U.S. GDP declines 0.3% as imports surged ahead of Trump's tariffs

The U S financial system contracted in the first quarter of the first negative reading since the COVID pandemic according to an initial measurement by the Commerce Department The decline was fueled by a massive surge in imports Consumer spending meanwhile climbed the weakest pace since mid- NBC News reports Economists were expecting gross domestic product GDP to have advanced for the first three months of compared with in the fourth quarter of Gross domestic product is the standard measure of a country s economic increase It is the sum of consumption expenditure cabinet spending and the balance of transaction defined as exports minus imports In bulk circumstances advanced economies like the U S try to aim for GDP of around to per quarter adjusted for inflation The U S has been doing slightly better than for the past two years and until Trump began his tariffs rollout it was expected to have performed at about that pace But Trump s tariffs shock has begun to rattle economic figures On Tuesday the Commerce Department revealed the U S commerce deficit in merchandise unexpectedly widened in March to an all-time high as companies began ramping up imports to get ahead of Trump s import duties Having a large volume of imports that results in a contract deficit does not necessarily signal economic weakness assuming the imports are balanced out by consumption and funding Although the U S has been operating at historically wide arrangement deficits for several years they have not substantially affected GDP performance But the latest surge in imports likely swamped the ability of the rest of the commercial sector to absorb them in the short term something that would product in lower GDP Still the measurement does not reflect overall consumer and business performance analysts with Morgan Stanley wrote in a note to clients It s major to note that this reflects front-running and not current economic weakness analysts with Morgan Stanley wrote in a note to clients What about the rest of the commercial sector Analysts say consumption and stake likely slowed but did not reverse The story in our view is one of a US business activity that exited the first quarter on solid footing the Morgan Stanley authorities noted Analysts with JP Morgan notes that if Q GDP is unexpectedly weak Q GDP could be unexpectedly strong If imports collapse in coming months there will be a temporary bounceback in measured GDP in Q they wrote in a note This story first appeared on NBCNews com More from NBC News Trump s tariffs give rise to a turbulent financial sector Automakers get a break on chosen Trump tariffs but the outlook for the Big is still cloudy Canada was poised to elect its own Maple MAGA movement Then Trump happened This story uses functionality that may not work in our app Click here to open the story in your web browser