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What does the GDP mean for the future of the U.S. economy?<\/p>\n
How will the latest GDP numbers impact the U.S. economy moving forward?<\/p>\n
The U.S. economy just had its worst quarter in three years, as a cloud of uncertainty has been forming amid President Donald Trump\u2019s<\/a> seismic policy changes. And the stock market has been on a slide today after several days of positive results.<\/p>\n The country’s gross domestic product, the value of all goods and services, shrank at an 0.3% annual rate in the first three months of the year, down from a 2.4% increase at the end of last year. Imports drove the change, as companies scrambled to bring in foreign goods ahead of announced tariffs. The trade gap subtracted from economic growth.<\/p>\n Stocks slid early Wednesday on the news, though the underlying economy did turn in a solid showing in the first quarter despite tumbling consumer confidence and rising business uncertainty<\/a> over the import fees. Trump responded quickly<\/a> on his social media platform, Truth Social: \u201cThis is Biden\u2019s Stock Market, not Trump\u2019s. I didn\u2019t take over until January 20th.\u201d<\/p>\n \u201cTariffs will soon start kicking in, and companies are starting to move into the USA in record numbers,\u201d Trump wrote, promising a \u201cboom\u201d urging American\u2019s to \u201cBE PATIENT!!!\u201d<\/p>\n Biden\u2019s allies rallied around the former president, and economists noted a period of economic growth under Biden.<\/p>\n Here’s the latest:<\/p>\n Federal Reserve policymakers have signaled that\u00a0short-term interest rateswill remain unchanged\u00a0as they wait for clearer signs that inflation is nearing the\u00a0U.S. central bank’s\u00a02% goal or until there is a\u00a0whiff of a deteriorating\u00a0job market.<\/p>\n The data so far has\u00a0presented neither of those scenarios to the Fed, and though economists say the real drag from President Trump’s<\/a>\u00a0aggressive\u00a0import\u00a0tariffs<\/a>\u00a0lies ahead, there is a great amount of uncertainty over where the policies will end up and the degree and timing of their impact on prices and jobs.<\/p>\n “The cone of possibilities,” as Cleveland Fed President Beth Hammack put it recently, is quite large, and includes the possibility of persistently higher inflation coupled with a slowdown in economic activity that would require the central bank\u00a0to pick which battle to fight.<\/p>\n That\u00a0dilemma has\u00a0not stopped traders from betting that by June a faltering economy will likely move the Fed to resume its rate cuts, ultimately\u00a0lowering borrowing costs by\u00a0a full percentage point by the end of this\u00a0year. They added to those bets\u00a0on Wednesday after data showed\u00a0the U.S. economy\u00a0shrank\u00a0last quarter and\u00a0the Fed’s preferred measure of price inflation did\u00a0not rise at all\u00a0on a monthly basis in\u00a0March.<\/p>\n But while economists say such a rate-cutting scenario is not out of the question, they are quick to note that inflation remains elevated and\u00a0is likely\u00a0to worsen at least temporarily as retailers raise prices to cover higher costs from the sharp increase in import levies. Longer-term inflation expectations remain largely grounded, but a few Fed policymakers have taken note of a sharp rise in short-term inflation expectations that they\u00a0worry<\/a>\u00a0could set the stage for a resurgence in price pressures.<\/p>\n \u2212 Ann Saphir, Reuters<\/p>\n The private sector added 62,000 jobs<\/a> in April, according to the latest ADP National Employment Report, well below the 115,000 jobs anticipated by economists polled by Reuters<\/a> and down from ADP\u2019s revised estimate of 147,000 job gains in March.\u00a0<\/p>\n ADP\u2019s chief economist, Nela Richardson, said it\u2019s been a difficult environment for hiring decisions.\u00a0<\/p>\n \u201cUnease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data,\u201d Richardson said in a press release.