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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.
I wouldn't put a ton of stock in the GDP numbers yet. Imports went up quite a bit to front load a head of the tarrifs, and imports are subtracted from the GDP. As far as I know anyhow.
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GDP = C + G + E - I
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Under the government’s formula for calculating GDP—consumption plus investment plus government spending plus net exports—imports are a drag on growth. A surge in imports deepens the negative net export figure, subtracting from GDP even if those goods are headed for eager American consumers. The result: strong domestic demand or businesses rushing to import goods ahead of new tariffs can translate into weaker GDP growth.
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companies typically pass on all or some of the costs to shoppers
People need to stop with the "all" part. That's not how tax incidence ever works in reality.

At the time of these numbers, I don't think even 100 thousand federal workers had left their positions. Of those who did, most were likely going to leave their positions in the near future anyway. The number of people accepting the first Deferred Resignation Program was in line with the normal churn of the federal workforce.
Many more federal positions are being vacated this quarter, though, and I expect that to have a really noticeable impact on the labor force.
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35 sats \ 4 replies \ @Aardvark 21h
Many more federal positions are being vacated this quarter, though, and I expect that to have a really noticeable impact on the labor force.
When do you think we will feel that?
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I don't think any of them are willing or able to do your job, so you may not notice.
The timeline is different per agency, but I think lots of them have already hit the market from HHS, Ed, and USDA.
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35 sats \ 2 replies \ @Aardvark 20h
My wife lost her job, that's my concern now.
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Yeah, if there are feds who do the same jobs she does, there will be more competition. The nice thing is most of them are big city snobs who don't want to leave DC.
I heard that when the Economic Research Service moved to Kansas City, 80% of the employees quit.
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29 sats \ 0 replies \ @Aardvark 19h
Good news for us then.