US economy shrank in Q1 2025 due to tariffs, raising concerns of potential recession

From Morningstar: 2025-05-01 09:26:00

The US economy shrank by 0.3% in Q1 2025 due to a surge in imports ahead of tariffs. Analysts worry this could signal a recession, though one quarter of negative growth doesn’t guarantee it. Economic growth may slow due to tariffs, with uncertainty leading to increased recession odds and potential inflation.

Economists believe the negative GDP growth is not the start of a recession, but a result of tariff-related disruptions. Consumers and businesses may struggle with uncertainty, leading to a potential slowdown in the economy. The impact of tariffs could reverse in Q2, with economic data remaining unpredictable and volatile due to policy uncertainties.



Read more at Morningstar: Is the US Headed for a Recession?