The U.S. economy contracted for the first time in three years, an initial measurement by the Commerce Department revealed on Wednesday.
During the first quarter of President Trump’s return to office, the gross domestic product (GDP) shrunk at an annual rate of 0.3%. The economic decline follows a 2.4% growth for the last quarter in 2024. Additionally, personal consumption fell from the last quarter, increasing by a 1.8% annualized rate in comparison to the previous 4% rate.
While the GDP measurements reflect data from January to March of this year, Trump has taken to social media to blame his predecessor, former president Joe Biden, for the economic decline.
“This is Biden’s Stock Market, not Trump’s,” Trump said via Truth Social. “This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers.”
Economists left surprised by contraction
The economic shrink was fueled in part to “an increase in imports” and a “decrease in government spending,” the advanced estimate said. The decline comes as a surprise, with economists surveyed by the Wall Street Journal having anticipated a 0.4% growth.
A volatile and uncertain economic landscape leading up to the report has already led various companies to adjust or withdraw their economic forecasts for 2025.
Proctor & Gamble, PepsiCo, and Chipotle lowered their economic forecasts, citing volatility and changing consumer habits. Meanwhile, Delta Air Lines, American Airlines, and Southwest Airlines withdrew their full-year guidance for 2025.
Major stock indexes were lower on Wednesday as investors absorbed the unpleasant news: The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite were respectively down 0.74%, 1.05%, and 1.51% in late-morning trading.