Could the US economy shrink?

Five charts to start your day

The US economy appears to be in trouble. After growing steadily for nearly three years, forecasts now predict a -2.4 percent drop in the first quarter of 2025. This is a sharp reversal from the +2.3 percent growth expected in February.

What's changed? Simply put, Americans aren't spending as much.

This matters because consumer spending drives the US economy. When shoppers become cautious, the entire economic picture darkens.

Another problem is trade. American businesses have been rushing to import goods before new tariffs take effect. The White House has threatened 25 percent duties on Canadian and Mexican imports, causing companies to stockpile merchandise. This has widened the trade deficit, unsettled markets, and made consumers even more hesitant to spend.