“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.4 percent on April 9, up from -2.8 percent on April 3.
The Atlanta Federal Reserve’s GDPNow graph of estimated first quarter economic growth is still the best representation of where US economic growth is headed, I said last week. It has plunged from +3 percent where it was during the Biden administration, to a range from -2 to -3 percent of GDP contraction since March 4, 2025.
Why? Trump’s tariff wars. Here’s the latest headline from MarketWatch on the automobile tariffs, for instance. GM, Ford and Stellantis face extra $5,000 cost for each car made in America, thanks to Trump’s tariff on parts
The Big Three automakers also are dealing with an average tariff cost of nearly $9,000 for each finished vehicle that’s imported, according to a new study by the Center for Automotive Research.
Its key findings were:
- · Increased cost of $107.7 billion to all U.S. Automakers.
- · Increased cost of $41.9 billion to the D3 Automakers.
- · Impact to D3 production volume of 6.8 million vehicles.
Trump has delegated himself emergency powers that really belong to congress to enact his tariffs, when there is no emergency. President Biden’s tariffs were already doing the job of protecting American workers and industries. The manufacturing sector had added 700,000 jobs and were building new factories because of the CHIPs, Infrastructure, and Inflation Reduction Acts during Biden’s administration.
This President is really driving economic growth off a cliff not because of a huge persecution complex (it’s an act), but to enrich himself and his Oligarchs. He maintains the taxes collected from the tariffs will offset more tax cuts, when he has done no research (or chosen to ignore what is available) on the effects of a worldwide tariff war.
Trump’s wrecking ball mentality is even alarming the Oligarchs. Ray Dalio, Founder and Chief Investment Officer of Bridgewater Associates, the world’s largest hedge fund, said recently on CNBC, “We have a breakdown of the monetary order. Such times are very much like the 1930s…I’ve studied history, and this repeats over and over again.”
What did he mean? The US bond and currency markets were collapsing. US Treasury Bond yields soared 0.5 percent in a week, and the US Dollar’s value in relation to other currencies plunged. Foreign investors were losing faith in our economy at a time when Republicans want to add approximately $5.8 trillion to our national debt with their tax cuts, and record debt holdings by foreign investors.
Those foreign investors determine how much that additional debt will cost, or they may not want to buy some of that debt in the form of more US Treasury bonds or Mortgage-backed securities. Former Treasury Secretary Lawrence Summers has said it’s making US look like a third world country.
That’s enough bad news to scare anybody, as even small businesses are now worried. “The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months.” said NFIB Chief Economist Bill Dunkelberg. “Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them.”
Surveys show consumers are now beginning to save rather than spend, also a sign of a possible recession. Their spending behavior has reversed from the past four years under President Biden when we were the world’s fastest growing economy.
MarketWatch cites Primerica, for instance, a firm specializing in life insurance and securities, who conducted a survey in late December of people with household incomes ranging from $30,000 to $130,000, or roughly the middle 60% of Americans.
“Despite increases in income, about 73% of middle-income Americans said they are cutting back on nonessential purchases due to the high cost of living, and 84% are eating at home more frequently.”
That is why Republicans and DOGE are on such a cost-cutting spree. But Elon Musk appeared to dramatically lower DOGE’s savings goal, projecting $150 billion for the year—far short of his earlier trillion-dollar figure at a recent cabinet meeting, said Fortune Magazine. However, questions remain about the savings claimed by the team, with critics pointing to inflated numbers, retracted claims, and a growing list of controversial cuts.
This is why we are hearing horror stories about the cutbacks coming from social security and Medicaid services, with maybe more to come. We are no longer the economy to be envied, if Republicans in their greed destroy the faith and credit of the U.S. government.
Harlan Green © 2025
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
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