The U.S. economy slowed sharply in the first quarter of 2025, shrinking at a 0.3% annual rate. Businesses stockpiled goods anticipating President Trump's tariffs. This was a significant drop from the 2.4% growth in the previous quarter and the worst performance since early 2022.
Economists had forecast 0.8% growth. Concerns about the tariffs' impact on the economy, including a potential recession, grew. Businesses front-loaded purchases before the tariffs took effect.
While the import surge might distort the initial GDP figures, experts noted that the tariffs influenced business and consumer behavior. The front-loading of demand could lead to a sharper decline later.
Another key economic measure showed demand remained resilient. The first-quarter growth was also impacted by a rise in imports and a decrease in government spending.
Economists expect a slowdown in 2025 due to the tariffs, which could increase consumer costs. GDP growth is forecast to slow to 1.9%. Weak employment data further signaled economic weakness. The combination of data suggests a possible recession, potentially influencing the Federal Reserve's decisions on interest rate cuts.
5 Comments
ZmeeLove
Consumers are going to feel the effects of these tariffs, and it isn't looking pretty. Time to change direction.
Bermudez
Sounds like fearmongering to me. The way they report this makes it seem like the sky is falling.
Comandante
The GDP shrank, but people are still spending. The narrative set forth is misleading.
Muchacha
The Federal Reserve will have to step in if this trend continues. We need to stabilize the economy.
ZmeeLove
Why is everyone fixated on tariffs? Businesses need to adapt - that's how economies evolve.