{"id":14429,"date":"2025-05-01T16:36:11","date_gmt":"2025-05-01T16:36:11","guid":{"rendered":"https:\/\/finderica.com\/?p=14429"},"modified":"2025-05-01T16:36:11","modified_gmt":"2025-05-01T16:36:11","slug":"the-u-s-economy-shrank-in-q1-because-of-tariffs-and-consumer-worries","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=14429","title":{"rendered":"The U.S. Economy Shrank In Q1 Because Of Tariffs And Consumer Worries"},"content":{"rendered":"\n
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Maplewood, Minnesota. Joann Fabrics going out of business and closing all 800 of its stores. (Photo … More<\/span> by: Michael Siluk\/UCG\/Universal Images Group via Getty Images)<\/span><\/p>\n

<\/fbs-accordion>UCG\/Universal Images Group via Getty Images<\/small><\/figcaption><\/figure>\n

There is a scramble among economists and analysts to explain the real annualized 0.3% decline in U.S. GDP. A slight contraction is the description, along with various explanations of why it happened and is likely to be temporary. Whether that is true or a form of professional and existential self-calming is to be seen.<\/p>\n

What Happened To GDP In Q1<\/h2>\n

Economists originally expected the 0.3% fall in GDP to be a 0.4% gain \u2014 a swing of 0.7 percentage points. The fourth quarter of 2024 had realized an annualized gain of 2.4%. That was a swing of 2.7 percentage points.<\/p>\n

Economists who examined the Bureau of Economic Analysis data generally chalked the drop up to a number of factors. One was a surge in imports. Many companies could easily see increased tariffs as upcoming costs that would ultimately require price increases on customer goods. So, they placed extra orders for inventory and equipment ahead of time. Imports are deducted from GDP totals because they aren\u2019t part of domestic production.<\/p>\n

Companies weren\u2019t alone in trying to head off upcoming price hikes. Consumers did as well.<\/p>\n

Next came spending cuts and federal layoffs by the Trump administration. It\u2019s unclear what they amounted to alone, but they also led to 172,017 job cuts in February, according to outplacement consultancy Challenger, Gray & Christmas. It was the highest February total since 2009 and the highest monthly total since July 2020 during the pandemic, when 272,649 job cuts were announced.<\/p>\n

Is This A Recession?<\/h2>\n

There is an old assumption that a recession is two consecutive quarters of negative GDP growth, but it isn\u2019t accurate. It was part of a \u201crough translation\u201d suggested in a Dec. 1, 1975, New York Times <\/em>op-ed by Julius Shiskin<\/a>, then commissioner of the U.S. Bureau of Labor Statistics. The full translation was:<\/p>\n