{"id":56155,"date":"2025-04-30T13:57:16","date_gmt":"2025-04-30T13:57:16","guid":{"rendered":"https:\/\/prosfunds.com\/?p=56155"},"modified":"2025-04-30T13:57:19","modified_gmt":"2025-04-30T13:57:19","slug":"us-economy-contracts-at-0-3-rate-as-trump-tariffs-prompt-import-surge","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=56155","title":{"rendered":"US economy contracts at 0.3% rate as Trump tariffs prompt import surge"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=104ece93-c362-4d78-aaf9-ace4e314ec0c\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>The US economy contracted by an annualised 0.3 per cent over the first quarter, as companies in the world\u2019s largest economy responded to Donald Trump\u2019s trade war by rushing to import goods.<\/p>\n<p>The fall in the GDP reading \u2014 the first since 2022 \u2014 was worse than economists\u2019 most recent forecasts and compared with the 2.4 per cent rise recorded for the fourth quarter.<\/p>\n<p>Since large swings in imports can distort GDP statistics, some economists focus instead on other measures, such as investment and consumer spending.<\/p>\n<p>Wednesday\u2019s figures showed that the sum of consumer spending and gross private fixed investment increased by 3 per cent in the first quarter, up on the previous rate of 2.9 per cent.<\/p>\n<p>The GDP fall was largely the result of US companies\u2019 rush to buy goods from abroad ahead of Trump\u2019s sweeping tariffs, with US Census Bureau data on Tuesday showing the trade deficit for goods hitting a record high in March.<\/p>\n<p>In a post on his Truth Social network, Trump suggested the figures had \u201cNOTHING TO DO WITH TARIFFS\u201d.<\/p>\n<p>Blaming former President Joe Biden, he added: \u201cI didn\u2019t take over until January 20th\u2009.\u2009.\u2009. When the boom begins, it will be like no other. BE PATIENT!!!\u201d<\/p>\n<p>The difference between imports and exports is an important factor in calculating GDP, which also measures domestic consumption, investment and government spending.<\/p>\n<p>Economists anticipate some rebound in the second quarter as imports fall and previously stockpiled foreign goods are bought by US consumers.<\/p>\n<p>Gregory Daco, chief economist,\u00a0EY-Parthenon, said that companies\u2019 \u201cfrontloading of orders to get ahead of tariffs\u201d had \u201ccreated\u00a0a massive shock to GDP\u201d.<\/p>\n<p>But he referred to the factors behind Wednesday\u2019s GDP figure as \u201cunprecedented distortions\u201d that were unlikely to change the Federal Reserve\u2019s calculations about the underlying performance of the US economy.<\/p>\n<p>Although the goods trade deficit dragged down the overall GDP figure for the quarter, this was partly offset by businesses spending on stockpiling.<\/p>\n<p>Stock futures dropped and bond yields rose slightly following the data. The two-year Treasury yield, which moves with interest rate expectations, was up 0.01 percentage points to 3.66 per cent.<\/p>\n<p>There was no significant shift in interest rate cut expectations following the data, with traders in the futures market still pricing in roughly four cuts this year.<\/p>\n<p>Several Wall Street economists revised their estimates for first-quarter growth downwards after Tuesday\u2019s goods trade figures were published.\u00a0\u00a0<\/p>\n<p>The Bureau of Economic Analysis, which produced Wednesday\u2019s GDP figures, added that the fall in output for the first quarter also reflected a decline in government spending.<\/p>\n<p>In an acknowledgment of the stockpiling that took place ahead of Trump\u2019s tariffs announcement this month, the bureau highlighted the rise in \u201cprivate inventory investment\u201d.<\/p>\n<p>It added that consumer spending was also among the factors that partly, but not wholly, offset the increase in imports and the fall in government spending.<\/p>\n<p>\u201cThe strong domestic demand figures are a poignant reminder of what might have been a graceful soft landing until the sweeping tariffs threw the economy off course,\u201d said Eswar Prasad, professor at Cornell University.<\/p>\n<p>Trump\u2019s trade war is expected to lead to slower growth over the second half of this year, with higher prices weighing on consumption.<\/p>\n<p>The IMF said last week that US GDP would expand by 1.8 per cent this year \u2014\u00a0down from its January estimate of 2.7 per cent. Many private sector forecasters predict no growth at all.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/104ece93-c362-4d78-aaf9-ace4e314ec0c\" target=\"_blank\" rel=\"noopener\" rel=\"nofollow\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The US economy contracted by an annualised 0.3 per cent over the first quarter, as companies in the world\u2019s largest economy responded to Donald Trump\u2019s trade war by rushing to import goods. The fall in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":56156,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-56155","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>US economy contracts at 0.3% rate as Trump tariffs prompt import surge | Prosfunds<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The US economy contracted by an\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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