Stocks slide as GDP falls amid import surge ahead of Trump tariffs; Dow drops on economic uncertainty

The U.S. economy contracted 0.3% in the first quarter of 2025, the first negative reading since 2022, according to an initial measurement released Wednesday by the Commerce Department.

The U.S. economy contracted 0.3% in the first quarter of 2025, the first negative reading since 2022, according to an initial measurement released Wednesday by the Commerce Department.

The decline in gross domestic product was fueled by a massive surge in imports, while other parts of the U.S. economy showed signs of slowing. Consumer spending climbed 1.8%, the weakest pace since mid-2023. The report also showed inflation remained firm.

Markets tanked in response. The broad S&P 500 declined as much as 1.6%, while the tech-heavy Nasdaq fell 2%. The Dow Jones Industrial Average lost nearly 600 points, or about 1.6%. Government bond yields climbed, suggesting weaker demand for U.S. debt.

The GDP figures cover just the first three months of the year, and other data in the report shows business investment remained firm. Economists were expecting the GDP to have grown 0.4% for the first three months of 2025, compared with an increase of 2.4% in the fourth quarter of 2024.

The report is among the last data points to capture a snapshot of the U.S. economy before President Donald Trump's "Liberation Day" tariffs announcement sent shock waves around the world. More recent data has begun to capture some of that fallout. Earlier Wednesday, payroll processor ADP reported just 62,000 new roles added in April — well below both estimates.