\u00a0\u00a0<\/p>\n ADP’s report, in addition to Wednesday\u2019s GDP report and a pullback in business and consumer surveys, signals \u201cthe economy is losing momentum and risks to the economic outlook are increasing,\u201d according to a note from Bill Adams, chief economist for Comerica Bank.\u00a0<\/p>\n ADP\u2019s figures are an independent measure of employment based on payroll data from more than 25 million employees. It is typically viewed as a preview of the more comprehensive jobs report released by the Bureau of Labor Statistics each month, although there is no correlation between the reports. \u00a0<\/p>\n The Bureau is set to release its next jobs report Friday. Economists surveyed by Dow Jones Newswires and The Wall Street Journal expect to see 133,000 jobs<\/a> added in April, down from 228,000 added in March.<\/a>\u00a0\u00a0<\/p>\n \u2012 Bailey Schulz<\/p>\n Trump doubled down on blaming his predecessor for the shrinking economy under his watch during a Wednesday Cabinet meeting that he opened to reporters.<\/p>\n Despite being on the job 101 days, Trump even argued Biden \u2013 not him \u2013 should be held responsible for the performance of the upcoming second GDP quarter, which runs from the beginning of April through July.<\/p>\n “You could even say the next quarter is sort of Biden,” Trump told reporters. \u201cWe’re turning it around. It’s a big ship to turn around, and we’re going to have the greatest country financially in the history of the world.\u201d<\/p>\n Trump met with his Cabinet secretaries for two hours and three minutes as his administration\u2019s top officials took turns praising the president\u2019s first three-plus months in office and updating him on their efforts to carry out his agenda. The meeting followed reports that the country’s gross domestic product shrank at 0.3% annual rate in the first three months of the year.<\/p>\n \u2012 Joey Garrison\u00a0<\/p>\n Congressional Republicans had mixed reactions to the 0.3% dip in the U.S. GDP announced Wednesday morning, with some expressing concern and others urging patience while the wake of President Donald Trump’s tariffs hopefully stabilizes.<\/p>\n “How can anybody look at it objectively and not be disappointed?” asked Sen. Thom Tillis, R-N.C. Tillis is one of the most vulnerable sitting GOP senators as he’s up for reelection in his swing state next year.<\/p>\n It was caused by “several different factors,” he said. Asked by USA TODAY what he made of Trump blaming former President Joe Biden<\/a> for the change, Tillis was straightforward.<\/p>\n “That will work now. It won’t work six months from now,” he said. “There is some argument to say that some of this is a lag from the prior administration. But once you get elected, you own the economy.”<\/p>\n Sen. John Kennedy, R-La., said the GDP number only dropped because of increased imports “as people are trying to get ahead of tariffs.”<\/p>\n Asked whether that is attributable to Trump, given the tariffs are his policy, Kennedy said only that “it’s attributable to consumer behavior.”<\/p>\n Sen. Jerry Moran, R-Kan., said of course “we want to see a growing economy,” but urged patience.<\/p>\n “There are negotiations that are apparently taking place,” between the administration and other countries over tariffs, he said, so “we ought to give the administration and particularly the USTR the chance to work out agreements with countries that are interested in changing their behavior in order to do business in the United States.”<\/p>\n \u2012 Riley Beggin<\/p>\n The economy contracted in the first quarter because imported goods surged at a whopping annual rate of 50% as businesses stocked up on foreign merchandise before tariffs took effect. And the value of imports is traditionally subtracted from the economy\u2019s total GDP.<\/p>\n Why?<\/p>\n In the GDP report, the government measures the amount of goods produced in the U.S. by totaling consumer spending, business investment and other outlays. Since imported goods are made overseas, they must be subtracted from the total that consumers, companies and the public sector purchased during the quarter.