US GDP growth took a hit in the very first quarter of 2025, contracting to 0.3%. The drop in the growth figure comes as Trump's tariff play has caused mayhem in the global macro sphere. “The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending,” the US Bureau of Economic Analysis said in a release on Wednesday.
However, the US President was quick to claim that the GDP slowdown was not due to tariffs, and blamed Biden for leaving behind weak economic numbers. "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," POTUS said in a social media post.
So far this year, the Dow Jones Industrial Average has dropped over 1,700 points or 4.06%, signalling muted investor sentiment. The S&P 500 index followed suit and declined over 5% or nearly 300 points during the same period.
"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!!!," his social media post further read.
Behind the Slowdown
According to the data released by the government agency, the real GDP figure fell from 2.4% in Q4 2024 to just 0.3% in Q1 2025. The sharp decline was largely owing to a surge in imports level which jumped 41.3%, led by a 50.9% spike in goods.
At the same time, consumer spending also slowed but remained positive. Personal consumption expenditure rose 1.8% for the period, marking the weakest quarterly gain since Q2 2023 and down from a 4% gain in the previous quarter, as per a report by CNBC.
“No surprise that GDP took a hit in the first quarter, mainly because the balance of trade blew up as companies imported goods like crazy to front-run tariffs. The more telling number for the future of the expansion was consumer spending, and it grew, but at a relatively weak pace,” Robert Frick, corporate economist with Navy Federal Credit Union, told CNBC.
While the picture looks concerning, its not 'alarming' for now. The spending surge in the previous quarter may be a contributing factor to the worrying figure, he said.
