The 2nd QTR

Then, we will officially be in a recession. There is no need to wait for 2026 to arrive for the recession to hit. It will have started in Trump's first 100 days. (Because the number is small -0.3%, it probably means that in January and February, the number was still slightly positive, but when it turned negative in March, it was more than enough to offset the small gains in January and February, leaving the quarter at -0.3%.)

In another post yesterday, I predicted that the recession would not start in 2026, as predicted by the experts, but in June 2025. Today's GDP news makes that obsolete. I now think it probably started in March 2025. And Trump will do nothing to lessen the blow, so I now expect that it will be a steep recession with stagflation that will be ongoing during the 2026 election.

[SergeStorms]

16. And, right on cue, he blames Biden.

Biden didn't start a freaking global trade war, and fire tens of thousands of people, moron!

[LudwigPastorius]

17. Make America G...glub...glub..glub...

[progree]

20. Folks, two negative quarters in a row is NOT officially a recession. The NBER is the widely accepted arbiter of when

Last edited Thu May 1, 2025, 07:39 PM - Edit history (2)

recessions occur. (The U.S. government Bureau of Economic Analysis says the NBER -- National Bureau of Economic Research -- is the official arbiter -- see below). Not Internet memes and myths, no matter how common they may be.

https://www.nbcchicago.com/news/local/what-is-a-recession-impacts-jobs-real-estate-economy/3693896/

Dr. Antonio Saravia says the “conventional definition” of a recession is when there is negative growth in the GDP in two consecutive quarters.

"conventional definition" -- a common definition would be better wording. But as the article goes on to state, it is not the official definition.

Unemployment rates and payroll data can also be used to determine the start and end dates of a recession, according to economists.

The National Bureau of Economic Research also holds that significant declines in economic activity must be evaluated on their depth, diffusion and duration.

"A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough," according to the Business Cycle Dating Committee with NBER, which officially determines if a recession has occurred. https://www.nber.org/news/business-cycle-dating-committee-announcement-january-7-2008

https://www.nber.org/research/business-cycle-dating
http://www.nber.org/cycles/recessions_faq.html
which morphs into:
https://www.nber.org/research/business-cycle-dating/business-cycle-dating-procedure-frequently-asked-questions

Q: The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to the NBER's recession dates?

Q: Why doesn't the committee accept the two-quarter definition?

Q: When did the NBER become the quasi-official arbiter of US business cycle dates?

https://www.google.com/search?q=is+the+nber+the+official+arbiter+of+when+recessions+occur

From the Bureau of Economic Analysis (BEA.gov) https://www.bea.gov/help/glossary/recession

In general usage, the word recession connotes a marked slippage in economic activity. While gross domestic product (GDP) is the broadest measure of economic activity, the often-cited identification of a recession with two consecutive quarters of negative GDP growth is not an official designation. The designation of a recession is the province of a committee of experts at the National Bureau of Economic Research (NBER), a private non-profit research organization that focuses on understanding the U.S. economy. The NBER recession is a monthly concept that takes account of a number of monthly indicators—such as employment, personal income, and industrial production—as well as quarterly GDP growth. Therefore, while negative GDP growth and recessions closely track each other, the consideration by the NBER of the monthly indicators, especially employment, means that the identification of a recession with two consecutive quarters of negative GDP growth does not always hold. For information on recession, or business-cycle, dating, see: http://www.nber.org/cycles/jan08bcdc_memo.html.

This is especially significant because the BEA is the government organization that produces the GDP numbers.