<\/p>\n \u2012 Paul Davidson\u00a0<\/p>\n A key measure of inflation cooled in March, according to new Commerce Department data, a dose of good economic news mixed in with the bad.<\/p>\n The personal consumption expenditures (PCE) price index\u00a0rose 2.3%<\/a>\u00a0from a year earlier, a lower annual inflation rate than in recent months. PCE inflation measures what Americans pay for goods and services. It\u2019s the favored inflation measure of the Federal Reserve, the panel that sets interest rates. A 2.3% inflation rate is close to 2%, the Fed’s inflation target.<\/p>\n March inflation data comes from a time before most of Trump\u2019s tariffs took hold.<\/p>\n The Commerce report showed that U.S. consumer spending rose 0.7% in March, a solid gain.<\/p>\n \u201cInvestors should be diligent, but the U.S. economy could prove more resilient than people expect,\u201d said Scott Helfstein, head of investment strategy at Global X.<\/p>\n – Daniel de Vis\u00e9<\/p>\n Economists saw both good and bad tidings in the GDP report, which seemed to show an import-driven decline overlaid against an otherwise sound economy.<\/p>\n \u201cThe economy weakened in the first quarter,\u201d said\u00a0Bill Adams<\/a>, chief economist at Comerica Bank, in written comments. \u201cBusinesses and consumers pulled forward purchases to get ahead of tariffs in the first quarter, and throttled back spending and investment plans in other areas.\u201d<\/p>\n A dramatic surge in imports \u201cputs an asterisk on today’s negative first quarter GDP release,\u201d said\u00a0Peter Graf, chief investment officer at Nikko Asset Management Americas.\u00a0At the same time, Graf said, the tariff reaction \u201cshows how dramatically government policy expectations can drive real-world business decisions. Companies got ahead of possible tariffs by building inventories, just as they are now likely getting ahead of a possible policy-driven recession by reducing hiring and investment.\u201d<\/p>\n An economic decline in the midst of an expansion \u201cis unusual,\u201d but \u201cit\u2019s not unheard of, and the economy isn\u2019t in a recession,\u201d said Ryan Sweet, chief U.S. economist at Oxford Economics.<\/p>\n – Daniel de Vis\u00e9<\/p>\n Allies of former President Joe Biden fired back after Trump tried to blame the plunging stock market under his watch on his predecessor.<\/p>\n The S&P 500, which tracks the stock performance of 500 leading companies, grew by 14% annually during Biden\u2019s four years in the White House, including by 23% in 2024 and 24% in 2023.<\/p>\n During Trump\u2019s first 101 days of his second term, the S&P 500 is down about 8%.<\/p>\n \u201cWhen Joe Biden handed Donald Trump the best-performing economy in the world, experts praised the U.S. for leaving every other wealthy nation \u2018in the dust,\u2019 said Andrew Bates, former Biden deputy press secretary. \u201cNow we\u2019re plummeting toward a Trumpcession.”<\/p>\n He added: \u201cDonald Trump is the only president to have sent a strengthening economy into a nosedive in 100 days, and the only president to have bankrupted a casino.”<\/p>\n In the same vein, some economic forecasters faulted the Trump administration over the GDP numbers, which came after a long span of economic growth under Biden.<\/p>\n “If you were looking for a playbook on how to slow a healthy economy, this seems like a good example,” said Scott Helfstein, head of investment strategy at Global X.<\/p>\n – Joey Garrison and Daniel de Vis\u00e9<\/p>\n Responding to the economic growth report, White House trade adviser Peter Navarro said the influx in imports was an anomaly caused by tit-for-tat tariffs that he expects to reverse in the next quarter and contribute to long-term economic growth.<\/p>\n \u201cWhat happened with the numbers today is, we had a fairly extraordinary surge of imports that was totally driven by the rest of the world trying to get their products in here before the tariffs took full hold,\u201d Navarro told reporters at the White House, referring to it as a “one-shot” deal.<\/p>\n Navarro said the tax bill Republicans in Congress are working to pass would also stimulate domestic investment. The bill would include 100% expensing for equipment and buildings in the U.S., a valuable tax write-off for businesses.