U.S. Economy Shrank in First Quarter, in Reading Clouded by Messy Trade Data
President Trump’s tariffs have roiled financial markets and upended global trading patterns.Now they are disrupting measures of economic growth as well.U.S.
gross domestic product, adjusted for inflation, declined at an 0.3 percent annual rate in the first three months of the year, the Commerce Department said Wednesday.It was, on the surface, a stunning reversal from the strong growth at the end of last year, when the economy expanded at a 2.4 percent rate.But the first quarter figure was misleading, the result of quirks in the way economic activity is measured.
More reliable data on consumer spending and business investment suggested that growth slowed in the first quarter but remained fundamentally solid.That strong foundation could be quickly eroding, however.Economic activity in the first quarter was temporarily lifted by consumers and businesses racing to import goods before Mr.
Trump’s tariffs took effect.And that was before the full extent of those policies became clear.
Forecasters widely expect spending and investment to slow in the months ahead, as tariffs drive up prices and uncertainty keeps businesses on hold.“There’s a lot of reasons to expect the underlying trends in the U.S.economy to soften,” said Ben Herzon, an economist at S&P Global Market Intelligence.Consumer spending slowed in the first quarter, growing at a 1.8 percent annual rate, down from 4 percent at the end of last year.
But economists said that was at least in part because of harsh winter storms that hit southern states in January, causing many shoppers to stay home.There is little sign, so far, that the steep drop in consumer sentiment that began shortly after Mr.
Trump took office has yet translated into a pullback in actual spending.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.If you are in Reader mode please exit and log into your Times account, or su...