Economy Shrinks in Q1, Trump Urges “Be Patient”

First quarterly GDP drop in 3 years sends markets tumbling and sparks political finger-pointing over who’s responsible.

Photo by Dominik Lückmann on Unsplash

Economy Contracts in Q1 2025

The U.S. economy shrank at a 0.3% annual rate in the first quarter of 2025, marking the first decline in GDP in three years. Businesses front-loaded imports ahead of President Trump’s new tariffs, widening the trade deficit and dragging growth into negative territory (USA Today).

Excluding this tariff-driven trade imbalance, underlying demand remained solid, and one quarter of decline doesn’t yet constitute a recession (two consecutive quarters are the informal rule). Economists note the contraction was largely a temporary side effect of the import surge rather than a broad collapse in spending.

For the stock market, this was the worst first 100 days for S&P stocks of any presidency since 1974.

Political Reactions: Blame and Assurances

What the Trump Administration Is Saying

The GDP dip immediately ignited a political blame game. President Donald Trump blamed his predecessor, Joe Biden, for the downturn, dubbing it the “Biden Overhang” and insisting the slow patch is carryover damage from the prior administration. On Truth Social, Trump urged Americans to “BE PATIENT!!!”, predicting that his new tariff policies will eventually spur an economic boom “like no other.”

He also asserted that the weak first-quarter figures “have NOTHING TO DO WITH TARIFFS.”

What Democrats Are Saying

Biden allies quickly pushed back, pointing out that the contraction and market slide unfolded on Trump’s watch. They note that stocks had performed strongly during Biden’s term, and argue that Trump’s trade war strategy is to blame for undercutting growth. Both sides are using the data to reinforce their narratives heading into upcoming economic debates.

What’s in the Pro Brief (Subscriber Only):

• The story behind the 0.3% GDP drop: how a tariff-fueled import surge shaved a whopping 5 percentage points off growth, and why officials say it’s a one-off.

• Historical context on the market reaction: this was the worst first 100 days for stocks of any presidency since 1974, and what that signals about investor confidence.

• Inside the political messaging war: Trump’s “Biden Overhang” vs. Biden camp’s “Trumpcession” – how each frames the economy, and the stakes for policy and 2025’s outlook.

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