<\/p>\n Like the president, Navarro pointed the finger at former President Joe Biden, calling the economic situation\u00a0\u201cfruit of that poison Biden tree\u201d that Trump has been stuck with.<\/p>\n \u201cHe didn’t leave us with a very good hand,\u201d Navarro said of Biden. \u201cRight now, we see things improving. We see our policies being put into action.\u201d<\/p>\n -Francesca Chambers<\/p>\n Experts blamed the GDP decline on a trade imbalance from an unprecedented surge in imports in early 2025, as traders rushed to stock up ahead of sweeping tariffs imposed by the Trump administration.<\/p>\n Trade data from January showed that the U.S. imported more goods than in any other month since the Census began tracking the numbers in 2002, hitting a record $320 billion and driven by sharp increases in products from China, Canada, and Mexico<\/a>, which together supply nearly half of the nation\u2019s foreign goods.<\/p>\n The trend continued in February, with imports remaining near record levels at over $290 billion<\/a> \u2013 a 21% increase from February 2024 \u2013 as tariff fears persisted. Despite a brief pause on Canadian and Mexican tariffs, uncertainty kept importers scrambling to secure goods before further hikes, experts told USA TODAY. China\u2019s tariffs rose from 10% to 20% in early March, and by mid-March, some rates on Chinese goods had skyrocketed to 145%.<\/p>\n As early as December 2024, as Trump vowed to impose new tariffs upon taking office, China reported that its exports to the U.S. had peaked at $48.8 billion<\/a>, the highest monthly total for 2024. Experts told USA TODAY then that the spike was likely related to anticipated tariff hikes. The Census is scheduled to release trade data for March on May 6.<\/p>\n – Dian Zhang<\/p>\n Trump blamed his predecessor for the tariff-induced economic slowdown in the first three months of the year, calling it the \u201cBiden Overhang,\u201d a day after he completed 100 days in office. Biden\u2019s last full day in office was Jan. 19.<\/p>\n \u201cThis is Biden\u2019s Stock Market, not Trump\u2019s. I didn\u2019t take over until January 20th,\u201d Trump posted on Truth Social. \u201cTariffs will soon start kicking in, and companies are starting to move into the USA in record numbers.\u201d<\/p>\n Trump urged patience from Americans.<\/p>\n \u201cOur Country will boom, but we have to get rid of the Biden \u201cOverhang,\u201d he wrote. \u201cThis will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!\u201d<\/p>\n – Swapna Venugopal Ramaswamy<\/p>\n Stocks are trading lower Wednesday<\/a> morning as investors react to a spate of negative economic news and trade war comments from earnings releases.<\/p>\n The blue-chip Dow was 1.4% lower, giving up 569 points to trade near 39,958, while the broad S&P 500 fell 1.7%, losing 92 points to about 5,469. The tech-heavy Nasdaq slid 2.1%, down 64 points near 17,096 at midmorning. The 10-year U.S. Treasury note was unchanged at 4.171%, but the VIX, which is often known as Wall Street’s “fear gauge,” surged 15%.<\/p>\n Some stocks were sharply lower after earnings releases that included comments about tariff woes. Super Micro warned its fiscal third quarter results would miss analysts’ expectations as customers delayed platform decisions. The stock was 17% lower. Meanwhile, shares of app maker Snap were 16% lower afer the company declined to give guidance due to economic uncertainty. It also said some advertisers have reported an impact from changes to the de minimis exemption that is scheduled to end May 2.<\/p>\n – Medora Lee and Andrea Riquier<\/p>\n The\u00a0nation\u2019s\u00a0gross domestic product, the value of all goods and services produced in the U.S., shrank at a seasonally adjusted annual rate of 0.3% in the January-to-March period, the Commerce Department said Wednesday. That\u2019s down from a 2.4% increase in the third quarter and a 2.8% advance for all of 2024.<\/p>\n Economists surveyed by Bloomberg had projected a meager 0.4% rise in output.<\/p>\n