The US economy was reduced during the initial months of the second mandate of President Donald Trump, since a series of tariff proposals caused uncertainty between companies and consumers.
The Gross Domestic Product of the United States, or GDP, decreased to an annualized rate of 0.3% for three months that ended in March. The figure marked a strong drop in 2.4% annualized growth during the last three months of 2024.
The GDP measure fell largely due to a wave of imports as companies stored an inventory to avoid long -range rates. Before data release, analysts warned that a decrease in GDP because of this trend would not reflect economic weakness.
Reading came to less than what most economists expected.
The government’s GDP formula subtracts imports in an effort to exclude foreign production from the calculation of total goods and services.
Imports increased more than 40% at the beginning of this year as companies ran the inventory in the USA. Before possible tariffs, according to data. On the contrary, federal expenditure fell around 5% in the first three months of 2025.
The decrease in GDP “mainly reflected an increase in imports”, as well as a fall in government spending, said the United States trade department.
The data covers a period before the so -called liberation day tariffs in early April.
Analysts widely expected a strong decrease in economic performance at the beginning of this year, although they did not agree on the seriousness of the deceleration.
“We anticipate a marked deceleration in the economy of the United States during the first quarter, driven by the increase in political uncertainty around trade, tariffs and immigration,” S& P Global Ratings said in a note to customers.
The data would probably be biased by an avalanche of imports as companies sought to avoid rates, S& P Global Ratings Said. The GDP measure deduces imports to exclude foreign manufacturing goods and services, so a unique import increase could blur the finding.
“The reading of the GDP of the first quarter may not provide an accurate reflection of the underlying economic conditions because it is significantly influenced by the front load of imports,” S& P Global Ratings Said.
President Donald Trump observes the day he thanks the winner of the Super Bowl Lix, NFL champion, Philadelphia Eagles, on the southern grass of the White House in Washington, DC, on April 28, 2025.
Leah Millis/Reuters
Many observers define a recession through the abbreviated metric of two consecutive declines in the GDP adjusted by inflation of a nation. The National Office of Economic Research, a research organization responsible for formally identifying a recession, uses a more complicated definition that is based on a variety of indicators.
Despite marking the feeling of the consumer and the ongoing agitation in the market, some key measures of the economy remain quite strong.
The unemployment rate is historically low level and the growth of employment remains solid, although it has slowed from the previous maximums. Meanwhile, inflation cooled in March, which increases price increases well below a peak reached in 2022, they showed the data.
The resistant data offers in the best partial tranquility, some economists told ABC News.
The measures of the economy, such as inflation and hiring, are released a month after the data is collected, often reflect changes in slow movement in business or consumer behavior, economists said. As a result, such measures can be obsolete, especially when the economy is in flow.
Speaking at the Chicago Economic Club earlier this month, the president of the FED, Jerome Powell, recognized the “solid condition” of the US economy, but warned about the signals of a possible deceleration.
“Life moves quite fast,” Powell said.
