US growth figure expected to make for tough reading for Trump

Analysts expect US GDP figures to amusement a marked slowdown successful maturation for the archetypal 4th of the year, spurred by rising imports up of the instauration of sweeping tariffs by President Donald Trump. Photo: Patrick T. Fallon / AFP
Source: AFP

US GDP figures for the archetypal 4th are expected to amusement a crisp drop-off successful maturation -- and perchance adjacent a recession -- reflecting a surge successful imports earlier President Donald Trump's sweeping tariffs came into effect.

"It's going to beryllium a beauteous melodramatic slowdown from the 4th quarter," Moody's Analytics economist Matt Colyar told AFP.

The gross home merchandise information for the 4th volition beryllium published connected Wednesday, the 101st time since Trump's instrumentality to bureau connected January 20.

In that time, helium has announced respective rounds of tariffs, laying retired plans successful March to enforce sweeping levies connected apical trading partners from aboriginal April successful a bid to reset US commercialized relations.

The instauration of those tariffs sparked a selloff successful fiscal markets, sending volatility surging to levels not seen since the Covid-19 pandemic and spooking investors.

"Usually, authorities argumentation doesn't alteration that much, peculiarly not successful the archetypal 100 days of a presidency," George Washington University economics prof Tara Sinclair told AFP. "But this one's different."

"I deliberation it's beauteous wide that determination were melodramatic argumentation changes that are straight weakening the economy," she said.

Following April's melodramatic marketplace movement, the Trump medication announced a 90-day intermission to the higher tariffs for dozens of countries to let for commercialized talks, portion maintaining a baseline 10 percent complaint for astir countries, sector-specific measures, and caller sweeping tariffs totalling 145 percent connected China.

Rising recession hazard

Infographic showing the US commercialized equilibrium with selected economies. Photo: Nicholas SHEARMAN, Janis LATVELS / AFP
Source: AFP

The US system grew 2.8 percent past year, according to the Commerce Department. Heading into the new year, analysts had wide expected maturation to cool, but to stay astatine astir 2 percent successful 2025.

Since Trump's instrumentality to office, and the instauration of caller tariffs, galore analysts person sharply chopped their maturation outlook. Some economists -- including those astatine Wall Street titans Goldman Sachs, JPMorgan and Morgan Stanley -- present foretell an economical contraction successful the archetypal quarter.

But adjacent if the system does not declaration for the archetypal 4th -- which ended earlier Trump's sweeping tariffs came into effect -- the standard of the slowdown analysts expect would nevertheless beryllium significant.

"Our anticipation is benignant of shockingly connected the higher side, and we're astatine 0.5 percent," said Colyar from Moody's Analytics.

The marketplace statement estimation is for annualized GDP maturation of 0.4 percent for the archetypal quarter, according to Briefing.com -- a marked alteration from the 2.4 percent annualized complaint seen successful the last 4th of 2024.

If the system cools arsenic expected, it volition beryllium mostly down to a surge successful imports, arsenic consumers and businesses scrambled to bargain what they needed earlier the tariffs kicked in, analysts told AFP.

"This spike successful imports, that's coming straight from people trying to get up of tariffs," said Sinclair from George Washington University. "And that is successful nonstop effect to the policies of this president."

Beyond the effects of tariffs, the GDP information is apt to overgarment a "very analyzable story," Belinda Roman, subordinate prof of economics astatine St Mary's University successful San Antonio, Texas, said successful an interview.

Roman pointed to better-than-expected employment figures, which suggest that "clearly there's thing other changing that we're not seeing conscionable yet" successful the data.

"I deliberation determination mightiness beryllium a tiny contraction," she said.

"That whitethorn beryllium offset by the information that we've seen what I deliberation is simply a precise absorbing summation successful employment," she said.

"I deliberation we'll commencement to spot successful 2nd 4th and 3rd 4th much antagonistic impacts, due to the fact that it's it takes it a while," she said. "It doesn't hap immediately."

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Source: AFP