U.S. Economy Records Negative Growth Amid Trade Policy Fallout

The U.S. economy has seen its first contraction in three years during the first quarter, a downturn largely blamed on the lingering effects of tariff policies from the Trump administration. This has led to heightened economic uncertainty, with American companies withdrawing their earnings forecasts for the year.

Historical Trade Deficit and Economic Indicators

The U.S. Department of Commerce reported a -0.3% annualized rate of decline in GDP for the first quarter, marking the first contraction since the COVID-19 pandemic hit in early 2022. A record trade deficit and a cooling labor market, with only 62,000 private-sector jobs added in April, are among the key concerns.

Inflation and Consumer Sentiment

Rising inflation, with the core PCE index increasing by 3.5% in Q1, and a drop in consumer confidence to its lowest level in nearly five years, further complicate the economic outlook. Experts warn of a potential recession if trade policies remain unchanged.

Political and Expert Reactions

President Trump has shifted blame to the previous administration, while experts and financial institutions like Apollo Global Management and the Federal Reserve Bank of Minneapolis warn of imminent layoffs and a possible summer recession without policy revisions.