(The Center Square) – The White House is defending its economic policies after the Bureau of Economic Analysis released its advance estimate for the first quarter 2025 real gross domestic product Wednesday, showing a GDP decrease at an annual rate of 0.3%.
This marks the first quarterly decline in real GDP since the first quarter of 2022, when the U.S. saw a 1.4% annualized decline in real GDP. Real GDP was up 2.4% in the final quarter of 2024.
President Donald Trump, having just completed the first 100 days of his second term, distanced his administration from the results, attributing the contraction to the “overhang” of former President Joe Biden’s policies.
“This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden ‘Overhang,’” Trump wrote in a post on Truth Social.
The major components that comprise real GDP are consumer spending, investment, government spending, exports and imports. While investment grew by nearly 4% from January through March, consumer spending rose over 1% and there was a slight increase in exports, there was a slight decrease in government spending and a spike in imports.
“The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending,” according to the bureau.
Imports grew by about 5%. Critics blasted Trump’s tariff policy for the GDP decrease.
Trump argued the changes weren’t at all connected to the tariffs imposed by his administration, which the president hopes will ultimately lessen America’s reliance on imports and boost domestic manufacturing.
“This… has NOTHING TO DO WITH TARIFFS, only that [Biden] left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!” Trump urged.
Consumer goods, excluding food and automotive – “mainly medicinal, dental, and pharmaceutical preparations, including vitamins,” – and capital goods, except automotive, drove the increase in imports. Trump just altered automotive tariffs Tuesday, making some automakers importing car parts eligible for reimbursement and ensuring the 25% tariff on imported cars and auto parts isn’t combined with other tariffs.
