Stock prices tumbled on Wednesday after a new report showed that the U.S. economy shrank in the first quarter of 2025.
The Dow Jones Industrial Average fell 0.8%, while The S&amp;P 500 dropped 1.1%. The tech-heavy Nasdaq Composite fell 1.5%, according to <a href="https://www.cnbc.com/2025/04/29/stock-market-today-live-updates.html" target="_blank" rel="noopener">CNBC</a>. The drop in value followed a report from the Commerce Department that showed the U.S. GDP shrank 0.3% in the first three months of the year.
“This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers,” President Donald Trump posted on <a href="https://truthsocial.com/@realDonaldTrump/posts/114427089568235019" target="_blank" rel="noopener">Truth Social</a> on Wednesday morning. “Our Country will boom, but we have to get rid of the Biden ‘Overhang.’ This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!”
The underwhelming economic report hit after economists predicted that the U.S. GDP would grow by 0.4% in the first quarter. GDP contracted instead as Trump’s tariff policies drove up imports, which are subtracted from net exports as part of the calculation of a final GDP figure. It is the first contraction in the U.S. economy since the first quarter of 2022, according to <a href="https://www.wsj.com/economy/us-gdp-q1-2025-1f82f689" target="_blank" rel="noopener">The Wall Street Journal</a>.
Trump paused and cut billions in government spending, which suppressed GDP growth. Consumer spending fell, as well.
Trump’s moves on trade – hefty tariffs on China, Canada, and Mexico, alongside a flat 10% tariff across the board with higher duties threatened – had the largest impact on the GDP report. Net exports, which is U.S. exports minus imports, subtracted 5% from the rest of the GDP calculation, according to WSJ.
Wells Fargo economist Shannon Grein said that the topline GDP contraction makes the U.S. economy appear weaker than it is.
“The headline decline overstates weakness because a lot of that was tariff-induced pull-forward,” Grein said. “Overall, I think that it was a relatively solid underlying report when it comes to demand.”
The GDP report has sparked concerns that the United States could be in recession. A recession is typically defined as two consecutive quarters of economic contraction.
Commerce Secretary Howard Lutnick, in a cabinet meeting on Wednesday, said that Trump’s tariffs have spurred significant new investment in the United States. He also downplayed the impact of tariffs on the latest GDP numbers.
“I have the pleasure of running the investment accelerator, which gets to recruit these companies, and you&#8217;ve never seen anything like the companies committed to building in America. Technology companies have committed over $2.5 trillion to build in America based on your tariffs,” Lutnick said. “Sovereign countries all backing, the whole Middle East and all these countries backing their sovereign wealth funds, they all want to invest in America, and they&#8217;re coming in, again, over $3 trillion committed.”
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Commerce Secretary <a href="https://twitter.com/howardlutnick?ref_src=twsrc%5Etfw">@howardlutnick</a>: &quot;Technology companies have committed over $2.5 trillion to build in America based on your tariffs&#8230; Then you&#39;ve got the whole pharma industry knows it&#39;s got to come home&#8230; Auto is coming home, industrial is coming home.&quot; <a href="https://t.co/BHXpjTovB9">pic.twitter.com/BHXpjTovB9</a>
&mdash; Rapid Response 47 (@RapidResponse47) <a href="https://twitter.com/RapidResponse47/status/1917608615269261580?ref_src=twsrc%5Etfw">April 30, 2025</a></blockquote>
Trump announced new investments and pledges to the United States from companies committed to building domestically because of tariffs totaling $8 trillion.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
President Trump and Commerce Secretary Lutnick tout the 8 TRILLION dollars of new investments in America as a result of tariffs.
Lutnick: &quot;And this is all driven by your tariff policies. No chance this would be happening without it.&quot; <a href="https://t.co/Q8nLnX294F">pic.twitter.com/Q8nLnX294F</a>
&mdash; Townhall.com (@townhallcom) <a href="https://twitter.com/townhallcom/status/1917606795486585080?ref_src=twsrc%5Etfw">April 30, 2025</a></blockquote>

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Stock Prices Drop After New Data Shows GDP Shrank Since Start Of Year

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Stock Prices Drop After New Data Shows GDP Shrank Since Start Of Year