NowGazer

The U.S. economy unexpectedly contracted by 0.3% in the first quarter of 2025, raising alarm bells about the country’s economic trajectory under President Trump’s second term. The decline, the first since the pandemic recovery began, has been attributed to weaker consumer spending, a slowdown in exports, and stockpiling ahead of new tariffs on Chinese and European goods.

Economists expected modest growth this quarter, but the advance GDP reading released this week caught many off guard. Wall Street responded immediately — the Dow dropped over 400 points while the tech-heavy Nasdaq slid nearly 2%.

Trump has deflected blame onto his predecessor, calling it the “Biden Overhang,” though analysts say the newly announced tariffs and trade uncertainty have dampened business confidence. “This is about inflation, interest rates, and global supply disruptions. It’s a hangover from 2024, not a partisan issue,” said Morgan Stanley’s chief economist Lauren Fox.

The White House insists that the coming quarters will rebound with manufacturing investments and tax incentives, but consumer sentiment has dropped to its lowest level in five years. With global investors now reevaluating their U.S. exposure, the data signals a potential slowdown just as the administration ramps up economic nationalism.