Trump points finger at Biden as US stocks sink amid recession fears
Donald Trump has lashed out at Joe Biden, insisting that his presidential predecessor was to blame after the US economy suffered its worst-performing quarter in three years.
A slew of disappointing economic data sent US stocks sharply south on Wednesday as the clearest signs yet of the damage wreaked by the White House tariff agenda renewed recession fears.
GDP data, which reflected economic activity ahead of Trump’s ‘Liberation Day’ tariffs and the imposition of 145 per cent rates on Chinese imports, revealed a 0.3 per cent fall in growth in the first three months of 2025, while private sector employment increased by just 62,000 in April, well short of analyst expectations of 115,000.
But Trump was quick to dodge responsibility for the paltry performance, claiming in a fiery Truth Social post that it “had nothing to do with tariffs,” adding: “This is Biden’s Stock Market, not Trump’s.”
“Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers,” he wrote.
“Our country will boom, but we have to get rid of the Biden “Overhang”. This will take a while.”
While analysts had braced for a slowdown, the negative figure caught markets by surprise, triggering a slump in stock prices on Trump’s 101st day in office.
The S&P 500 fell 1.3 per cent, while the Nasdaq is down 1.8 per cent, after both had managed a positive run of performance in the second half of April.
Weakening expectations for growth also spread to the UK, risking a break in the FTSE 100’s three-week long spree of positive returns after the market closed flat.
Economists had forecast a modest increase in US GDP growth of 0.2 per cent, down from 2.4 per cent growth in the last quarter of 2024, thanks to the drag from increased tariffs.
The decline in growth came largely from a significant jump in imports, as businesses rushed to build up inventories ahead of the tariffs kicking in.
Imports of goods and services surged by 41 per cent while exports rose just 1.8 per cent, stripping 4.8 percentage points from headline growth in the largest drag on record.
“Companies got ahead of possible tariffs by building inventories just as they are now likely getting ahead of a possible policy-driven recession by reducing hiring and investment,” said Peter Graf, CIO at Nikko Asset Management Americas.
Personal consumption expenditures rose by 1.8 per cent, and although this was ahead of expectations of a 1.2 per cent gain, it marked the smallest rise since the second quarter of 2023.
“Recent shifts in US trade policy have dramatically increased the probability of a recession, so it seems very likely that this slowdown will be amplified in the coming months,” added Richard Flynn, Managing Director at Charles Schwab UK.
“At this point, it’s difficult to imagine how a recession could be prevented, aside from substantial further backpedalling on tariff policy.”
Peel Hunt forecasts now put the chance of a US recession at 35 per cent, while JP Morgan has put the figure at 60 per cent.
Markets are now expecting the US Federal Reserve to cut interest rates by one per cent throughout 2025 to stimulate economic growth, compared to 0.79 per cent this time last week.
But inflation continues to be an issue for the central bank, with figures today coming in higher than expected, even before the price penalty of tariffs have begun.