US economy shrinks Trump blames Joe Biden for the "skid marks"
The US economy shrank unexpectedly under President Donald Trump in the first three months of the year. The decline in gross domestic product (GDP) amounted to 0.3 percent on an annualized basis, according to an initial estimate released by the Department of Commerce in Washington on Wednesday.
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- The US economy has lost considerable momentum and contracted surprisingly in the first quarter of the year.
- Gross domestic product (GDP) fell by an annualized 0.3 percent in the first three months, according to an initial estimate by the Department of Commerce in Washington.
- Experts had not expected such a significant development, but had merely assumed a clear slowdown in growth.
Trump blamed his predecessor Joe Biden for the development. Experts, on the other hand, see the "first signs of a slowdown" in the president's tariff policy.
Compared to the previous quarter, US GDP shrank by 0.1 percent according to the figures. The Department of Commerce attributed the development to significantly increased imports ahead of Trump's expected tariff announcements at the beginning of April.
Trump promises "booming" country
Trump wrote in the online service Truth Social that the decline had "nothing to do with the tariffs". US citizens must be patient. The country will soon be "booming, but we have to get rid of the Biden 'overhang'", the Republican emphasized.
Under Biden, the US economy had recently grown significantly. In the last quarter of 2024, growth amounted to 2.4 percent. Unlike in Germany, the USA extrapolates quarterly figures for the year as a whole, which means that economic figures can only be compared to a limited extent.
US citizens are only consuming cautiously
The opposition Democrats accused Trump of driving the USA into recession with his erratic tariff policy, endangering jobs and destroying the retirement savings of many citizens on the stock market. "The president's ill-conceived and chaotic trade war is nothing more than a tax on American families," said Democratic Senate Minority Leader Chuck Schumer.
The Kiel Institute for the World Economy (IfW) sees "the first signs of Trump's economic policy putting the brakes on the US economy". Not only did imports rise drastically in the first quarter in order to avoid the feared tariff surcharges, but US citizens have also only consumed cautiously, explained IfW expert Klaus-Jürgen Gern.
Trump-critical US economist and Nobel Prize winner Paul Krugman was cautious. Although a "Trump recession" - i.e. a recession under Trump - is "quite possible", it cannot yet be reliably read from the quarterly figures. The economy also shrank under Biden at the start of 2022, but there was no downturn.
Experts disagree with Trump
On Tuesday, Trump celebrated the 100th day of his second term in office and promised US citizens a flourishing economy and more jobs in the automotive industry, among others. Many experts, however, consider his tariff policy to be detrimental to growth and a driver of inflation.
In contrast, there was initially good news from the USA in terms of consumer prices: inflation in March slowed to 2.3% year-on-year. The Department of Commerce attributes this primarily to lower energy and fuel prices.
The International Monetary Fund (IMF) also expects Trump's tariffs to have a negative impact: according to the economic forecast published just over a week ago, the US economy is only expected to grow by 1.8% this year. This is 0.9 percentage points less than previously expected by the IMF.
