During the same period, the United States economy experienced its first negative quarterly growth since 2022. According to newly released advanced data by the Commerce Department, the nation’s gross domestic product (GDP) contracted 0.2% during the first quarter of the year. This figure represents a modest uptick from a previous estimate, which showed a 0.3% decrease. The adjusted numbers tell a stronger story of the continuing struggles facing American consumers and businesses. Much of this is due, in large part, to President Donald Trump’s unprecedented trade policies.
The decrease in GDP reflects a significant adjustment in consumer spending, which was revised downward by half a percentage point in the latest estimate. Weaker consumption outlays for necessity goods including food, cars/trucks, and services played a role in this downturn. Together these trends illuminate the increasing economic burdens on families. Inflation and other market forces are beginning to erode their purchasing power.
Only a week after the tariff ruling, a federal court ruling has thrown Trump’s entire trade policy into question. This policy has been further complicated by a chaotic and aggressive tariff regime, further stacking the deck of economic uncertainty. A three-judge panel at the US Court of International Trade in Lower Manhattan ruled unanimously on Wednesday. This motivated the Trump administration to appeal, since they want to continue defending their still-unpopular form of international trade.
Now unfortunately the administration’s trade war is shaking up the entire economy. Businesses are hurting and consumers are faced with record price increases on imported goods. As critics of the tariffs point out, these tariffs have hurt American families and businesses, decreased consumer confidence, and decreased consumer spending.
As the economy continues to feel the pinch from these crises, analysts will be looking more closely at the role of these developments. The newly revised GDP data paints a picture of an economic landscape that is precarious at best. If consumer spending can’t find a floor, that will be a drag on growth going forward.