First Quarter GDP Adjusted Downward as Voters Worry About the Economy

U.S. Economy Shows Unexpected Weakness

The U.S. economy isn’t doing as well as initially believed, based on a report released by the U.S. Bureau of Economic Analysis on Thursday.

Real GDP grew by only 1.6% in the first quarter of the year, a drop from the previously reported 2%. This 0.4 percentage point drop reflects a reduction in both investment and consumer spending.

Accompanying this downturn is a rising worry among Americans about the economy’s future.

Gallup’s Economic Confidence Index (ECI) for May fell to -45, marking a seven-point decline from April and the lowest level since October 2022.

Only 16% of Americans describe the state of the economy as “excellent or good,” while nearly half, at 49%, see it as poor. A significant 76% of U.S. adults think economic conditions are getting worse, which is the highest level of concern since May 2023.

Concerns are widespread, as evidenced by Republicans experiencing a drop in their Economic Confidence Index score to +22, the lowest during Donald Trump’s second term, and down 33 points since February. Meanwhile, the scores for Democrats (-80) and Independents (-58) have also hit their lowest since Trump returned to office.

Many Americans are increasingly naming inflation and the high cost of living as major issues. In May, 15% identified these as the most pressing concern, up from just 8% in February. Inflation now ranks as the second most significant problem, trailing behind government issues at 26%.

Concerns over gas prices have also increased, with 4% mentioning it as the most important issue facing the nation.

Food and energy costs are rising due to the ongoing Iran war. The Consumer Price Index for All Urban Consumers (CPI-U) went up by 0.6% in April following a 0.9% increase in March, according to the U.S. Bureau of Labor Statistics. The overall index surged 3.8% for the 12 months ending in April before seasonal adjustments.

Gallup noted that economic outlook has grown noticeably bleaker compared to the beginning of the year and seems to be returning to the lows seen in 2022.

In contrast, Trump portrayed a more positive view of the economy during a Cabinet meeting on Wednesday, highlighting his administration’s tax cuts, stock market achievements, and 401K growth.

“We passed the largest tax cuts in American history,” Trump stated.

He also mentioned that the average family received tax refunds nearly amounting to $5,000.

Trump cited 68 all-time record highs in the stock market since the election and claimed that the average 401K has risen by $30,000 since he took office.