The U.S. economy shrank during the first three months of 2025, marking the first contraction in three years as businesses scrambled to front-load imports ahead of new tariffs announced by President Donald Trump.

The unexpected drop in gross domestic product (GDP), down 0.3% on an annualized basis, comes just months into Trump’s second term, deepening anxiety over his trade policies and triggering fresh market jitters.

On Wednesday, the Commerce Department reported that GDP, the broadest measure of economic activity, declined for the first time since the first quarter of 2022. Analysts had expected growth of 0.4%, especially after a stronger-than-anticipated 2.4% expansion in Q4 of 2024. But an unforeseen 41.3% surge in imports, the biggest quarterly increase outside the COVID-19 era since 1974, dragged GDP sharply into negative territory, subtracting over five percentage points from the headline number.

While trade swings are notoriously volatile and often reversed in subsequent quarters, the data sent alarm bells ringing across Wall Street. Stock futures dipped, and Treasury yields climbed following the release. The surprise contraction also landed a blow politically, just as Trump prepares for further trade battles.

Trump Blames Biden for Contraction — and Signals More to Come

During a Cabinet meeting hours after the report was released, Trump quickly distanced himself from the economic setback, pinning the blame on his predecessor, Joe Biden.

“This is Biden,” Trump declared. “And you could even say the next quarter is sort of Biden because it doesn’t just happen on a daily or an hourly basis.”

Trump pointed to the timing of his inauguration, insisting that the economy was still running on Biden-era momentum when the negative numbers were being generated.

“We took, all of us, together, we came in on January 20th,” he said. “The stock market in this case says how bad the situation we inherited.”

The remarks followed a post on Truth Social in which Trump tried to reframe the downturn as a symptom of Democratic mismanagement.

“This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th,” he wrote. “Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden ‘Overhang.’”

Trump added: “This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!”

However, the Commerce Department’s own breakdown contradicts Trump’s claims. The data point directly to the economic impact of his own policy — specifically, a tariff plan unveiled early in April. The announcement led importers to rush in foreign goods to avoid higher duties, bloating the trade deficit and dragging GDP down.

Tariffs and Trade Shock Shape the Quarter

Imports of goods surged nearly 51%, as businesses rushed to beat the start of 10% across-the-board tariffs Trump introduced on U.S. trade partners. Though those tariffs were later paused for a 90-day negotiation window, a move yet to yield deals, the early announcement still triggered a scramble in global supply chains. Exports, by comparison, rose only 1.8%.

Consumer spending, which typically powers the U.S. economy, also slowed sharply. Personal consumption expenditures rose 1.8%, down from a 4% increase in the previous quarter. This was the slowest pace of consumer growth since mid-2023, though monthly data from March showed a modest rebound with spending up 0.7%, ahead of expectations.

Private domestic investment, however, offered a rare bright spot. Investment rose 21.9%, largely driven by a 22.5% jump in equipment purchases — likely another front-running response to the anticipated tariffs.

Federal government spending contracted as well, falling 5.1% amid President Trump’s early push for budget tightening through the Department of Government Efficiency led by Elon Musk. The decline shaved about one-third of a percentage point off GDP.

Economists Warn of Deeper Risks

“Maybe some of this negativity is due to a rush to bring in imports before the tariffs go up, but there is simply no way for policy advisors to sugar-coat this. Growth has simply vanished,” said Chris Rupkey, chief economist at Fwdbonds.

Robert Frick, a corporate economist with Navy Federal Credit Union, said the data is concerning, particularly the sluggish consumer spending, but not yet catastrophic.

“The more telling number for the future of the expansion was consumer spending, and it grew, but at a relatively weak pace,” he said. “That’s concerning, but not alarming as it could have been due to bad weather and a spending surge at the end of last year.”

Still, Frick noted, the headline contraction sets a troubling tone for the second quarter, especially if Trump’s tariffs stay in place beyond the 90-day suspension.

