White House Downplays Economic Turmoil as GDP Shrinks

The White House is attributing the reduced pace of economic expansion to the Biden administration even as it promotes an optimistic view of the economy.

For the first time in three years, the U.S. economy experienced a slowdown, as indicated by the Bureau of Economic Analysis' report showing a 0.3% decrease in GDP during the initial quarter of this year. This downturn was linked to an increase in imports prior to the introduction of new tariffs. Additionally, consumer expenditure saw a reduction.

"That’s Biden, not Trump, since we entered in January, these are quarterly figures, and when we arrived, I strongly opposed all his economic policies which were ruining our nation in numerous aspects," Trump stated. Later, he added separately, "I believe you must allow us some time to recover, but this is indicative of the Biden administration’s economy," according to Trump.

The Trump administration chose to highlight favorable economic signs such as investments totaling approximately $8 trillion linked to their tariff policies, along with strong GDP growth of 3%, viewing these factors as evidence of ongoing progress.

"The private sector began to significantly accelerate following the elections. Even though I didn’t witness this firsthand, everyone understood our plans and objectives. This led to impressive growth within the private sector. Notably, gross domestic investment surged by an unprecedented 22%, something not previously observed. Each fresh investment, each newly established factory, and every additional job created serves as evidence of the resilience and potential of the U.S. economy, signaling faith in America’s upcoming trajectory," according to Trump.

Even though the administration asserts a stance of optimism as Trump marks the initial 100 days of his second term, he has encountered declining approval numbers and consumer trust, along with market responses during this period.

Trump argued “tariffs will soon start kicking in.”

"This is Biden's stock market, not Trump's. I didn't assume control until January 20th. Our country will thrive, but first, we must eliminate the Biden 'overhang.' This process will take some time; it has absolutely nothing to do with tariffs. The situation was worsened because he handed us poor figures, but once the growth starts, it will surpass anything seen before. PLEASE HAVE PATIENCE!!!" Trump posted on Truth Social.

Kelly Loeffler, who serves as the Small Business Administrator, contended that Main Street is "flourishing."

"And the amount of loans we have approved has increased by 80% during President Trump's initial 100 days in office compared to the previous administration’s first 100 days. This indicates that small businesses are looking toward the future with plans to hire more staff and expand their operations, showing an increase in confidence. It seems like Main Street and manufacturing are making a comeback; our lending figures for manufacturers are reaching all-time highs," stated Loeffler.

"What I observe is that Americans express their gratitude to me when I am traveling around. They tell me they appreciate President Trump’s belief in them—the American workers, businesses, and industries—and how they could once again have a significant presence. This has led me to witness an incredible amount of optimism," Loeffler stated.

RELATED STORY | U.S. GDP drops 0.3% due to disruptions caused by Trump tariffs

However, some individuals are urging the administration to grant tariff exemptions due to worries regarding the sustainability of small enterprises.

"Small enterprises form the backbone of the U.S. economy; however, due to their narrow profit margins, they are particularly susceptible to increased expenses triggered by the Trump Tariffs. Such companies lack both the fiscal buffer needed to cope with abrupt cost increases and the means to manage rapid alterations within an inherently intricate supply network," stated Senator Ed Markey in a communication addressed to the administration earlier this week.

When questioned regarding the criteria for exemptions, Loeffler referred to this phase as a "fluid process."

"This is an era of negotiations. We anticipate gaining greater clarity shortly, and with this newfound certainty, American businesses will understand the landscape they're operating in, which will ensure a fair and even playing field," Loeffler stated.

Sarah Wells, who owns a small business, mentioned that she is dealing with the impact of tariffs as well as decreasing sales figures, and is currently focusing on reducing costs.

Wells runs Sarah Wells Bags, a company that creates breast pump bags. Although she has worked with a Chinese manufacturer for 13 years, she mentioned that she is "beginning anew with an entirely different supplier."

"I really want to succeed here. However, I'm unable to locate anyone who can handle this task, as even those factories with limited capacity for small batches lack the personnel to accommodate an additional 100 new brands seeking production services. The required infrastructure simply isn't available," Wells explained.

