The American economy had come across in the first three months of 2025, so that the fear of the recession was fueled at the start of President Donald Trump’s second term of office, while using a potentially expensive trade war.
The gross domestic product, an amount of all goods and services produced from January to March, fell at 0.3% on an annual basis, according to a report from the Commerce Department on Wednesday, adapted for seasonal factor and inflation. This was the first quarter of negative growth since Q1 of 2022.
Economists investigated by Dow Jones were looking for a profit of 0.4% after the GDP rose by 2.4% in the fourth quarter of 2024. In the past day, however, the economists of Sub Wall Street changed their in negative growth, largely as a result of an An Angpped Rise in Import as companies and consumers who wanted to present the Trump rates in the beginning of April.
Indeed, the import rose 41.3% for the quarter, powered by an increase in goods to 50.9%. The entry is destroyed from GDP, so the contraction of growth cannot be considered negative in view of the potential that the trend turns over in the following quarters. Import took more than 5 per head points of the headline. The export rose 1.8%.
“Perhaps the sum of this negativity is due to a hurry to get input before the rates rise, but there is simply no way for policy advisers to make this sugar. The growth has just disappeared,” said Chris Rupkey, chief economist at FWDBonds.
People shop in a store in Manhattan on July 27, 2023 in New York City.
Spencer Platt | Getty Images News | Getty images
Consumer expenditure delayed during the period, but were still positive. The expenditure for personal consumption rose by 1.8% for the period, the slow quarterly profit since the first quarter of 2023 and a decrease in a profit of 4% in the previous quarter.
In addition, private domestic investments during the period and 21.9% rose, mainly driven by 22.5% in equipment expenditures that could also be counted are tariff.
“” No surprise that GDP took a hit in the Cracst Quarter, especially the best that the trade balance is blown up, because companies are good as crazy rates for the front. The more meaningful number for the future of the expansion was consumer spending, and it grew, but in a reativory weak pace, “said Robert Frick, business economist at Nile Federal Credit Union.” Last year. “
The Futures of the stock market went out after the report, while the Treasury yields have gone higher.
The report offers cross signals for the Federal Reserve prior to its policy meeting next week. While the negative growth metal Migcht encourages the central bank to lower interest rates, inflation values can pause policy makers.
The price expenditure for personal consumption index, the preferred measure of the FED, achieved 3.6% profit for the quarter, an increase in 2.4% rose in the quail. Core PCE is exclusive of food and energy and rose by 3.5%. FED officials regard the core reading as a better measure of long-term trends.
A lecture known as the chain-weighted price index, which adapts to changes in consumer behavior and other factors, rose 3.7%, well above the estimate of 3%.
Markets are still price in a rate reduction during the June meeting and a total of four movements by the end of the year, a possible indication that the FED will give priority to economic growth above inflation.
On Wednesday, the Bureau of Labor Statistics also reported that the index of employment costs increased by 0.9% in the first quarter, in accordance with expectations.
Although the economy still adds jobs and still spend consumers, the GDP report raises the danger of recession and the commitment to Trump, because he needs deals with US trading partners.
The traditional rule of thumb for recession is two consecutive negative quarters, although the official Arriter, the National Bureau of Economic Research, the definition of “a significant decrease in economic activity is sprayed in the economy and lasts more than a few months.”
The following markets will look for the BLS Non -Farm Payrolls account, released on Friday. Payrolls processing company ADP reported on Wednesday that private recruitment in April only 62,000 increased.
