Particle.news
Download on the App Store
73 ARTICLES
·
last wk.

U.S. Economy Contracts 0.3% in Q1 as Tariff-Driven Import Surge Weighs on Growth

The first quarterly GDP decline since 2022 reflects slowed consumer spending, reduced federal outlays, and rising inflation, with markets and hiring showing signs of strain.

President Donald Trump speaks during a cabinet meeting at the White House, Wednesday, April 30, 2025, in Washington. (AP Photo/Evan Vucci)

Overview

  • The U.S. GDP shrank by 0.3% in the first quarter of 2025, driven by a 41.3% surge in imports as businesses rushed to avoid tariffs imposed by President Trump in April.
  • Consumer spending slowed to a 1.8% annualized growth rate, the weakest since mid-2023, while federal government spending dropped by 5.1%, further dragging on economic output.
  • Inflation pressures intensified, with the core personal consumption expenditures (PCE) index rising to 3.5%, complicating the Federal Reserve's policy outlook.
  • Stock markets fell sharply following the GDP report, with the Dow Jones dropping 700 points, reflecting investor concerns over slowing growth and persistent inflation.
  • Private hiring showed weakness, with ADP reporting a gain of only 62,000 jobs in April, missing expectations and signaling potential labor market fragility.