Special Poll
The U.S. economy shrank in the first quarter of 2025, marking the first economic contraction in three years and igniting renewed concern over the direction of the country’s financial health. New data showed gross domestic product fell by 0.3%, a development that surprised many analysts and sent markets tumbling.
Much of the decline was driven by a surge in imports, as businesses rushed to bring in goods ahead of steep new tariffs imposed under President Donald Trump’s trade policy. Imports spiked by 41.3%, distorting the trade balance and weighing heavily on GDP. At the same time, consumer spending a key engine of economic growth slowed considerably, and government spending also dipped, adding further drag.
Markets responded swiftly and sharply to the news. Dow futures fell more than 300 points, and the index opened the day down 1% to 40,122.77. The S&P 500 declined 1.6% to 5,474.58, while the Nasdaq Composite dropped 2.2% to 17,081.42, with tech stocks leading the losses.
President Trump dismissed suggestions that his tariff strategy played a role in the slowdown, instead blaming what he called the lingering “Biden overhang.” He reiterated that the economic weakness was due to “bad numbers” he inherited, even as businesses and economists point to the recent trade uncertainty and higher costs as sources of disruption.
While the contraction does not yet signal a recession, economists caution that the risks are mounting. A single quarter of negative growth doesn’t constitute a recession, but coupled with weakening consumer demand and global market volatility, some warn that the next few quarters will be critical in determining whether the U.S. economy is slipping into a broader downturn.