Oops, Aggressive Economy Slump According to Forbes: First Quarter GDP Contracts
Economic growth in the United States takes a steep dive, contracting by 0.3% in the initial quarter, with tariffs exerting significant pressure.
Forbes Media's Steve Forbes gets real with 'The Big Money Show' panel, discussing the international fallout from escalating trade tensions between the U.S. and China.
Turns out, the U.S. economy took a big hit during the first quarter as President Donnie Trump's economic policies kicked into gear, according to data released on Wednesday by the Commerce Department's Bureau of Economic Analysis (BEA).
Brace yourselves, folks! The first quarter GDP contracted by a disastrous 0.3% (yup, you read that right), meaning the economy shrank instead of grew as it typically does. But hey, who needs economic growth anyway, right?
Interestingly enough, economists surveyed by LSEG had expected the economy to shrink at the same freakin' rate of 0.3% in the quarter. This crappy GDP growth rate is slower than the impressive 2.4% growth recorded in the previous quarter, and the first contraction since the first quarter of 2022.
So, what the heck happened to tank the economy? Well, imports went through the roof, with an astounding 41% increase, primarily consumer goods like pharmaceuticals, medication, and vitamins, as well as capital goods such as computers and parts. This tidal wave of imports was triggered by businesses and consumers rushing to stockpile goods ahead of Trump's tariffs, man!
Good news for consumers though – consumer spending was up 1.8%. Services spent like drunk sailors, growing by 2.4%, while housing and utilities saw massive consumption gains. And even underwear sales went through the roof, with nondurable goods increasing a whopping 2.7%.
But even this consumer spending surge couldn't completely offset the growth-killing spike in imports.
Unsurprisingly, it was government spending that took a nose dive, plummeting 1.4%. The federal government led the way, slashing spending on national defense activities by a gut-wrenching 8%. Nondefense spending followed suit, dropping a measly 1%. And state and local government spending barely moved up at all – rising just 0.8% in the quarter.
Don't worry though, those Congress critters still manage to rake in big bucks.
Ryan Sweet, Chief U.S. Economist at Oxford Economics, chimed in, saying that the engine of the economy didn't stall in Q1, despite facing multiple shocks like tariffs, supply-chain stress, tightening financial conditions, and uncertainty.
But hey, don't expect any Fed help any time soon. The economy might be in the dumps, but inflation ain't going anywhere. Damn tariffs and soaring import prices!
That's all, folks! In the grand scheme of things, one lousy quarter ain't gonna bring down the American economy – but it's a stark reminder of the impact of Trump's economic policies. Brace yourselves, folks. Things are gonna get bumpy.
- The first quarter GDP shrank instead of grew, according to data from the Commerce Department's Bureau of Economic Analysis, signaling a contraction of 0.3% in the economy due to President Donnie Trump's economic policies.
- Interestingly, economists had expected the same rate of contraction in the quarter, with consumer spending emerged as a bright spot, increasing by 1.8%.
- Services and housing and utilities saw consumption gains, with nondurable goods increasing a whopping 2.7%, even underwear sales went through the roof.
- Unsurprisingly, government spending took a nose dive, with the federal government slashing spending on national defense activities by 8%, followed by nondefense spending dropping 1%.
- Steve Forbes, in conversation with the 'The Big Money Show' panel, discussed the international fallout from escalating trade tensions between the U.S. and China, teasing at the possible effects on the economy.
- Inflation remains high, despite the economy's downturn, due to factors such as tariffs and soaring import prices.
- Economists like Ryan Sweet, Chief U.S. Economist at Oxford Economics, suggest that the economy didn't stall in Q1, despite facing multiple shocks, and things might become challenging due to Trump's economic policies.
