While some media outlets and Democrats have seized on the slight decline in the Gross Domestic Product for the first quarter as proof that President Donald Trump’s economic plans are not working, economists see good news in the underlying data.
The Wall Street Journal reported that the GDP — the value of goods and services produced across the U.S. economy — fell at an annual rate of 0.3 percent from January to March.
“Consumer spending, the economy’s main engine, rose at a 1.8% pace in the first quarter, the smallest increase since mid-2023. Spending by the federal government fell as the Department of Government Efficiency cut jobs and contracts,” the Journal explained.
That’s what we want to happen: the economy re-privatized. President Joe Biden’s economy was built on spending unprecedented amounts of borrowed and printed money, which was not sustainable over time.
HOLD ON:
Did no one else notice in today’s GDP report that interest on the federal debt DECLINED for the 1st time since…
*checks notes*
…Trump was president in ’19 and ’20. This is incredible news! pic.twitter.com/jB9GhN9x2J— E.J. Antoni, Ph.D. (@RealEJAntoni) April 30, 2025
The Journal further noted that the main driver of the slight GDP decrease, when economists had expected a 0.4 percent increase, was the impact of Trump’s tariff policies.
Businesses rushed to get ahead of the tariffs by importing massive amounts of goods, causing the GDP number to take a hit.
GDP was negative because of only two components:
– Trade/Imports subtracted 4.83% on tariff frontrunning
– Government subtracted 0.25%, first negative govt “contribution” since 2022 pic.twitter.com/6Ng0qyQCZ5— zerohedge (@zerohedge) April 30, 2025
Do you trust Trump to handle the economy?
“Net exports, the difference between what the U.S. imports and exports, subtracted nearly 5 percentage points from headline GDP. That was the biggest quarterly drag from net exports on record dating back to 1947,” the Journal said.
Shannon Grein, an economist at Wells Fargo, told the outlet regarding the GDP report, “The headline decline overstates weakness because a lot of that was tariff-induced pull-forward.”
“Overall, I think that it was a relatively solid underlying report when it comes to demand,” she added.
Heritage Foundation economist E.J. Antoni concurred, posting on social media platform X said, “Consumer spending outpaced gov’t purchases in today’s GDP report by 3.2 percentage points – that’s the best number since Q2 ’22, which was also the last time gov’t purchases declined; this is fantastic news.”
Consumer spending outpaced gov’t purchases in today’s GDP report by 3.2 percentage points – that’s the best number since Q2 ’22, which was also the last time gov’t purchases declined; this is fantastic news: pic.twitter.com/2DOJrthL4E
— E.J. Antoni, Ph.D. (@RealEJAntoni) April 30, 2025
He added in another post, “Q1 GDP declines 0.3% SAAR [Seasonally Adjusted Annual Rate] as massive front running of tariffs caused imports to explode 41.3%, dragging GDP down by -5.03pp; gov’t declined 1.4% in 1st drop since ’22; meanwhile, investment exploded 21.9% higher – despite the headline number, this is a surprisingly good report.”
Q1 GDP declines 0.3% SAAR as massive front running of tariffs caused imports to explode 41.3%, dragging GDP down by -5.03pp; gov’t declined 1.4% in 1st drop since ’22; meanwhile, investment exploded 21.9% higher – despite the headline number, this is a surprisingly good report: pic.twitter.com/JTSAi7ZsfI
— E.J. Antoni, Ph.D. (@RealEJAntoni) April 30, 2025
Antoni also noted, “The flood of imports from Q1 is going to tank imports for Q2/Q3, which will show up as faster GDP growth in the Q2 report; ATL Fed and NY Fed are both forecasting significant improvements in growth at 2.5% and 2.72%, respectively.”
The flood of imports from Q1 is going to tank imports for Q2/Q3, which will show up as faster GDP growth in the Q2 report; ATL Fed and NY Fed are both forecasting significant improvements in growth at 2.5% and 2.72%, respectively: https://t.co/GTSx5w8tgU pic.twitter.com/WnbPFf4ckx
— E.J. Antoni, Ph.D. (@RealEJAntoni) April 30, 2025
Trump said during his joint address to Congress in March that there would be an “adjustment period” as he put his tariff policy in place in his bid to bring jobs back to the U.S. and rebalance trade relationships.
President Trump said farmers need to “bear with me again” as he imposes tariffs. Trump said that the tariffs will create ‘a little disturbance’ but added that tariffs are ‘about making America rich again.’ pic.twitter.com/aWpYZ4S1AY
— Newsweek (@Newsweek) March 5, 2025
We’re seeing that now in the GDP number as businesses adjusted to try to beat the tariffs.
However, the underlying indicators are that Trump’s “Golden Age” is taking form.
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