Collapse of U.S. stock markets as recession odds rise to 74% due to weak GDP numbers

U.S. markets collapsed on Wednesday after new economic figures showed a 0.3% decline in GDP in the first quarter of 2025, raising recession odds to 74%, based on investor sentiment and Wall Street models.

The Commerce Department released the figures, confirming a contraction in the economy between January and March. This marked the first negative quarter since early 2022.

The contraction hit Donald Trump's second term as he launched a new wave of economic policies, particularly his trade wars. This decline surprised many on Wall Street.

Dow Jones economists had forecasted a 0.4% increase in GDP, expecting growth to continue after a 2.4% rise in the fourth quarter of 2024. But this confidence evaporated quickly, as companies and consumers began flooding imports to avoid Trump’s tariffs that took effect in April.

Imports reduce GDP as companies rush before tariffs

The rise in imports was sharp. Imports increased by 41.3%, and goods alone jumped by 50.9%