The U.S. economy shrank for the first time in three years during the first quarter of 2025, according to new data reported on Wednesday. Between Jan. and March, the Bureau of Economic Analysis estimated gross domestic product contacted an an annualized rate of 0.3%.
All three major stock indexes — the Nasdaq, Dow Jones, and S&P 500 — took a hit soon after the report came out, with each down more than 1% an hour into trading on Wednesday.
President Trump, soon after the report, posted on Truth Social that “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,” the president added. “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!!!”
Taking a deeper look at the GDP decline, it showed a drop in net exports, as imports increased dramatically ahead of the president’s new tariffs, which were put in place on Apr. 2. Imports increased at an annualized rate of 41.3% during the first quarter. Government contributions to GDP also contracted for the first time in several years, decreasing 0.25%.
Overall, this was the first time GDP contracted since the first quarter of 2022.
It is worth remembering President Trump’s “Liberation Day” tariff plan went into effect after Q1. So while importers looked to have changed how they operated in the first quarter in anticipation of the tariff announcement, a better glimpse at how the tariffs affected the economy will likely come in Q2.
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