U.S. GDP Falls By 0.3% In Three Months Amid Trump’s Economic Policies

Data confirms it: the US economy has just experienced its worst quarter since 2022. It shows a negative growth of -0.3% in the first quarter. This unexpected GDP decline raises fears of a decisive turning point for markets and investors. Upstream, trade tensions seem to be worsening.

An Economy Destabilized by Trump’s Policy

It’s a fact! The new economic policy of President Donald Trump is causing a real shockwave (and not just in the United States!). In only a few months, his tariff decisions have:

• worsened the trade deficit;
• disrupted trade exchanges;
• weakened growth.

Result: the inflation-adjusted GDP dropped by -0.3%. This figure is well below the 0.8% forecast.

According to the Department of Commerce, this drop mainly results from an explosion of imports (+41.3%) aimed at anticipating tariff increases. Upstream, exports grew by only 1.8%. This dynamic endangers the balance of world trade.

According to a report:

The difference between imports and exports has decreased the GDP the most since 1947.

A key engine of the economy, consumption has also slowed down significantly. Specifically, it fell to 1.8% (compared to 4% previously). Public spending aggravated the trend. It dropped by -5.1%.

Having said that, corporate investments rebounded by 9.8%. Some analysts interpret this as anticipation of the upcoming inflation.

Recession or Simply an Economic Slowdown?

Certainly, the GDP decline is not yet enough to qualify the situation as a technical recession. The fact is it requires two consecutive quarters of contraction. Nonetheless, the signals are worrisome.

Reference is notably made to the unemployment rate which remains low: 4.2%. Added to this is underlying demand, measured by final sales to private buyers, which is slightly increasing.

However, as explained by Gregory Daco, economist at Ernst & Young, the global economy is considerably exposed to a risk of marked slowdown (especially if tariffs remain unchanged!). The coming months will therefore be decisive.

The specter of a recession is not yet a certainty. However, the fundamentals of the American economy are eroding. Investors and analysts remain attentive to the evolution of Trump’s economic policy amid increasing instability!