GDP drop fuels volatile stock market as voters fear recession

Yahoo

01-05-2025

(NewsNation) — The Dow Jones Industrial Average plunged significantly before rallying Wednesday after news broke that the economy contracted by 0.3% in the first quarter of 2025.
The drop, a first in three years, came as an exclusive NewsNation/Decision Desk HQ poll found that a large majority of U.S. voters, 82%, are worried about a potential recession under the Trump administration.
If that were to happen, prices at the pump and grocery store could become unpredictable.
Trump calls himself a 'great unifier'
Demand usually slows during economic downturns, which could mean lower prices. The bigger problem is having enough money to pay for them.
'The biggest challenge for Americans is, because corporations are concerned, the odds are most people won't get a pay raise that will keep up with inflation,' said Ted Jenkin, partner at Exit Wealth.
A wide margin of poll respondents, 91%, said they are concerned about inflation — and 59% said it is the biggest problem for the nation.
Dave Portnoy rips Trump on stocks: 'This is his market'
Ellen Zentner, chief economic strategist for Morgan Stanley, told the Associated Press that President Donald Trump's sweeping tariffs are playing a significant role in the shrinking GDP.
'Even if today's weak GDP may have partially reflected companies trying to get ahead of tariffs, it was still a stagflation warning shot over the bow of the economy,' Zentner said.
Much of Wednesday's economic data raised concerns about a weakening economy. A report on the job market from ADP suggested employers outside the government may have hired far fewer workers in April than economists expected — less than half.
Tariff deals with India, Japan, South Korea in the works: Trump
Along with daily expenses, retirement and long-term saving plans are sensitive to volatile swings in the stock market.
Short-term losses are common in downturns, but financial advisers generally urge those who don't plan on retiring in the next few years to remain calm.
During a NewsNation town hall Wednesday, Trump said the United States is in a transition period — and that Americans should hold tight.
'I think you're going to see tremendous economic victories over the next period of a year, like far greater than ever imagined … It will happen much faster than people understand,' Trump told Chris Cuomo.
NewsNation's Anna Kutz and the Associated Press contributed.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.