U.S. GDP fell at an annualized rate of 0.3 percent during the first three months of the year, according to data released Wednesday by the Commerce Department, after an annualized increase of 2.4 percent in the fourth quarter of 2024.
Economists had expected U.S. GDP to fall amid a steep increase in orders of foreign products, which could be far more expensive once Trump’s full slate of tariffs take effect.
“The drop seems to be wholly due to tariff-related distortions,” economists at Pantheon Macroeconomics wrote in a Tuesday preview of the report.
“GDP likely would have risen in the absence of the dramatic shift in policy. Underlying momentum in growth was undoubtedly waning before the tariff shock, though, and in its aftermath we now expect activity to stagnate this year.”
The first-quarter import surge took roughly 5 percentage points off of the GDP growth rate, according to the Commerce Department, washing out nearly 4 percentage points from domestic investment and roughly 1 percentage point from consumer spending.
The Hill's Sylvan Lane has more here.
