Market Commentary Chart Book June 2025

Market Commentary – July 14, 2025

The U.S. economy contracted by 0.5% in Q1 2025, a sharper decline than the earlier estimate of 0.2%, largely due to President Trump’s trade tariffs disrupting business activity. A rush to import goods before tariffs took effect caused imports to surge 37.9%, subtracting nearly 4.7% from GDP. This marks the first economic contraction in three years, following 2.4% growth in Q4 2024. Consumer spending also slowed drastically, growing just 0.5%, compared to 4% in the previous quarter. A key measure of underlying economic strength—which excludes volatile components like exports and government spending—rose only 1.9%, down from 2.9% in Q4. Federal government spending fell 4.6%, its largest drop since 2022. Overall, the data reflects how tariff-driven trade disruptions and consumer anxiety are weighing on U.S. economic activity.