The US economy shrank 0.3% during the first three months of 2025 amid an escalating trade was and the looming threat of recession. President Donald Trump however remained undaunted — opining that the ‘economic boom’ he had promised on the campaign trail would “take a while” and urging Americans to ‘be patient’. He also blamed his predecessor Joe Biden for leaving the country with ‘bad numbers’ and claimed that the contraction was unrelated to tariffs.
“This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden “Overhang.” This 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!!!” he wrote on Truth Social.
Trump inherited a solid economy that had grown steadily despite high interest rates imposed by the Fed in 2022 and 2023 to fight inflation. His erratic trade policies over the past 100 days — including 145% tariffs on China — have however paralysed businesses and threatened to raise prices and hurt consumers. Democrats were quick to blame Trump for disrupting several years of solid economic growth after the data was released on Wednesday.
First-quarter growth was slowed by a surge in imports as companies in the United States tried to bring in foreign goods before Trump imposed massive tariffs.The January-March drop in gross domestic product — the nation’s output of goods and services — reversed a 2.4% gain in the last three months of 2024. Imports grew at a 41% pace, fastest since 2020, and shaved 5 percentage points off first-quarter growth. Consumer spending also slowed sharply — to 1.8% growth from 4% in October-December last year. Federal government spending plunged 5.1% in the first quarter.Forecasters surveyed by the data firm FactSet had, on average, expected the economy to eke out 0.8% growth in the first quarter, but many expected GDP to fall.
Financial markets sank on the report. The Dow Jones tumbled 400 points at the opening bell shortly after the GDP numbers were released. The S&P 500 dropped 1.5% and the Nasdaq composite fell 2%.
(With inputs from agencies)