Data confirms it: the U.S. economy has just suffered its worst quarter since 2022. It presents negative growth of -0.3% in the first quarter. This unexpected GDP decline raises fears of a decisive turning point for markets and investors. On the other hand, trade tensions seem to be worsening.
In summary
The U.S. economy contracts by -0.3% in Q1, affected by Trump's tariff policies.
Despite signs of weakness, economists believe a recession is not yet confirmed.
An economy destabilized by Trump's policy
It's a fact! President Donald Trump's new economic policy is causing a real earthquake (and not just in the United States!). In just a few months, his tariff decisions have:
increased the trade deficit.
disturbed exchanges.
weakened growth.
Result: Inflation-adjusted GDP fell by -0.3%. This figure is well below the forecast of 0.8%.
According to the Department of Commerce, this decline is mainly due to a surge in imports (+41.3%) aimed at anticipating tariff increases. On the other hand, exports only rose by 1.8%. This dynamic jeopardizes the balance of global trade.
According to a report: The difference between imports and exports has reduced GDP more than ever since 1947.
A key driver of the economy, consumption has also slowed significantly. Specifically, it fell to 1.8% (it was previously 4%). Public spending worsened the trend, falling by -5.1%.
That said, business investments rebounded by 9.8%. Some analysts interpret this as a precursor to future inflation.
Recession or simple economic slowdown?
Certainly, the GDP decline is still not enough to qualify the situation as a technical recession. The fact is that two consecutive quarters of contraction are required. Nevertheless, the signs are concerning.
This mainly refers to the unemployment rate, which remains low: 4.2%. Additionally, underlying demand, measured by final sales to private buyers, is progressing slightly.
However, as Gregory Daco, economist at Ernst & Young, explains, the global economy is highly exposed to a marked slowdown risk (especially if tariffs remain unchanged!). The coming months will be decisive.
The specter of a recession is not yet a certainty. However, the fundamentals of the U.S. economy are weakening. Investors and analysts are awaiting the evolution of Trump's economic policy in an environment of increasing instability.