For the last three years, the U.S. economy has grown, to one degree or another, in literally every quarter. Headed into this week, that streak was expected to continue: The Wall Street Journal reported that economists projected modest growth in the first quarter of the year, spanning January through March.
It now appears those expectations were too rosy. The New York Times reported:
President Trump’s tariffs have roiled financial markets and upended global trading patterns. Now they are disrupting measures of economic growth as well. U.S. gross domestic product, adjusted for inflation, declined at an 0.3 percent annual rate in the first three months of the year, the Commerce Department said Wednesday.
Not only were the numbers worse than expected, and not only did this mark the first time in three years that the overall U.S. economy contracted, the latest report also pointed to a sharp reversal: Domestic GDP growth over the previous four years was strong and steady, including quarterly growth around 3% in each of the preceding three quarters.
Then Donald Trump returned to power.
The president’s team apparently wasn’t altogether sure what to say about the development. A deputy White House press secretary appeared on C-SPAN and suggested Joe Biden was to blame for the bad news, because the Democratic president was in office for part of January. Around the same time, trade advisor Peter Navarro appeared on CNBC and made the case that the discouraging data was actually encouraging — if observers put aside the effects of the president’s trade tariffs.
There was a kernel of truth to the claim: The quarterly data was skewed a bit by businesses and consumers scrambling to get ahead of Trump’s tariffs, which the president unveiled a couple of days after the end of the first quarter. But (a) that doesn’t exactly help the White House’s position; and (b) it suggests the second quarter is likely to be worse.
This also seems like a good time to note that when it came to economic policy, all Trump had to do was nothing.
A New York Times report published early last month summarized the Biden-era economy in a tidy paragraph. “President Trump inherited an economy that was, by most conventional measures, firing on all cylinders. Wages, consumer spending and corporate profits were rising. Unemployment was low. The inflation rate, though higher than normal, was falling.”
As regular readers know, there was no shortage of related reports as Trump prepared to take office. A Wall Street Journal analysis described the state of the Biden-era economy as “remarkable,” which coincided with a Bloomberg analysis that said, “The nation is experiencing a dream combination of strong growth and low inflation.”
There was plenty more where that came from. A month before Election Day 2024, the New York Times reported that the U.S. job market was “as healthy as it has ever been” — as in, in the history of the United States — and described economic growth as “robust.” A few days later, The Washington Post’s Heather Long explained in a column, “We are living through one of the best economic years of many people’s lifetimes.” The same day, Politico described the status quo as “a dream economy.” The Economist, a leading British publication, also described the U.S. economy as “the envy of the world,” adding that the American economy “has left other rich countries in the dust.” It reached the point that, in the days leading up to the election, Trump actually started telling the electorate that he wanted credit for all the good economic news, despite the fact that he hadn’t been in office for nearly four years. Upon returning to the White House, Trump could’ve left well enough alone, focused on border security and his golf game, and he’d probably have an approval rating in the mid-to-high 50s. He had other ambitions, however, and as the new GDP data helps prove, we’re all paying the price. This post updates our related earlier coverage.
Steve Benen is a producer for "The Rachel Maddow Show," the editor of MaddowBlog and an MS NOW political contributor. He's also the bestselling author of "Ministry of Truth: Democracy, Reality, and the Republicans' War on the Recent Past."
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