A surge in the trade deficit edged GDP into negative territory, said Dean Baker, senior economist for the left-leaning economic think tank the Center for Economic and Policy Research, in a statement.“ This was due to massive stockpiling of inventories and purchases of durable goods in anticipation of tariffs.”
Several observers were quick to point the finger at the Trump administration.
“ Our economy is crumbling under President Trump’ s mismanagement, and today’ s falling GDP data confirms our slide toward a recession,” said Lindsay Owens, the executive director of the progressive group Groundwork Collaborative.“ Trump is creating the conditions for a particularly brutal recession.”“ It turns out that when you launch a trade war with blanket tariffs, layoff federal workers en masse, cancel federal contracts, and reduce skilled immigration, you will have negative GDP growth,” wrote Rep. Ro Khanna( D-Calif.) on X.
Rep. Don Beyer( D-Va.) said that“ Trump’ s chaos is clearly and significantly raising the risk of a recession, and the economic warning lights are all flashing red.” In response to the release, markets predictably slipped. Trump, for his part, took to his social media site Truth Social after the release of the report to say that“ This is Biden’ s Stock Market, not Trump’ s.” He added that“ tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers … This will take a while, has NOTH- ING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other.”
Economists say they think the report’ s numbers are related to tariffs. According to reporting from the Times, the main takeaway from the report is that consumers and businesses started to modify their behavior even prior to Trumps“ Liberation Day” tariffs on April 2, which rattled markets.
A surge in the trade deficit edged GDP into negative territory, said Dean Baker, senior economist for the left-leaning economic think tank the Center for Economic and Policy Research, in a statement.“ This was due to massive stockpiling of inventories and purchases of durable goods in anticipation of tariffs.”
“ The negative GDP number could also mean the end of the big upswing in productivity growth under Biden. This is bad news for both real wage growth and inflation,” continued Baker.
“ No surprise that GDP took a hit in the first quarter, mainly because the balance of trade blew up as companies imported goods like crazy to front-run tariffs. The more telling number for the future of the expansion was consumer spending, and it grew, but at a relatively weak pace,” said Robert Frick, corporate economist with Navy Federal Credit Union, according to CNBC.
The report also registered increased inflation. The personal consumption expenditures price index, the Federal Reserve’ s favored inflation gauge, registered a 3.6 % gain for Q1, up from 2.4 % in the final quarter of last year.
The numbers from the Bureau of Economic Analysis come a day after reports of consumer confidence in April dipping to lows not seen since early in the COVID-19 pandemic.
62 The Trial Lawyer