Inflation Complicates Fed Outlook

The economic report also poses a dilemma for the Federal Reserve ahead of next week’s policy meeting. The GDP data would typically bolster arguments for cutting interest rates to stimulate growth, but inflation measures surged in Q1, casting doubt on how quickly the Fed can pivot.

The personal consumption expenditures (PCE) price index, the Fed’s preferred gauge, climbed 3.6%, up from 2.4% in the prior quarter. Core PCE, which strips out food and energy, rose 3.5%, suggesting persistent underlying price pressure. A broader inflation measure, the chain-weighted price index, rose 3.7%, far above the 3% forecast.

Later in the day, the Commerce Department noted that March’s PCE price index rose 2.3% annually, while core PCE was in line at 2.6%.

Despite those figures, markets are still betting that the Fed will prioritize growth, pricing in a rate cut at the June meeting and anticipating as many as four cuts by year’s end.

Jobs Report Next Critical Test

While the economy is still adding jobs, with employment costs rising 0.9% last quarter, the slowdown in GDP raises concerns about whether the labor market can continue to defy the broader trend. On Wednesday, payroll processor ADP reported just 62,000 private-sector hires in April, far below the previous months.

The more closely watched nonfarm payrolls report is due Friday and could play a major role in shaping market sentiment and White House messaging.

The contraction puts Trump in a precarious spot: launching aggressive trade measures intended to boost American industry while presiding over a shrinking economy. And while the president is quick to point the finger at Biden, economists are pointing squarely at Trump’s own policies as the immediate cause of the pullback.

Governor Alex Otti of Abia State has approved a new salary structure for health workers across the state’s public health institutions, marking a significant step in his administration’s broader push to overhaul a long-neglected healthcare system.

The new pay regime, known as the Abia State Health Workers Salary Scale (ASHWOSS), will come into effect on May 1, 2025, and is benchmarked against the federal salary structure for healthcare professionals. It applies to doctors, nurses, pharmacists, physiotherapists, optometrists, radiographers, and medical laboratory scientists working in the state’s hospitals and primary health centers.

Announcing the development in a statement on Wednesday in Umuahia, the Abia State Commissioner for Health, Prof. Ogbonnaya Uche, said that the move was aimed at addressing decades of poor remuneration, wage disparities, and the resulting exodus of skilled personnel from the state health system.

“With effect from May 1, 2025, health workers in Abia will begin to receive the same remuneration as their counterparts in federal health institutions,” Uche said. “This brings to an end years of agitation and discontent among medical professionals who have had to work under difficult conditions with inadequate compensation.”

A Broader Plan to Revive Public Health

The introduction of ASHWOSS is part of Governor Otti’s larger campaign to rebuild the state’s crumbling healthcare infrastructure, improve healthcare delivery, and restore public confidence in government-run hospitals.

Since taking office in 2023, Otti has made health sector reform one of his administration’s focal points. One of his earliest actions was to embark on the rehabilitation and equipping of general hospitals and primary health centers across the state — many of which had fallen into disrepair under previous administrations. Several facilities, including the Amachara Specialist Hospital and Aba General Hospital, have undergone significant refurbishment, with others in Umuahia, Arochukwu, and Isuikwuato in various stages of renovation.

In addition to rebuilding physical infrastructure, the Otti administration has prioritized staff welfare and professional development. Health workers in Abia have historically grappled with prolonged salary arrears, poor working conditions, and lack of essential medical tools — factors that contributed to chronic understaffing and patient neglect in government health institutions.

771 Health Workers to Be Recruited Across Disciplines

As part of efforts to fill longstanding vacancies and expand service capacity, the government has approved the recruitment of 771 new health workers into the public health system. According to Uche, the recruitment covers a wide range of professionals including doctors, nurses, pharmacists, physiotherapists, radiographers, and laboratory scientists.

He said the number was based on a recent needs assessment conducted across various hospitals and health agencies.

