WSJ What’s News: U.S. Economy Shrank as Trade Turmoil Began to Hit
Release Date: April 30, 2025
Host: Alex Osola, The Wall Street Journal
The latest episode of WSJ What’s News, hosted by Alex Osola, delves into the pressing economic challenges facing the United States as trade tensions begin to exert significant pressure on the economy. This comprehensive summary captures the key discussions, insights, and conclusions from the episode, providing a clear understanding of the current economic landscape.
1. U.S. GDP Decline Amid Trade Turmoil
The episode opens with Alex Osola reporting that the U.S. economy experienced a contraction in the first quarter of the year, marking the steepest GDP decline since Q1 2022. The Commerce Department revealed that the GDP shrank by 0.3%, primarily due to a surge in imports driven by newly implemented tariffs.
Harriet Tory, WSJ economic correspondent, explains the implications of this decline:
“There was a big surge in imports in the first quarter, and that was a drag on growth. But if you look at the underlying measures of growth in the economy, it wasn't a dramatic weakening in underlying demand.”
(02:05)
Despite the GDP drop, underlying consumer spending, especially on services, remained resilient. However, the tariff-induced increase in import costs overshadowed these positive signs, highlighting the fragile state of the economy.
2. Inflation Trends and Future Outlook
The discussion shifts to inflation, with the Personal Consumption Expenditures (PCE) Price Index rising by 2.3%—a figure slightly above the Federal Reserve's target of 2%. This marks the coolest inflation reading since the previous fall.
Harriet Tory provides her perspective:
“Inflation was very, very weak in March, which is a good thing after so many years of rising prices. But it's unlikely that, given tariffs, that inflation is going to continue to cool as it has in recent months.”
(03:22)
She emphasizes that tariffs are expected to exert upward pressure on prices of imported goods, potentially stalling the cooling trend in inflation. Despite strong consumer spending in March, the pervasive impact of tariffs remains a looming concern for future inflation rates.
3. Slowing Hiring and Its Economic Impact
The conversation then turns to the labor market, highlighting a significant slowdown in hiring as reported by the ADP National Employment Report. In April, the U.S. private sector added 62,000 jobs, a sharp decline from 147,000 jobs in March—far below economists' expectations.
Harriet Tory comments on the potential fallout:
“Weakness in hiring is, of course, very bad for the economy because when people lose their jobs, they lose their incomes, they stop spending and it ripples throughout the economy.”
(04:22)
This hiring slowdown raises concerns about reduced consumer spending and overall economic momentum. The economic community is now closely awaiting the upcoming jobs report scheduled for Friday to gauge the labor market's trajectory.
4. Impact on New Graduates and Hiring Freezes
The episode highlights the adverse effects of the hiring slowdown on recent graduates. Oyen Adedoyan, personal finance reporter, discusses how companies are retracting their hiring projections for college graduates.
“Employers were actually expected to hire more graduates this year. But now employers are saying that they expect to hire the same number of graduates as they did last year.”
(05:18)
This shift is attributed to broader economic uncertainties and hiring freezes, including within the federal government. Graduates are finding fewer entry-level opportunities, complicating their transition into the workforce.
5. Companies Shelving Financial Guidance Amid Uncertainty
A notable trend discussed is the increasing number of companies retracting their financial guidance for the upcoming quarter. Chip Cutter, WSJ reporter, explains that firms like Stellantis, General Motors, JetBlue, Snap, and Volvo are pulling their forecasts due to economic uncertainties.
“They're all fairly worried and uncertain about where the economy goes and what's ahead.”
(07:08)
Chip attributes this hesitancy to the unpredictable nature of the Trump administration's tariff policies and fears of diminished consumer demand. The lack of clear guidance frustrates investors and adds to the market's volatility.
6. Strategies for Navigating Uncertainty
Despite the reluctance to provide forward guidance, some companies are adopting flexible forecasting methods. For instance, United Airlines has presented multiple scenarios to accommodate different economic outcomes.
Carol Tamey, CEO of UPS, comments on the unpredictability:
“The only thing we're certain of is we don't know which, if any, of our scenarios will play out.”
(08:25)
This approach reflects a broader executive sentiment of navigating through unprecedented economic turbulence, signaling a shift towards more adaptive business strategies.
7. Corporate Performance Amid Trade Challenges
In contrast to the broader economic struggles, certain tech giants are reporting robust financial performances. Microsoft announced double-digit revenue growth in its fiscal Q3, driven by a 21% increase in its cloud business.
Similarly, Meta Platforms (Facebook's parent company) exceeded revenue expectations with a 16% growth, alleviating concerns that tariffs would negatively impact its global digital advertising revenue.
8. Regulatory Challenges for Tech Giants
The episode also covers the ongoing legal battles faced by major tech companies. Google CEO Sundar Pichai is actively opposing the Justice Department's measures to dismantle the company's monopoly in online search, including proposals to sell off the Chrome browser and share user data with competitors.
The trial, presided over by U.S. District Judge Amit Mehta, is anticipated to reach a verdict by August. This case underscores the heightened regulatory scrutiny on Big Tech and its implications for market competition.
9. Legal and International Developments
Additional news includes the release of Mohsen Madawi, a Columbia University student detained by the Trump administration for his pro-Palestinian demonstrations. Judge Jeffrey Crawford ordered Madawi's release, highlighting concerns over the administration's treatment of legal residents expressing political views.
On the international front, the U.S. and Ukraine are nearing a deal to grant the U.S. access to Ukrainian mineral resources. Central to this agreement is a bi-national investment fund. President Trump has framed the deal as a mechanism for the U.S. to reclaim military aid invested in Ukraine, though the latest drafts show concessions, such as not requiring Kyiv to repay past military aid.
Conclusion
The episode of WSJ What’s News paints a complex picture of the U.S. economy grappling with trade-induced challenges. From a contracting GDP and cooling inflation to hiring slowdowns and corporate uncertainties, the economic landscape remains fraught with volatility. Meanwhile, tech giants continue to perform well amidst regulatory pressures, and significant legal and international developments add further layers to the unfolding economic narrative.
For a deeper dive into these topics and ongoing updates, listeners are encouraged to stay tuned to WSJ What’s News.
Notable Quotes:
- Harriet Tory (02:05): “There was a big surge in imports in the first quarter, and that was a drag on growth... underlying demand in the economy.”
- Harriet Tory (03:22): “Inflation was very, very weak in March... tariffs are going to raise the cost of imported goods.”
- Harriet Tory (04:22): “Weakness in hiring is, of course, very bad for the economy...”
- Oyen Adedoyan (05:18): “Employers were actually expected to hire more graduates this year...”
- Chip Cutter (07:08): “They're all fairly worried and uncertain about where the economy goes and what's ahead.”
- Chip Cutter (07:45): “Pulling guidance really frustrates investors...”
- Chip Cutter (08:25): “The only thing we're certain of is we don't know which, if any, of our scenarios will play out.”
Produced by Anthony Bansi and Pierre Bienname, with supervising producer Michael Cosmides.