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Trump’s 101st day in office marked by 0.3% contraction in US GDP

Date: 30 April 2025

2 minute read
30 April 2025
 
If you are covering the latest US GDP data, please see the following comment from Lindsay James, investment strategist at Quilter:
 
“On Donald Trump’s 101st day in office, we are just now beginning to see the true impacts of his policies on the US economy. While it does not quite cover the fallout of his ‘Liberation Day’, today’s US GDP data still clearly illustrate what has been a turbulent first quarter of the year for the US, as well as the advance measures that were taken by businesses in an attempt to mitigate the impacts of his tariffs.
 
“Thanks in part to companies stockpiling imports ahead of the implementation of Trump’s tariffs, resulting in a significant imbalance between imports and exports, the 0.3% contraction reported today comes as no surprise. The Atlanta Fed’s GDPNow estimate for Q1 pointed to an annualised contraction of as much as 2.7%, so it seems the downturn is not as severe as it could have been. However, given it is only the first reading, there is a chance it could be revised down further yet. A clearer picture of the underlying demand from consumers comes from the real final sales to private domestic purchases, which grew 3%; a solid outcome with a slight increase on the 2.9% seen in Q4.
 
“US GDP has fallen markedly compared to the 2.4% growth achieved in the fourth quarter of 2024. However, the higher the imports compared to exports, the lower GDP will be, so investors need not panic too much as Q2 is expected to have a far lower level of imports dragging the overall figure down.
 
“However, this is not to say that GDP will be plain sailing from here on out. Consumer sentiment has tanked, and the global economy is in a very different place than it was just a few short months ago. The impact this will have on spending is still unclear, but we can expect businesses to put a hold on investment and expansion plans until the outlook is less hazy, which will likely weigh on jobs and wage growth. With inflation also expected to rise, consumers may look to keep more money in their pockets which could stall any potential GDP growth.
 
“The Federal Reserve will reconvene next week for its third monetary policy meeting of 2025 and a hold on rates appears to be almost set in stone, particularly given the risks of being seen to buckle to recent criticism from Donald Trump. The start of 2025 has been stormy to say the least and the Fed has an increasingly difficult landscape to navigate, so we can expect to see very little in the way of rate cuts until much later in the year.”

Megan Crookes

External Communications Executive