Recession Odds Spike, Wall Street Tumbles As Q1 GDP Surprisingly Contracts: 'Be Patient,' Trump Responds

Wall Street is set for a volatile Wednesday after first-quarter GDP data showed an unexpected economic contraction, stoking fears that a recession may already be underway.

The U.S. economy shrank by 0.3% on an annualized basis last quarter, down from 2.4% growth in the previous quarter and well below the expected 0.4% growth, official advance statistics showed.

The outcome marked the first quarterly contraction since the second quarter of 2022.

In addition, U.S. private employers added 62,000 jobs in April, according to ADP National Employment Report, the lowest since July 2024 and well below predictions of 108,000.

Broad-based equity losses followed during premarket trading in New York as investors digested signs of weakening growth, elevated inflation, and deteriorating trade balances.

Futures on the S&P 500 fell 1.28% to 5,489.61 by 9:00 a.m. ET, shedding 71 points.

Contracts on the Dow Jones Industrial Average declined by 336 points, or 0.8%, to 40,191. The tech-heavy Nasdaq 100 underperformed, plunging 1.9% to 19,184, while the small-cap Russell 2000 index dropped 1.7% to 1,944.

Recession odds for 2025 climbed to 74%, their highest level yet, according to data from CFTC-regulated betting platform Kalshi. Under Kalshi’s terms, a $100 bet on a recession now yields $131 if the U.S. sees two consecutive quarters of negative GDP growth.

Economists Divided On US Economic Performance

David Russell, global head of market strategy at TradeStation, noted the growing stagflation risk: "Today's data shows more stagflation, with the economy shrinking and prices rising more than expected. Trade was a huge drag as imports jumped ahead of tariffs. Combined with the weak ADP payrolls growth and yesterday's weak JOLTs data, the numbers increasingly suggest a recession may have begun."

Economist Joseph Brusuelas of RSM US LLP offered a more tempered view: "The trade shock caused a large change in behavior that resulted in that large drag due to a larger trade deficit. However, the economy did not slide into recession in Q1 2025."

He expects a recession more likely by midyear, citing a $140 billion inventory swing that temporarily padded GDP by 2.25 percentage points.

Robin Brooks, a senior fellow at the Brookings Institution, echoed concerns about the unusual nature of the trade dynamics, calling the current environment "a huge natural experiment," with ballooning imports and swelling inventories reflecting a widespread effort to front-run tariffs.

Trump Responds: ‘This Is Biden’s Stock Market, Not Trump’s’

"This is Biden's Stock Market, not Trump's. I didn't take over until January 20th," Trump wrote on social media X, shortly after the GDP release.

Trump denied that his trade policies were responsible for the weak GDP figures, attributing the slowdown to the economic legacy of President Joe Biden.

"This will take a while, has nothing to do with tariffs, only that he left us with bad numbers," Trump posted.

"But when the boom begins, it will be like no other. Be patient!!!"

Top Premarket Gainers In The S&P 500

• Western Digital Corporation (NASDAQ:WDC) up 7.5% to $43.7
• Trane Technologies plc (NYSE:TT) up 6.3% to $375.6
• Seagate Technology Holdings plc (NASDAQ:STX) up 5.9% to $86.4
• Live Nation Entertainment, Inc. (NYSE:LYV) up 5.6% to $139.7
• Humana Inc. (NYSE:HUM) up 5.5% to $273.5

Top Premarket Decliners In The S&P 500

• Super Micro Computer, Inc. (NASDAQ:SMCI) down 19.3% to $29.1
• First Solar, Inc. (NASDAQ:FSLR) down 12.8% to $119.6
• Starbucks Corporation (NASDAQ:SBUX) down 10.0% to $76.4
• Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) down 8.4% to $15.9
• Garmin Ltd. (NYSE:GRMN) down 8.1% to $187.5

By 8:52 a.m. ET, according to Benzinga Pro data, the stocks falling most over the past 30 minutes of premarket trading included:

• AppLovin Corp. (NASDAQ:APP) down 6.2% to $242.0
• Apollo Global Management Inc. (NYSE:APO) down 3.6% to $133.1
• Atlassian Corporation (NASDAQ:TEAM) down 3.5% to $220.8
• Shopify Inc. (NYSE:SHOP) down 3.3% to $95.0
• KKR & Co. Inc. (NYSE:KKR) down 3.0% to $111.0
• Eaton Corp. (NYSE:ETN) down 2.5% to $283.1
• Palantir Technologies Inc. (NYSE:PLTR) down 2.4% to $111.4
• Southern Copper Corporation (NYSE:SCCO) down 2.2% to $87.5
• Freeport-McMoRan Inc. (NYSE:FCX) down 2.1% to $34.5
• Caterpillar Inc. (NYSE:CAT) down 2.1% to $312.0

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