ON DEMOCRATS’ CLAIM THAT TRUMP ‘CRASHED’ THE ECONOMY. The government’s Bureau of Economic Analysis reports its advance estimate of gross domestic product decreased at an annual rate of 0.3% in the first quarter of 2025 after increasing 2.4% in the last quarter of 2024. It was the first decrease in GDP in three years.
You will not be shocked that Democrats jumped on the news to declare that President Donald Trump has crashed the economy in just 100 days. (The GDP report included the last few weeks of the Biden administration.) “A crashing economy heading toward a RECESSION,” House Democrats tweeted. “Crashing the economy,” House Minority Leader Hakeem Jeffries (D-NY) said. “Crashing the economy,” Trump impeacher Rep. Jamie Raskin (D-MD) said.
You get the idea. Now, a negative GDP is not good news. But ask yourself — what’s going on? Could there be some special factor at work that has led to the 0.3% drop? Something that is not necessarily an indicator of a weak economy?
Indeed there is. It is Trump related, but it is not “crashing the economy.”
The most important thing to know is that imports reduce GDP, and in this case, they did it in a way that had a particular effect on first-quarter numbers. Read this explanation from the New York Times: “GDP, as the name suggests, is meant to measure only goods produced domestically, not imports, which are produced abroad. But rather than measure production directly, the government counts all goods and services sold in the country, and then subtracts the ones that were made overseas. (It also adds in exports, which are produced domestically but sold to foreign buyers.) That means that, in theory, imports neither add to nor subtract from GDP. Anything that is imported to the country should show up elsewhere in the quarterly data either as consumer spending or as an unsold product held in inventory, both of which are counted as additions to GDP. In practice, though, the government is good at counting both imports and consumer spending, but often must rely on rough estimates for inventories, especially in preliminary data. The first-quarter figures showed an increase in inventories, but not a surge on a par with the growth in imports, despite anecdotal reports that companies were stockpiling products and materials ahead of tariffs.”
What happened was clearly a product of Trump’s various tariff announcements. U.S. companies dramatically increased imports in the first quarter, hoping to build up a lot of inventory before tariffs apply to future imports. So all those imports were counted against the GDP number, bringing it down. Again, the New York Times: “Economists predicted either that the first-quarter inventory figures will be revised higher when more complete data become available or that inventories will jump again next quarter, providing a temporary lift to GDP.”
So in short, “the negative number was misleading,” according to the New York Times. “Consumers raced to buy cars and other goods before tariffs took effect. Businesses did the same with equipment, parts, and raw materials, laying in stores for the trade war to come.”
Look around and you will see similar cautionary passages in other reporting. “The headline decline overstates weakness because a lot of that was tariff-induced pull-forward,” economist Shannon Grein told the Wall Street Journal. “Overall, I think that it was a relatively solid underlying report when it comes to demand.” Reuters concluded: “The [GDP report] grossly exaggerated the economy’s fading prospects. Though consumer spending slowed considerably from the fourth quarter, the pace of growth remained healthy. Businesses also boosted investment in equipment, mostly information processing and transportation.”
So what does that mean? It means Trump did not crash the economy. Now, we should always note that we don’t know what will happen in the future. The economy might indeed crash, or it might boom. The point is, on the basis of the GDP report released April 30, 2025, Trump did not crash the economy.
It is obviously in the interest of Democrats and their allies in the media and activist world to push the notion that Trump crashed the economy. You’ll see lots of stories and commentaries to that effect. But take a careful look at things before you believe it.