The start of the chaos in the second term of President Trump spread the economy at the beginning of the year, as consumers and traders jumped to respond to the announcement of tariffs and a constant flow of policy changes.
The principles and the uncertainty they created was enough to push the first quarter to the opposite of economic growth. The US total domestic products adjusted for inflation have decreased by 0.3 percent annual in the first three months of the year, the Commerce Department said on Wednesday that a surprise reversal from strong growth late last year.
The decline in the first trimester was the result of the comedy in the way the economic activity was measured. Consumers have suggested more reliable data on consumer expenses and business investment that the growth in the first quarter has slowed down but the agreement has not been signed.
However, when the negative number was confusing, it reflected something real about the way Mr. Trump had objected to the economy in the first months in the office. Customers ran to buy cars and other products before the tariff came into effect. Business works the same with equipment, parts and raw materials, setting up stores for trade war.
Furthermore, the first trimester statistics were a glimpse in the past, before Mr Trump announced more tariffs in early April. This declaration, and then the growing and reversal continuity created chaos in the financial market and began a full-grown trade war with China.
Stocks were read at the beginning of trading on Wednesday, because Wall Street was fixed on the impact of Mr. Trump’s trade policies. S&P 500 has decreased by about 2 percent in the case of initial business.
Mr. Trump told supporters to “be patient” on a social media post on Wednesday and blamed his predecessor to transfer him to a bad economy, despite the fact that he was strong in growth while taking office.
Mr. Trump’s adviser and an architect of the administration’s trade policy, Peter Navaro, told reporters that GDP statistics “should be really positive news for America.”
Very few economists agree. Although the first quarter statistics showed the growth of the growth mainly under the tariff-induced noise, the forecasts are largely expected and investment is slow in the front months, as the tariffs increase prices and prevent uncertainty businesses.
“All this is about to change,” said Kathy Bostjanic, the nationwide insurance nationwide economist. “Once everything is kicked out of our economy, the labor market is slowing down. The appointment is already suspended, and we hope the unemployment rate will start to rise.”
Customer expenditure has slowed down in the first quarter, which has dropped from 4 percent by the end of last year to a 1.8 percent annual rate. However, economists said it was at least part of the winter storm due to hit in the Southern state in January, resulting in many buyers at home. So far there are very few signs that the steep drop of the consumer feelings that began after Mr. Trump’s responsibility still translated a poolback to the actual expenditure.
Similarly, the survey has shown that corporate leaders have become more disappointing about economic views, despite the first trimester, business investment in the equipment has increased.
Rather, the decline in GDP in the first quarter was almost completely driven by a huge increase in imports as customers and traders tried to handle Mr. Trump’s tariffs forward. This enthusiasm shaved about five percent points from GDP growth in the first quarter.
To understand why the rise of imports decreased on GDP, it helps somewhat to understand how the numbers are calculated.
GDP, by name, is not only measuring natively produced products, not imports, which are produced abroad. However, instead of direct production measurements, the government calculates all the products and services sold in the country and then subtracts the manufactured abroad. (It also adds to exports, which is produced natively but sold to foreign buyers)))
This means, theoretically, imports are not associated or subtracting something imported from GDP or will be demonstrated as a salested product placed on the consumer’s expense or in the quarterly data, both are regarded as an addition to GDP
In reality, though, the government is good to calculate both the import and consumer expenses, but often inventors must rely on rough assumptions, especially on the basic data. The first trimester statistics showed the increase in inventors, but the companies were not equally encouraged with the increase in imports of the company’s storage of the products and materials before the tariff.
Economists predicted that the first quarter Inventory statistics would either be higher if more complete data would either be higher, or those lists would jump again in the next quarter, would provide a temporary lift to GDP
Beyond that national curiosity in the data, economists say that greater acceptance is clear from the latest information: Customers and traders began to change their behavior in response to Mr Trump’s policy before April 2 April. The full impact of these policies will not be clear for months, but economists have warned that the damage can be sufficiently sufficient, especially if Mr Trump has been changing his attitude on almost daily basis for the past one month.
The US economy has been significantly elastic in recent years, repeatedly denies the forecast for the recession. Economists said that there is still a pocket of energy that can help prevent the strains that it left by Mr. Trump’s policy. But before this year, the growth was slow, leaving low cushions.
“We put weight in the economy instead of gaining weight,” said Diane Swanock, chief economist of the accounting firm KPMG.
Daniel Qae Reporting contributions.
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