The U.S. GDP contracted in the first quarter, and Trump "blamed" Biden, claiming that economic prosperity takes time
The U.S. GDP unexpectedly declined by 0.3% in the first quarter. Less than an hour after the data was released, Trump quickly took to social media to state that this is the economic "mess" left by Biden, claiming that the U.S. economy will achieve unprecedented prosperity, just needing time. However, the U.S. Department of Commerce pointed out that the GDP decline is related to the large-scale imports caused by Trump's tariff policy and a decrease in defense spending in the first quarter
The U.S. GDP declined in the first quarter, and Trump quickly distanced himself from the responsibility, blaming the previous administration and warning that "prosperity" will take some time.
On Wednesday, ahead of the U.S. stock market opening, two economic data releases fell short of Wall Street's expectations, intensifying market concerns about stagflation. Specifically, the U.S. April ADP employment numbers increased by 62,000, which was below expectations and marked the lowest growth rate in nine months. The U.S. economy shrank for the first time since 2022, with the initial annualized GDP estimate for the first quarter declining by 0.3%, in stark contrast to the 2.4% growth in the first quarter. As a result, all three major U.S. stock indices fell at the market open, with the Nasdaq briefly dropping nearly 3%.
Less than an hour after the data was released, Trump responded on Truth Social, stating:
"This is Biden's stock market, not Trump's. I didn't take office until January 20. Companies are starting to move into the U.S. in record numbers. Our country will prosper, but we must get rid of Biden's 'leftover problems.'"
Trump also emphasized:
"This will take some time, has nothing to do with tariffs, and the only issue is that he (Biden) left behind bad numbers, but when the economic boom begins, it will be unprecedented. Be patient!!!"
However, according to the Department of Commerce, Trump's assertion that the GDP decline and subsequent market drop are due to Biden's policies is inaccurate. The Department pointed out that the GDP data reflects the result of companies massively importing goods in anticipation of Trump's expected tariffs, and the decline in government spending last quarter also put pressure on GDP, primarily due to cuts in defense spending.
Additionally, Trump stated in his first 100 days speech that U.S. prices were falling sharply, but Wednesday's GDP report showed that the inflation indicator favored by the Federal Reserve—the core PCE index—rose by 3.6% quarter-on-quarter, exceeding expectations and higher than the previous quarter's 2.4%. Experts believe that the reduction in employment numbers and the decline in consumer confidence are due to the uncertainty and concerns caused by Trump's tariff policies
