US GDP down by 0.3%: What's next?

The uncertainty brought about by Trump's tariff is now bringing in results. Sadly, it isn't good.

- Fidel O. Abalos

The US economy shrank in the first quarter. The first time since the Covid 19-induced contraction. Notably, this is the result despite the 90-day pause of most of his reciprocal tariffs. As the 90-day pause ends, expect dire consequences.

According to the USA' Commerce Department's initial measurement released this week, its economy contracted by "0.3% in the first quarter of 2025, the first negative reading since 2022." Reportedly, "the decline was fueled by a massive surge in imports (to avoid paying more for the tariff), while other parts of the U.S. economy showed signs of slowing." Consumer sentiment isn't good too as spending climbed just 1.8%, "the weakest pace since mid-2023," it added.

Economists, before Trump declared his much ballyhooed "Liberation Day," were expecting the "GDP to have grown 0.4% for the first three months of 2025, compared with an increase of 2.4% in the fourth quarter of 2024." Making the situation worse is the fact that employment is cooling down. Earlier this week payroll processor ADP (Automatic Data Processing) reported that only 62,000 new roles were added in April. These are both below estimates.

As reciprocal tariffs will be in full play, expect joblessness to prevail as some companies might foldup or will be trimming down.