Gross domestic product (GDP), a key measure of overall growth in the US economy, fell by 0.3% in the first quarter of the year, down from 2.4% in the last quarter of 2024. The contraction – the first since the start of 2022 – puts the US on the brink of a technical recession, defined by two quarters of negative growth.
The drop in activity comes amid a huge fall in consumer sentiment, which in April dropped 32% to its lowest level since the 1990 recession.
The slowdown comes amid growing concerns that Mr. Trump’s wide-ranging tariffs could disrupt the U.S. economy, with some economists raising the chances of the U.S. slipping into a recession in 2025. Although the Trump administration’s blanket tariffs were announced on April 2 — after the end of the quarter — businesses sought to get ahead of the impact of the import duties by front-loading purchases early in the year.
Still, the report may not fully reflect the state of economic growth, economists cautioned, noting that the figures are likely to be noisy because of the surge in imports as businesses sought to get ahead of tariffs. A rise in imports may appear to lower economic growth and show a shift away from domestic consumption, but that doesn’t tell the whole story, economists note.
The U.S. economy is expected to show slower growth in 2025, partly due to the impact of Mr. Trump’s tariffs, which are import duties paid by American companies like Walmart or Target. When faced with higher tariffs, companies typically pass on all or some of the costs to shoppers, which can depress consumer spending.
Private payroll growth slowed to 62,000 in April, well below expectations
Key Points
- Private sector payrolls rose by just 62,000 for the month, the smallest gain since July 2024, down from 147,000 in March and missing the Dow Jones consensus estimate for an increase of 120,000.
- Leisure and hospitality posted the biggest gain, adding 27,000 jobs. Others that showed increases included trade, transportation and utilities (21,000), financial activities (20,000) and construction (16,000).
Private sector payrolls rose by just 62,000 for the month, the smallest gain since July 2024, amid heightened uncertainty over the degree of the tariffs and the impact they would have on hiring plans and broader economic conditions.
The total marked a deceleration from the downwardly revised gain of 147,000 in March and missed the Dow Jones consensus estimate for an increase of 120,000.
Wage gains also took a step backwards, rising 4.5% from a year ago for those staying in their jobs, down 0.1 percentage point from March. However, job changers saw an increase to 6.9%, up 0.2 percentage point.
Dow futures slide 300 points after data shows economy contracted last quarter
Stock futures fell on Wednesday to wrap up a volatile April after data showed the U.S. economy contracted in the first quarter as President Donald Trump’s flurry of policy moves, especially on trade, weighed on business sentiment.
Dow Jones Industrial Average futures shed 315 points, or 0.7%. S&P 500 futures were off 1.2%, while Nasdaq 100 futures lost 1.7%.
