US GDP drops for the first time since 2022 amid Trump tariff turmoil
US economy shrinks as Trump's trade war stirs recession fears (Illustrative photo: Getty Images)
The American economy saw its sharpest decline since 2022, shrinking by 0.3% in the first quarter as President Donald Trump's aggressive trade measures unsettled businesses and consumers, reports CNN.
According to the Commerce Department, GDP dropped to -0.3% — a steep fall from 2.4% in the previous quarter and far below economists' 0.8% projection.
The collapse was largely fueled by a historic spike in imports, which surged 41.3% as buyers rushed to get ahead of Trump's new tariffs.
Meanwhile, exports edged up just 1.8%, creating the biggest negative trade impact on GDP since 1947. Government spending also contracted sharply, while business investment climbed 9.8% as companies bulked up inventories before prices rise further.
President Trump dismissed concerns, writing on social media: "This will take a while, has NOTHING TO DO WITH TARIFFS, only that [Biden] left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!"
His adviser Peter Navarro added: "This is the best negative print I have ever seen in my life."
Recession concerns rise as outlook darkens
Consumer spending slowed significantly to 1.8%, and inflation accelerated, with the core PCE index rising to 3.5% from 2.6%.
Unemployment remained relatively stable at 4.2%, but job creation took a hit — only 62,000 new private-sector jobs were added in April, down from 147,000 in March.
"We're on this razor-thin edge," warned EY chief economist Gregory Daco, adding that continued tariffs could tip the economy into recession.
While some economic indicators remain resilient, BlackRock CEO Larry Fink believes the US may already be in recession.
"I think we're very close, if not in, a recession now," he told CNBC, pointing to market uncertainty and front-loaded consumer spending driven by tariff fears.
