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US economy contracts in Q1, first contraction since 2022, driven by surging imports. ADP jobs data disappoints; core PCE holds at 2.6%, stoking stagflation concerns. Fed seen cutting rates as early as July; markets price in nearly 100 bps of easing for 2025. The Dow Jones Industrial Average (DJIA) plunged more than 200 points or over 0.51% as the economy in the United States (US) contracted for the first time since 2022, fueling fears that the economy could be at risk of a recession under the Trump administration. At the time of writing, the DJIA clings to the 40,300 mark after falling from daily peaks reached at 40,614. DJIA drops 0.51% to 40,300 as Q1 GDP contracts, job growth slows, and traders bet on Fed rate cuts The US Commerce Department revealed that Gross Domestic Product (GDP) for the first quarter of 2025 shrank -0.3%, missing the mark for a 0.3% expansion and a drop from Q4 2024’s 2.4% increase. Digging into the report, the strong surge in imports of over 41% was the main reason for the softer reading. Other data amid a busy US economic docket revealed that companies hired fewer people than expected. The ADP National Employment Change in April missed estimates of 115K, coming at 62K. At the same time, the US Federal Reserve’s (Fed) preferred inflation gauge revealed by the US Bureau of Economic Analysis, the Core Personal Consumption Expenditures (PCE) Price Index, rose by 2.6% as projected, down from the 3% rise in February. After the GDP data, Wall Street’s major indices plunged, though they trimmed some of their losses as another measure of data suggested household spending remains solid. Personal Spending in March increased by 0.7% MoM, up from February’s 0.5% mark. Recently, US President Donald Trump said the “one big beautiful bill”…

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Filed under: News - @ April 30, 2025 8:26 pm