The US economy is reversed by Trump's abrupt political shifts

Washington
Cnn
–

The US economy only Had his worst quarter since 2022 because the considerable political consumers and companies were changed by President Donald Trump.

Gross domestic product, which measures all goods and services created in the economy, which were registered in the first quarter at an annualized price of -0.3%, the trade department announced on Wednesday.

This is a sharp slowdown compared to the fourth quarter of 2.4% and much worse than the projected rate of 0.8%. GDP is adapted for seasonal fluctuations and inflation.

The US shares fell after the publication of the GDP report.

The Trump administration has had a chaotic tariff tariff in the past few months and escalates the trade voltages with China and worrying Americans. Most economists say that Trump's monumental offer for the redesign of global trade is expected to be inflated in the United States and even trigger a recession.

However, the president distracted the fault of the weak figures, which is reflected in the first economic report card of his second term.

“Our country will be booming, but we have to get rid of the bidding 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 !!!”

During a cabinet meeting on Wednesday, Trump repeated this attitude: “This is bidges, that's not a Trump.”

The decline in the economy at the beginning of the year was of a wider trade deficit-a result of the American purchases, which drove Trump's tariffs and cuts of government spending after a press release. In the first three months of the year, imports rose from -1.9% to 41.3% in the fourth quarter. In the meantime, exports registered with 1.8%.

When imports exceed exports, this subtracts from GDP and that was far from the greatest growth in growth in the first quarter. The difference between imports and exports, which were withdrawn by GDP by most to records, are attributed to 1947.

Peter Navarro, the best trade advisor from Trump, described the GDP report “the best negative pressure I have ever seen in my life.”

“The markets have to look under the surface,” said Navarro on Wednesday in a CNBC interview and pointed out the strong increase in domestic investments in the last quarter. However, a large part of this came from companies that increased their inventory in front of the tariffs, said the trade department.

There were several signs of weakness in the first GDP report from Trump's second term, but it wasn't all dark and dark.

Consumer expenditure, which manages around 70% of the US economy, slowed down to 1.8% in the first quarter, which was significantly declining in the previous three-month period of 4%. This slowdown was largely due to the fact that the Americans lowered their expenses for goods, and was the weakest price since mid -2023.

The government spending also burdened the economy, whereby the federal expenditure fell -5.1% in the same period of 4%.

In the meantime, companies have actually increased their expenses, which are probably ahead of the expected price increases that come from Trump's tariffs. Business investments in the first quarter increased by 9.8%, which rose strongly in the fourth quarter -3%. The gross privatinvestment was 21.9%in the January to March März period, the highest rate since the end of 2021.

Stephen Miran, Chairman of the White House Economic Council, told Pamela Brown from CNN that the increase in business investments is not what companies do if they are concerned about economic prospects. ”

In a number of goods messages, the final turnover to private domestic buyers accelerated – an important level for the underlying demand in the economy – in the first quarter of 2.9% in the fourth quarter to 3%.

The White House showed this number as a sign of a “strong underlying economic dynamic, which appeared after President Trump's inauguration”.

“It is no surprise that the remains of Biden's economic catastrophe have thrown economic growth, but the underlying numbers tell the true history of the strong swing that President Trump brings,” said Trump's press spokesman Karoline Leavitt in a statement. In addition, she added that economic developments in recent months “stimulate an economic boom and set the prerequisites for unprecedented growth as President Trump introduces Trump to the new golden age”.

The report on Wednesday also showed that inflation took a stricter than expected upswing in the first quarter. The price index for personal consumption rose an estimated 3.6% in the quarter, which, according to the report, rose to 2.4% in the fourth quarter. With the exception of food and energy prices, the Kernpce index increased by 3.5% compared to 2.6% in the quarter.

While the latest GDP report indicates a much weaker economy compared to last year, this does not necessarily mean that the Americans are still in a recession.

A recession is technically designed as a broad contraction in the economy that defines the labor market, consumer expenditure, industrial activity and business investments-which takes longer than a few months. And although it may feel like there is a recession, according to surveys and surveys, the economy remains in good condition at some important fronts.

Unemployment remains relatively low – 4.2% in March – companies continue to invest in their business and consumers have not yet withdrawn with their expenses in any way, as state data show.

Nevertheless, the economy can quickly become worse, especially if Trump increases the use of his flash of tariffs.

“I don't think we can now call a recession from this data, but it is a sign that we are on this razor thin edge where the tariffs stay longer, the more likely we are on the way to an economic downturn,” said Gregory Daco, Chief Economist at Ernst & Young, to CNNS Matt Egan.

A separate report published on Wednesday showed a steep decline in the attitude of companies in the US private sector, which is not a good sign for economic growth in the future.

According to the monthly report by Payroll Company ADP published on Wednesday morning, employers added only 62,000 jobs in April. That is far below the 147,000 jobs in March.

“Unpainting is the word of the day. Employers try to reconcile the politics and uncertainty of consumers with a number of mostly positive economic data,” said Nela Richardson, chief economist at ADP. “It can be difficult to make hiring decisions in such an environment.”

A rule of thumb for the definition of a recession is two consecutive quarters of the negative GDP, which has not yet happened. The National Bureau of Economic Research is the official recession booker, although the group can be called up many months after the official start of a recession.

The last time the US economy was in a recession was in 2020, which only lasted two months and was stimulated by the Covid 19 pandemic. Before that, it was the great recession that lasted from December 2007 to June 2009 and has been the most serious economic downturn since the global economic crisis.