The U.S. economy shrank at a 0.3% annual pace from January through March, first drop in three years. It was slowed by a surge in imports as companies in the United States tried to bring in foreign goods before President Donald Trump imposed massive tariffs.
The January-March expansion in gross domestic product — the nation’s output of goods and services — was down from 2.4% in the last three months of 2024. Imports shaved 5 percentage points off first-quarter growth. Consumer spending also slowed sharply. Federal government spending plunged 5.1%.
But business investment rose at a 21.9% clip as companies poured money into equipment. And a category within the GDP data that measures the economy’s underlying strength rose at a healthy 3% annual rate from January through March, up from 2.9% in the fourth quarter of 2024. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
Trump inherited a solid economy that had grown steadily despite high interest rates imposed by the Federal Reserve to fight inflation. His erratic trade policies — including 145% tariffs on China — have paralyzed businesses and threatened to raise prices and hurt consumers.
(AP)
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It shows that Trump’s misguided economic policies are working as expected. Tariffs, or even the threat of tariffs, disrupt international trade which means consumer will have to pay higher prices for an inferior selection of goods. In addition, it appears that many if not most of the “illegal” aliens are not gangsters or sex fiends, but are people authorized to work (Biden gave them a “pardon”) who in fact have been employed and are not easily replaced meaning the lost value of their production is also a drain on the economy.
The impact on our community is that while we benefit from Trump’s support of Israel and opposition to anti-Semitism (unlike Biden who considered stabbing us in the back to be good policy), the deciding factor in elections is going to be “It’s the economy, stupid”.