The US economy contracted 0.3% in the first quarter of 2025, its first decrease in three years, driven by a record increase in imports as companies rushed to overcome imminent tariffs. | Photo credit: Jeenah Moon/Reuters
The American economy was first contracted in three years in the first quarter, flooded by an avalanche of imports as companies ran to avoid higher costs of tariffs and underline the disruptive nature of President Donald Trump of chaotic commercial policy.
However, the Gross Domestic Product (GDP) report of the Department of Commerce on Wednesday, however, greatly exaggerated the prospects for attenuation of the economy. Although consumer spending slowed down considerably, the growth rate remained healthy. Companies also increased team investment.
However, both consumer expense and the business probably reflected the front load before import tariffs are activated. As such, the report reinforced the growing disapproval of Americans from the management of the economy by Trump as it marks 100 days in office.
Trump is based on victory last November about the fear of voters to the economy, especially inflation. Consumer confidence is close to the minimum of five years and commercial feeling has collapsed, while airlines have withdrawn their 2025 financial forecasts, citing uncertainty about spending on non -essential trips.
“If the comfort in El Comercio was the result of the companies that precipitated the imported contributions to overcome the tariffs, the decomposition in the commercial balance will be reversed in the second quarter,” said Carl Weinberg, head economist of high frequency economy. “That will generate some GDP growth. However, corrosive uncertainty and higher taxes (tariffs are an import tax, drag the growth of GDP back to red at the end of this year.”
The Gross Domestic Product decreased at an annualized rate of 0.3% The last quarter, the first decrease from the first quarter of 2022, said the Office of Economic Analysis of the Department of Commerce in its early estimate of the GDP of the first quarter.
It was also overwhelmed by a decrease in federal government spending, probably linked to the aggressive fund cuts of the Trump administration, marked by massive shots and the closure of programs.
The economists surveyed by Reuters had predicted that GDP increased at a rate of 0.3% in the January-March period.
However, the survey was concluded before Tuesday’s data showed that the trade deficit of goods increased to a historical maximum in March in the midst of records of records, which led most economists to sharply reduce their GDP estimates. The economy grew at a rate of 2.4% in the fourth quarter.
Imports increased at a rate of 41.3%, the greatest increase since the third quarter of 2020, when the nation was in the middle of the COVID-19 pandemic, which fractured the global supply chains. That erased a modest increase in exports, which resulted in a large commercial gap that cut a record of 4.83 percentage points of GDP.
Imports were driven by consumer and capital goods. Bea said that an increase in silver bars imports had identified and eliminated a form of investment in the first quarter.
Transactions into value objects, such as gold and non -monetary silver, are not treated as investments and, therefore, purchases of these metals are not included in consumer spending, gross private investment or government spending, he said.
An unusually large amount of gold not detected had explained part of the jump in imports in recent months, which led to wide disparity in GDP estimates. The accumulation of inventory was abruptly recovered after two consecutive quarterly falls, dropping part of the blow of imports.
The US stocks. Uu. They opened below. The dollar won versus a basket or coins. The United States Treasury produces Rose.
The front load supports consumer spending
The consumer spending, which represents more than two thirds of the economy, grew at a rate of 1.8% after a 4.0% solid in the fourth quarter. He was backed by disbursements both in services and goods, mostly medical care, housing and non -durable goods. Most households withdrew the expense to avoid higher prices. With the labor market also cools, consumers are saving mainly.
Trump softened on Tuesday the blow of his automatic tariffs through an executive order that mixes credits with relief of other levies on parts and materials.
A 145% tariff on Chinese products, which unleashed a commercial war between Washington and Beijing, is still valid, as well as a variety of other import tariffs. Trump sees tariffs as a tool to increase income to compensate for its promised tax cut and revive an American industrial base for a long time.
Commercial equipment spending shot at a rate of 22.5%. Final sales to private national buyers, which exclude trade, inventories and government spending, grew at a solid rate of 3.0%. But this traditional measure of domestic demand has been distorted by tariffs.
Inflation warmed the last quarter. The Personal Consumer Expenses Price Index excluding volatile food and energy components increased at a rate of 3.5%, an acceleration of the 2.6% rhythm from October from December to December. The so -called inflation of PCE Central is one of the inflation measures tracked by the Federal Reserve for its 2%target.
Economists expect the United States Central Bank to resume the reduction of interest rates at some point this year.
Posted on April 30, 2025