“Governor Otti has also approved the release of funds for the salaries of the new recruits. The goal is to ensure that no facility is left critically short of personnel,” the commissioner said.

To complement the general workforce expansion, the government is also targeting the recruitment of specialists and consultants in high-demand medical fields where services are either nonexistent or extremely limited. These include laparoscopic and minimally invasive surgery, cardiac and neurosurgery, anesthesiology, transplant and robotic surgery, neonatology, oncology, and interventional radiology.

Other specialties to be considered on a case-by-case basis include nephrology, cardiology, ophthalmology, plastic surgery, orthopedics, and neurology.

To attract and retain these specialists, Uche said the governor has directed the Ministry of Health to negotiate a special emolument package separate from the general salary scale. The aim is to reverse the brain drain that has left many state facilities incapable of handling complex or emergency medical cases.

The approval of ASHWOSS follows the governor’s decision to allocate 15% of the state’s 2025 budget to health, matching the Abuja Declaration target that successive governments have failed to meet. The funds, according to officials, are being channeled into infrastructure, staffing, procurement of equipment, and capacity building.

“This administration is not paying lip service to health reform. We’re tackling the problems from the root — infrastructure, manpower, equipment, and fair wages,” Uche said.

A Legacy of Neglect and a Chance for Renewal

Under previous administrations, especially the immediate past government led by Okezie Ikpeazu, the health sector in Abia State became synonymous with decay. Health workers often went for months without pay, with some owed as much as 12 to 14 months in salary arrears. Strikes became common, while patients had little choice but to turn to private hospitals or travel out of the state for treatment.

Otti has been vocal about his commitment to reverse that trajectory. His administration began clearing inherited salary and pension arrears shortly after taking office, and with ASHWOSS now in place, there are growing signs that his promise to prioritize healthcare may be more than just political rhetoric.

He is wrong and flatly lost on the real purpose of education. Going to school with the sole goal of getting a job, and graduating with the same thinking, means the person missed many classes in school. The biggest mistake in the career system is the way some people position the value of education. Yes, some people now see going to university to be synonymous with getting a job!

But if you understand the value of education, education does not mean or equate to jobs. Education is designed to be a system to liberate the minds, and not a system to just get jobs. Jobs are just one of the benefits or features associated with education, because education provides knowledge.

Yes, the real value of education is the liberation of the mind. If we have knowledge, we cannot be ruled by jobs. We cannot fear jobs because we will have the capacity to own our future. If you have the right education, you have victory over jobs. An Igbo proverb says that “ndu ka ihe eji azu ya” [life is bigger than whatever is required to sustain it], and that means we need to seek knowledge over the fixation of jobs. I challenge us to develop skills and capabilities, and jobs, in different forms, will emerge.

And that means even when the jobs come, we must not allow the jobs to boss over us. Largely, there is no job anyone will hold that someone has not “held” or ‘resigned” from. And that means when your job title or your position at work is the first way people relate with you, you have a problem.

Why? The day that title goes, you become miserable because the basis of your existence has gone. But if you stand as a person, you will see that nothing will “expire” in your career because job titles come and go, but you should not. Let us have victory over jobs, and stop the debate that university education is useless with some even burning their certificates in Nigeria (I doubt they do!).

Remember: making an “A” or “C” is not the education; the process of making an “A”, “C” or whatever is the education. If you do not submit to that process, irrespective of whatever grade they assign to you, you will still miss what it means to be educated!

The purpose of education is to provide you with logic tools to think to sanitize your mind. Simply, to reason. We lived in the village and used to fall sick. Then we went to schools and teachers taught why washing hands before eating is desirable. Suddenly, we could go weeks and months without falling sick. What happened? Washing hands takes germs out…

You used to kill twins but someone explains that it is a biological process and over time instead of killing them, you celebrate the arrival of twins. You knew nothing of electronics; someone explains how electrons play to give electricity, you use that to create something. If you are educated, you are provided with LOGIC tools to think.

Note that we have many degree holders who are not educated.