Economic Watch: U.S. GDP shrinks in Q1, fueling recession fears

WASHINGTON, May 1 (Xinhua) -- U.S. GDP shrank 0.3 percent in the first quarter (Q1) of 2025, the Commerce Department said Wednesday.

It marked the first quarter of negative growth in three years, raising concerns of a looming recession.

"I expect sour consumer sentiment and business uncertainty to drag down Q2," said Gary Clyde Hufbauer, a non-resident senior fellow at the Peterson Institute for International Economics.

Many economists have expressed concern over sweeping tariffs of President Donald Trump's administration, warning they could slow global economic growth.

"The economy is likely to fall into a recession by the standard measure of two negative quarters," said Barry Bosworth, economist and senior fellow at the Brookings Institution.

He added that domestic demand could weaken further in Q2 "unless Trump does more to reverse his trade measures."

Bosworth called it "truly bizarre" that the administration seems intent on policies that could lead to stagflation, driven by a misunderstanding of what causes trade deficits.

Dean Baker, a senior economist at the Center for Economic and Policy Research, told Xinhua that there are reasons to expect "slower growth," especially in investment.

The decrease in GDP also reflected an uptick in imports, which are subtracted from GDP calculations. Bosworth said the "domestic demand was actually quite strong" due to an import surge in anticipation of Trump tariffs.

The current administration campaigned on reviving U.S. manufacturing, appealing largely to its working-class voter base. But critics said revamping the global trade system is a tall order.

"Trump wants to remake the global trade system, but he overestimates American power. In such a big and complicated world, no single country can impose its will on all the other countries," said Brookings Institution Senior Fellow Darrell West.

Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland, said the administration lacks "a coherent economic plan."

He noted that while the administration protects heavy industries, it under-prioritizes high-tech and light manufacturing, and leaves services and financial sectors exposed to retaliatory tariffs.

Moreover, the sweeping tariffs could backfire.

"If the second quarter number comes in negative, it will be known as the Trump recession," West said. ■