“If I wanted to open my own factory, I would have to have an SBA loan to do that. Where is the SBA disaster loan for the tariff trade situation? It doesn't exist. There's no resources. There's no training,” she added

When asked about possible assistance for small enterprises, Loeffler stated that they are developing various resources, such as increased borrowing options, measures concerning capital accessibility, and support for supply chains.

"We will also offer certain tools to help them tap into a domestic supply chain and guarantee that they can move their suppliers closer, ensuring they understand what’s available locally. We’ll delve deeper into this topic in the following days, but rest assured, we are examining all potential avenues to make sure we provide resources promptly, enabling us to relocate the supply chain back onto our shores," stated Loeffler.

However, ambiguity persists regarding tariffs since the administration has enacted a blanket 10% tariff, industry-specific duties, and is also striving to secure reciprocal tariffs with various nations.

"I believe there are likely two key areas to watch. First, will there be further announcements regarding the progress or possible outcomes from the current negotiations involving multiple nations under reciprocal tariff agreements? This could provide insight into expectations for the next 90 days. Will we maintain the status quo as discussions proceed, or might there be significant updates?" explained Greta Peisch, a partner at Wiley Rein and formerly the general counsel at USTR during the Biden administration.

Regarding the tariffs imposed on Chinese goods, since there hasn’t been much progress in negotiations, the key issue arises when these significant duties begin to take effect. These higher costs have a substantial impact on importers, leading them to wonder whether this might necessitate additional exemptions or alternative strategies to mitigate the effects. Therefore, I believe examining these areas could help us understand what steps may follow next.

To what degree can the most recent economic figures be ascribed to tariffs?

"I believe the brief response is that we lack knowledge, and even regarding its connection to the tariff actions, we remain unclear about what portion can be attributed directly to the tariffs versus the uncertainty and alterations brought forth by the evolving policies," stated Peisch.

A few people saw the recent economic growth statistics as an alarming indicator.

The economy contracted during the initial quarter of this year, even without factoring in the recent tariff declarations," stated Lindsey Owens, who serves as the executive director of Groundwork Collaborative—a research organization advocating for shifts in economic strategy—and previously served as an adviser to Senator Elizabeth Warren. "The data from the first quarter do not encompass the impacts of the April Liberation Day tariff measures and the subsequent turmoil and further weakening of the economy they triggered." She added with concern, "I've had concerns regarding a potential downturn for quite a while now; however, these latest figures make me twice as anxious. The repercussions on American households could potentially be severe should we indeed face a recession.

RELATED STORY | The Senate was unable to approve the measure overturning President Trump's tariffs.

A top White House advisor on trade, Peter Navarro, rejected the idea of an imminent economic downturn.

The notion that a recession is imminent should be largely dismissed. Considering the impact of upcoming tax reductions and the fundamental resilience of our economy, I believe everything will turn out fine," Navarro stated, referring to today’s figures as a "single occurrence" due to increased imports ahead of tariff implementation.

At the same time, an important inflation metric for the Federal Reserve indicated that personal consumption expenditures increased by 2.3% compared to the previous year, marking a deceleration from the prior month’s figures.

"The past four years have been extremely challenging for Americans, and we are working diligently to address these issues. I am quite certain that President Trump will succeed in reversing them. Many individuals have found the American Dream to be entirely out of reach financially. Over the last four years, purchasing homes has become increasingly difficult. Consequently, we are taking aggressive steps to ensure that citizens can once more obtain affordable housing and return to homeownership in this nation," stated William Pulte, who leads the U.S. Federal Housing Finance Agency.

Pulte stated that he wasn't worried about how tariffs might affect home prices.

I'm actually not too worried about housing costs being affected by tariffs. In my view, the President has everything well managed, and from what little evidence I have observed, housing doesn’t seem to be significantly influenced by these tariffs at all," explained Pultle. "The current priority should instead be tackling inflation; the President is actively working on this issue. Additionally, we’ve noticed that mortgage rates have started decreasing, which was necessary. Mortgage rates had escalated uncontrollably within our nation and needed to decline rather than continue climbing.

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