On April 28, 2025, President Donald Trump hosted the Philadelphia Eagles, winners of Super Bowl LIX, to a White House victory celebration. The ceremony was held on the South Lawn of the White House in Washington, D.C. The event was a wonderful celebration of an enormous victory for the team. This victory came in spite of mounting concerns over the performance of the U.S. economy during Trump’s second term.
For the first time in 11 years, the U.S. economy shrank as its gross domestic product (GDP) plummeted. It just fell at an annualized rate of 0.3% over the three months ending in March 2025. This deterioration arrives just as most experts are starting to conclude that a recession requires two or more quarters of declining inflation-adjusted GDP. Economic watchers had prepared for a deep drop off in performance at the start of the year. They blamed this decline on multiple reasons, but most notably tariff proposals that caused uncertainty for businesses and consumers.
At the beginning of this year, businesses were scrambling to move product back into the country. This increase occurred just as they were trying to stock up in anticipation of the tariffs. This increase was more than 40%, a powerful signal of businesses’ attempts to avoid the risk posed by shifting trade policies. S&P Global Ratings cautions that the initial GDP reading for the first quarter is overstating the economy’s strength. It artificially inflates the number, relying on the frontloading of imports — a signal that doesn’t actually reflect the economic fundamentals.
Federal spending fell too, down nearly 5% during the first quarter of 2025 alone. Though these impediments were major, inflation began to cool in March. This change heralds a new chapter from the unprecedented price hikes that reached their maximum in 2022. As Federal Reserve Chair Jerome Powell recently commented on the quickly evolving state of the economy, “Life moves pretty fast.”
The sudden contraction in economic performance has still caught the attention of experts and policymakers. S&P Global Ratings noted, “We anticipate a marked slowdown in the U.S. economy during the first quarter, driven by increasing policy uncertainty surrounding trade, tariffs, and immigration.” This recognition highlights the difficult situation in which the administration finds itself as it sails through treacherous economic seas.
Our U.S. economy just popped a blazing 2.4% annualized growth rate in the fourth quarter of 2024. This growth provides significant context for interpreting the current downturn, though challenges abound. Analysts have indicated that indicators such as inflation and hiring are released with a lag, making timely assessments of economic health difficult.
