President Trump Wednesday sought to dodge blame for shocking first quarter dip in the economy even as markets and voters give his performance the thumbs down.
Uncharacteristically urging patience, Trump called the surprise 0.3% drop in gross domestic product “the Biden overhang” and insisted things will turn around once his massive tariffs on foreign-made products kick in.
“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,” Trump claimed in a post on his social media site.
“(Biden) left us with bad numbers, but when the boom begins, it will be like no other,” he added. “Be patient.”
The quarterly shrinkage from January through March was the first drop in three years.
Economists had expected growth of 0.4%. GDP was down sharply from a 2.4% annual growth rate in the last three months of 2024.
The downturn was driven in part by a surge of imports as firms sought to get products onto U.S. soil before Trump’s tariffs take hold.
Despite his bombastic claims, Trump inherited a solid economy that had grown steadily despite high interest rates imposed by the Federal Reserve bank to fight inflation.
His erratic trade policies, including 145% tariffs on Chinese-made products, have paralyzed businesses and threatened to raise prices and hurt consumers.
A separate report Wednesday morning showed that American businesses added just 62,000 jobs in April, far below the consensus estimate for an increase of 120,000.
The weak ADP hiring report showed a stark drop in payroll growth from the downwardly revised gain of 147,000 in March.
Taken together, the data points to an economy on the brink of recession, with Trump’s tariffs threatening to usher in a dangerous era of “stagflation” in which prices rise as the labor market slumps.
Trader works on the floor of the New York Stock Exchange. (Richard Drew/AP)
Markets fell sharply at the opening bell after the GDP and jobs reports.
The bad economic data could cast a pall over Trump’s planned meeting with more than two dozen business leaders at the White House.
American consumers and markets have turned deeply pessimistic about the economy since Trump bulldozed ahead with his plans for massive taxes on imports from China and other key economic partners, including neighbors Mexico and Canada.
Economists say the Trump trade war will raise prices for Americans and could lead to empty shelves if importers stop bringing products from China. Experts say there has already been a sharp decline in cargo ships headed across the Pacific to the U.S.
