U.S. economic growth slowed sharply in the first quarter of 2025 as businesses rushed to stockpile goods ahead of President Trump's sweeping tariff policies.
The nation's gross domestic product — the total value of products and services — shrank at a 0.3% annual rate, down from growth of 2.4% in the final three months of 2024, the Commerce Department reported Wednesday in its initial GDP estimate. It's the worst quarterly performance for the U.S. economy since early 2022, when the economy was in recovery after cratering during the COVID pandemic.
The U.S. economy was forecast to show 0.8% growth in the first three months of 2025, according to the average estimate of economists polled by FactSet.
The slowdown comes amid growing concerns that Mr. Trump's wide-ranging tariffs could disrupt the U.S. economy, with some economists raising the chances of the U.S. slipping into a recession in 2025. Although the Trump administration's blanket tariffs were announced on April 2 — after the end of the quarter — businesses sought to get ahead of the impact of the import duties by front-loading purchases early in the year.
Impact of DOGE cuts
Growth in the first quarter was impacted by the increase in imports, as well as a 5.1% decline in government spending, the Commerce Department said.
Mr. Trump's Department of Government Efficiency, helmed by billionaire Elon Musk, has effectively shuttered major agencies like the Consumer Financial Protection Bureau, cut hundreds of thousands of federal workers, and canceled funding for health and science research.
Economists expect the U.S. economy to slow in 2025, partly due to the impact of Mr. Trump's tariffs, which are import duties paid by American companies like Walmart or Target. When faced with higher tariffs, companies typically pass on all or some of the costs to shoppers, which can depress consumer spending.
GDP growth is forecast to slow to 1.9% in 2025, according to FactSet. That's down from 2.8% in 2024.
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