Brett Ryan, a senior U.S. economist at Deutsche Bank Securities, noted that the initial economic optimism driven by tax policy has been overshadowed by trade tensions. Commerce’s first-quarter GDP estimate reflects a challenging start for President Trump, who promised to boost private investment and consumer spending. Recession fears have risen since Trump implemented significant tariffs, which economists argue will increase costs and reduce investment. This economic contraction may force Trump to address the political implications of his economic agenda. Despite this, Trump remains defiant, suggesting on Truth Social that the effects of his policies will take time to materialize. “Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers,” he wrote. However, his tariff policies have contributed to economic challenges, with demand for foreign goods rising as businesses anticipate new trade barriers. The Census Bureau reported a record-high trade deficit in March, negatively impacting GDP estimates. White House officials remain optimistic, pointing to underlying figures indicating stable economic fundamentals. While consumer spending and private investment partially offset the contraction, uncertainty remains about how higher trade barriers will affect growth and prices. Concerns persist that surging import costs could lead to price spikes or layoffs. The Business Roundtable’s survey reported a decline in businesses planning to expand workforces, and job openings fell significantly in March.
— new from Politico
