The U.S. Commerce Department delivered some bad economic news on Wednesday, April 30: the United States’ gross domestic product (GDP) contracted by 0.3 percent during the first three months of 2025.
This was the first GDP report released during Donald Trump’s second presidency, and it comes at a time when many economists are warning that Trump’s steep new tariffs could lead to soaring prices on a variety of imported goods, a recession, a weakening of the U.S. dollar, supply chain problems, and empty shelves in stores.
According to The New York Times’ David E. Sanger, the GDP contraction brings Trump’s “political risks…. into focus.”
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“President Trump took office 101 days ago after a campaign in which voters bought his argument that he could skillfully manage the economy and that his policy prescriptions could both bolster growth and eradicate inflation,” Sanger explains in a Times article updated early Thursday morning, May 1. “So, the news on Wednesday that the nation’s gross domestic product had contracted in the first three months of the year was a sharp political jolt as well as a blinking economic warning.”
Sanger adds, “It came at the end of a quarter in which stock prices were down sharply, Wall Street’s worst performance at the start of a new presidential term since Gerald R. Ford tried to steer the country out of scandal and inflation 51 years ago. And it only added to the widespread uncertainty among businesses and consumers about what the rest of the year might hold as Mr. Trump pursues a trade war that is already choking off supply chains and threatening to push prices up and lead to shortages of critical components and products on shelves.”
Sanger emphasizes that Trump is facing a “question of fundamental competence” on the economy.
The Times reporter notes, “Some of Mr. Trump’s economic advisers now recognize that the timing and execution of his tariff announcements could prove to be colossal mistakes, even if they applaud the underlying strategy…. The economic pain of the tariffs could start within months, with upward pressure on prices and shortages of both industrial and consumer products made abroad.”
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David E. Sanger’s full New York Times article is available at this link (subscription required).
