The U.S. economy contracted at an annual rate of 0.3% in the first quarter—a sharp contrast to the 2.4% growth seen in Q4 2024. New tariff policies have stirred up uncertainty, dampened confidence, and raised the specter of recession. 😬
According to the latest figures, increased imports (which subtract from GDP) and a decrease in government spending played significant roles in this downturn. Although growth in investment, consumer spending, and exports helped offset some of the loss, an unprecedented drag of 4.83 percentage points from net exports underscored the challenges ahead.
Wells Fargo economists remarked, "The U.S. economy is at a greater risk of recession now than it was a month ago, but this 0.3%-contraction in Q1 is not the start of one." However, experts like James Boys from University College London's Center on U.S. Politics have noted that recession odds have climbed sharply—from around 10% to nearly 55%.
Former U.S. Treasury Secretary Lawrence Summers also weighed in, criticizing the administration’s handling of economic policies as one of the most challenging hundred-day periods in recent history. Wei Liang, deputy head of the Institute of Macroeconomic and Strategic Studies at the China Institutes of Contemporary International Relations, warned that unless Washington reconsiders its tariff measures and austerity initiatives, the economy could tumble into two consecutive quarters of negative growth, deepening the market’s uncertainty.
As companies and investors navigate these volatile times, the outlook remains unpredictable. Stay tuned for more updates as policymakers and business leaders strive to steer the economy through this turbulent period. 👍
Reference(s):
U.S. economy shrinks in Q1 amid Trump tariffs, recession concerns grow
cgtn.com
