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U.S. Economy Contracts While Inflation Slows By Michael Maloney

The U.S. economy contracted in the first three months of 2025, as businesses rushed to stock up on imports ahead of the Trump administration's tariffs and consumer spending slowed. Meanwhile, U.S. inflation slowed down in March, going by the Federal Reserve's preferred gauge, showing that price pressures were easing before the steep new tariffs landed in early April. Elsewhere, the Bank of Japan held its benchmark policy rate steady at 0.5% and halved its growth forecast for the Japanese economy as U.S. tariffs begin to bite.

Top News U.S. Economy Shrank Last Quarter as Imports Surged Ahead of Tariffs

The Commerce Department said U.S. gross domestic product fell at a seasonally and inflation adjusted 0.3% annual rate in the first quarter. That was the first contraction since the first quarter of 2022. The main driver of the first-quarter contraction was Trump's trade war. Net exports, the difference between what the U.S. imports and exports, subtracted nearly 5 percentage points from headline GDP. That was the biggest quarterly drag from net exports on record dating back to 1947.

The Rush to Beat Tariffs Is Distorting the Economy. There's More to Come. China-to-U.S. Container Shipments Shrink as Tariffs Bite Fed's Preferred Inflation Gauge Slowed in March

The personal-consumption-expenditures price index rose by 2.3% in the 12 months through March, the Commerce Department said Wednesday, the coolest reading since last fall. Excluding highly variable food and energy prices, core PCE inflation came in at 2.6%.

U.S. Hiring Slows as Employers' Concerns Mount, ADP Data Show

Hiring in the U.S. private sector slowed markedly amid growing policy uncertainty. Just 62,000 jobs were created in April, down from 147,000 in March, according to the ADP National Employment report released Wednesday. Economists polled by The Wall Street Journal had expected hiring to slow less sharply to 120,000 extra positions on the month.

Key Developments Around the World Bank of Japan Keeps Rates on Hold, Slashes Growth Forecast

The Bank of Japan expects the Japanese economy to expand just 0.5% in the fiscal year ending March 2026, a sharply lower forecast than the 1.1% growth predicted in late January, highlighting how President Trump's efforts to rewire U.S. trade are hitting economies around the world. The central bank held its benchmark policy rate steady at 0.5%.

U.S. trade policy could force the Bank of Japan to change its economic outlook again, Gov. Kazuo Ueda said after the central bank halved its growth forecast for the year. "Given a relatively low degree of certainty in our outlook, there's a considerable chance that we have to adjust our forecasts, depending on changes in factors including tariffs, " Ueda said at a news conference. (Dow Jones Newswires) Bank of Canada Officials Viewed an April Rate Cut as 'Premature'

Despite various signs of tariff-fueled economic weakness, some senior Bank of Canada officials believed it would be "premature" to cut rates for an eighth straight time in April due to inflation risks, according to minutes of their deliberations.

Canada GDP Ticks Up After 0.2% Decline in February Financial Regulation GOP Lawmakers Vote to Eliminate Accounting-Firm Watchdog

Republican lawmakers advanced legislation that would eliminate the Public Company Accounting Oversight Board, the independent watchdog for firms that audit publicly traded companies, and move those responsibilities under the SEC.