The US economy contracted by 0.3% in Q1 2025, raising concerns in financial circles and among economists. This contraction marks the worst performance since early 2022.
GDP Decline and Its Causes
According to the Commerce Department, the 0.3% contraction was unexpected for financial experts. The main cause is attributed to the tariff policies of the Trump administration introduced in April, which experts say disrupted economic momentum.
Market Reactions to the Decline
News of the GDP contraction affected stock markets, with stocks falling while Treasury yields and gold prices rose. This indicates a shift in investor interest toward safer assets. Some economists predict that tariffs could reduce US GDP growth by 1% in 2025.
Historical Trends and Trade Tensions
The recent contraction reflects similar economic slowdowns caused by geopolitical tensions and trade policies. Experts from Kanalcoin warn that continued tariff policies may further shrink economic output.
The GDP contraction in Q1 2025 highlights the importance of reviewing tariff policies to ensure economic stability in the future.
