Just a hundred days into his term and not yet recovered from various "winning theories," Trump was doused with a bucket of cold water by the first economic data since he took office.

Impacted by factors such as a surge in tariff-free imports and weak consumer spending, the Bureau of Economic Analysis of the U.S. Department of Commerce reported on April 30 that the U.S. GDP for the first quarter of 2025 contracted at an annualized rate of 0.3% compared to the previous quarter, exceeding expectations and marking the first contraction since the second quarter of 2022. In the fourth quarter of last year, the U.S. GDP grew at an annualized rate of 2.4%.

Faced with this decline, Trump, who had been throwing tariffs indiscriminately, became anxious. He urged the public to "be patient" on social media, insisting that "this has nothing to do with tariffs," and hastily blamed former President Biden, claiming that he only took office on January 20, thus attributing the adverse effects to Biden's administration.

After the economic data was released, the futures of the three major U.S. stock indexes fell further, with the Nasdaq futures falling 1.39% during the day, the S&P 500 futures down 0.95%, and the Dow Jones futures down 0.45%.

On April 30, the New York Stock Exchange. Due to the data showing that the U.S. economy contracted in the first quarter, business confidence fell, and the stock market dropped significantly after the opening of the last trading day in April. Visual China

Bloomberg noted that this contraction marks the initial chain reaction of Trump's tariff policies. The 0.3% decline in the first quarter fell short of expectations of -0.2%, significantly retreating from the previous value of 2.4%, far below the average growth rate of about 3% over the past two years.

The Economic Analysis Bureau report showed that net exports dragged down GDP by nearly 5 percentage points, the most on record. Imports surged 41.3% in the quarter, the largest increase in nearly five years, but since these goods and services were not produced in the U.S., they were subtracted from GDP. By comparison, U.S. exports only increased slightly by 1.8% in the quarter.

Consumer spending, which accounts for two-thirds of GDP, increased by only 1.8%, the lowest growth rate since mid-2023, exceeding expectations of 1.2%, but falling short of the previous value of 4%; the annualized quarter-on-quarter preliminary value of the core personal consumption expenditure (PCE) price index for the first quarter was 3.5%, exceeding expectations of 3.1%, with the previous value being 2.6%.

The Financial Times of the UK reported that the trade balance is a key factor in calculating GDP, which also measures domestic consumption, investment, and government spending. The decline in the first quarter was largely due to U.S. businesses urgently stockpiling inventory before Trump raised tariffs. Data shows that the U.S. merchandise trade deficit reached a record high in March.

In their latest research report before the data release, Goldman Sachs pointed out that the expansion of the U.S. merchandise trade deficit in March exceeded expectations. Both goods imports and exports increased in March, with the main reason for the widening trade deficit being the increase in consumer goods imports, reflecting a pre-tariff "run-up" in imports, leading to faster inventory accumulation.

On the day the data was released, Trump posted on his "Truth Social": "This stock market performance is left by Biden, not Trump's. I didn't take over until January 20. Tariff measures will soon start to work, and a large number of companies are moving into the U.S. in record numbers. Our country will prosper, but we must get rid of the 'adverse effects' brought by Biden."

Trump posted on "Truth Social" to defend against the first-quarter economic data

"This takes time, it has nothing to do with tariffs (font bold), it's just that he left us with bad data, but when the U.S. economy begins to thrive, it will be unprecedented. Be patient!!!" Trump wrote.

Despite Trump's strong defense, the latest data exacerbated market pessimism about the U.S. economy. Some Wall Street economists expect that Trump's trade policies will further slow U.S. economic growth in the second half of the year. The International Monetary Fund (IMF) previously predicted that U.S. economic growth this year would be 1.8%, lower than the 2.7% forecast in January, and many private sector analysts even believe that the U.S. economy will not grow at all.

The Wall Street Journal noticed that CEOs of companies like American Airlines, PepsiCo, and Procter & Gamble have issued warnings that Trump's unpredictable tariff policies are disrupting business plans and undermining consumer confidence. General Motors withdrew its 2025 profit forecast on the 29th due to the withdrawal of car tariffs. When Colgate CEO Noel Wallace lowered the full-year profit outlook last week, he said: "Uncertainty leads to cautious anxiety among consumers."

Some consumers preemptively spent to avoid price increases, such as the surge in car sales in March. However, Diane Swank, chief economist at KPMG, pointed out: "This panic buying actually borrows future demand."

"We continue to put pressure on the economy rather than relieve it. The momentum of U.S. economic growth has weakened since earlier this year, and the buffer space is shrinking day by day." Swank said.

In addition, the dual pressure of tariffs pushing up inflation and weakening economic momentum also puts the Federal Reserve in a dilemma. Federal Reserve Chairman Powell said in mid-April that tariffs could lead to "rising prices and rising unemployment" in the short term, creating a monetary policy dilemma: any interest rate hike to curb inflation may exacerbate unemployment, while loose measures could push up prices.

The New York Times described the 0.3% contraction in the first quarter versus the 2.4% growth in the previous quarter as a striking contrast. Economists generally predict that as tariffs push up prices and policy uncertainty suppresses business investment, spending and investment will slow in the coming months.

Ben Huzen, an economist at S&P Global Market Intelligence, said: "There are many reasons to expect that the U.S. economic trend in the future will continue to weaken."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7499126365954818575/

Disclaimer: The views expressed in this article are solely those of the author. Welcome to express your attitude in the button below to "like/dislike".