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The US economy has signed a contract in the first three months of 2025, causing fear of recession at the beginning of the second term of President Donald Trump as he earns a potentially expensive trade war.
Gross domestic productThe sum of all goods and services produced from January to March decreased by 0.3% year -on -year, according to a trade department on Wednesday, adjusted to seasonal factors and inflation. It was the first quarter of negative growth from the first quarter of 2022.
Economists interviewed by Dow Jones sought 0.4% gain after GDP grew by 2.4% in the fourth quarter of 2024. However, over the past day, some economists have changed their forecast for negative growth to the Wall -Rate, in many respects, because of the unexpected growth of imports, as companies and consumers sought to reach Trump tariffs ahead, which were implemented in early April.
Indeed, imports took off 41.3% for 50.9%. Imports are subtracted from GDP, so the reduction in growth cannot be considered negative, given the potential so that the trend is changed in the next quarters. Imports have taken more than 5 percentage points by reading headlines. Exports increased by 1.8%.
“Perhaps some of this negativity is related to the speed to attract imports before the tariffs will rise, but there is simply no opportunity for policy advisers to sugar coating. The growth just disappeared,” said Chris Ruse, chief economist Fwdbonds.
People are shopping at Manhattan store on July 27, 2023 in New York.
Spencer Plath | Getty Images | Gets the image
Consumer costs slowed down during this period, but were still positive. Personal consumption expenses increased by 1.8% over this period, which is the slowest quarterly growth after 2023 and decreased with 4% profits in the previous quarter.
Moreover, private domestic investments took off during this period, increasing by 21.9%, first of all, due to 22.5% raising the cost of equipment, which could also be tariff.
“” “Not surprisingly, GDP took the blow in the first quarter, mainly because the trade balance exploded when companies that imported goods like crazy to run. Consumer expenses were more indicative for the future of expansion, but it grew at a relatively weak pace, “said Robert Fick, a corporate economist from the Federal Credit Union of the Military Fleet.
Futures on the stock market After the report, she slipped until the revenue of the Treasury passed above.
The report presented crossed signals for the federal reserve system on the eve of their political meeting next week. While the negative number of growth can push the Central Bank to reduce interest rates, inflation testimony can give politicians pause.
The cost of personal consumption expenses, the privileged Fed inflation, amounted to 3.6% of the quarter profits, which increased by 2.4% in Q4. With the exception of food and energy, Core PCE increased by 3.5%. Fed representatives believe that the nucleus reads a better date for long -term trends.
Related reading, known as the price index that is weighed in a chain that regulates changes in consumer behavior and other factors, increased by 3.7%, which is much higher than 3% of the estimate.
Markets are still pricing in reducing the rate at the June meeting and in general four steps by the end of the year, which is a potential evidence that the Fed will put economic growth compared to inflation.
Also on Wednesday, the Labor Statistics Bureau reports that the employment index in the first quarter increased by 0.9% according to expectations.
While the economy still adds jobs, and consumers are still spending, GDP report increases both the danger of recession and the Trump rates when it leads the US trading partners.
The traditional rule of recession is two negative premises, although the official referee, the National Bureau of Economic Research, uses the definition of “a significant decrease in economic activity, which spreads throughout the economy and lasts more than a few months”.
The following markets will search for BLS Nonfarm Salaries to be released on Friday. ADP wage processing has reported that only 62,000 were privately hired.
