The US economy is experiencing a contraction in GDP, with a decline of 0.3% in the first quarter of the year, which is a significant drop from the previous quarter's 2.4% growth. This economic downturn coincides with President Trump's implementation of tariffs, creating uncertainty and volatility in markets and impacting consumer spending and government expenditure. Although the labor market remains strong, consumer behavior indicates caution as they adjust their spending in anticipation of potential economic fallout from the trade policies. Historically, two consecutive quarters of GDP contraction are needed to officially declare a recession, but the current economic indicators and public sentiment suggest recessionary pressures are building. The future economic outlook heavily depends on the duration and impact of the tariffs, particularly those on China, and whether these policies will be adjusted to mitigate potential long-term damage.

The US economy's GDP contracted by 0.3% in the first quarter, marking the first decline in three years and signaling potential economic distress amid ongoing trade tensions.

President Trump's tariffs on major trading partners, including Canada and Mexico, have contributed to market volatility, affecting consumer confidence and spending, which fell to 1.8% from 4% in the previous quarter.

Inflation has risen to 3.6% from 2.4% in the previous quarter, while government spending contracted by 5%, both of which contribute to the economic unease under the current administration.

The economy's contraction follows a period of high growth in 2021, with GDP reaching nearly 7% and unemployment at historic lows, but the current slowdown reflects a shift in consumer behavior and spending priorities.

Recession fears are heightened by the public's negative perception of economic conditions, with the potential for a recession becoming more likely if the tariffs remain in place and continue to disrupt trade and economic stability.

The official criteria for a recession involve two consecutive quarters of GDP decline, but the current economic climate is fraught with uncertainty, driven largely by trade policies and their impact on business and consumer sentiment.

The economic challenges faced today contrast with the overheated economy of 2022, as consumers are now more cautious, having exhausted pandemic savings and adjusting spending habits in response to looming trade-related uncertainties.