Key trends in charts: How the US is performing under Trump
Less than three months into his second term, Donald Trump has sparked global policy uncertainty. The US itself is at risk of a recession, but a stronger-than-expected jobs report in April has led to a slightly positive outlook. Mint takes a closer look.
The early months of US President Donald Trump's second term have already led to global chaos, particularly because of reciprocal tariffs. While US GDP contracted in the first quarter, a recession may still be a few months away. Nevertheless, Trump's approval ratings have taken a hit, bond yields and uncertainty have surged, and the economic outlook has dampened. A stronger US jobs report brought some optimism, but there are questions about whether it will last.
US GDP contracts
The impact of Trump’s policies, especially his flip-flops on reciprocal tariffs, is yet to fully kick in. However, the US economy already suffered a setback in the first quarter of the year. GDP contracted 0.3% in January-March, the first such decline since the first quarter of 2022. Since the contraction was mainly on account of a surge in imports in the run-up to the reciprocal tariffs announcement, Q2 may see a rebound, pushing a potential recession to later in the year.
Import frenzy
Nevertheless, fears of reciprocal tariffs led to a sharp surge in imports in the first quarter as companies and consumers rushed to buy foreign goods. Imports soared 41.3% from the preceding quarter, which pulled GDP growth into negative territory. Since imports are subtracted from the GDP calculation, their impact is usually negative, but Q1 saw a sharper negative contraction. According to the US Bureau of Economic Analysis, the contribution of imports was -5.0 percentage points in the first quarter as opposed to +0.27 in Q4 2024 and -0.82 in the same quarter last year.
Also read | Nouriel Roubini: US economic tailwinds will help it overcome tariff headwinds
Trump's popularity falls
44%: That’s the percentage of Americans who approved of the way Donald Trump handled his job as president in April, down from 47% at the start of his second term in January, according to the presidential approval ratings poll conducted by Gallup. Other presidents who served a second term had a higher approval rating in the same month of their first year. Barack Obama had a 49% approval rating in April 2013, George W. Bush had a 49% rating in April 2005, and Bill Clinton had a 54% rating in April 1997.
Safe haven no more?
While stock markets around the world crashed after the reciprocal tariff announcement and have since recovered to some extent, movement in US bond yields made investors especially nervous. Bond selling accelerated after the tariffs came into effect, pushing government borrowing costs higher.
The benchmark 10-year bond yield jumped sharply and was as high as 4.48% on 11 April before seeing a partial correction. The surge in bond yields, along with a declining dollar index and rising gold prices, has raised questions over the US's safe-haven status.
Negativity on the rise
It's not just investors – US citizens in general are more concerned about the country's economic prospects. According to a survey conducted by the Pew Research Center from 7-13 April, 45% of Americans believe the US's economic situation will worsen over the coming year, up from 37% in February. While Republicans remain more optimistic, negative outlook is on the rise, with 15% of Republicans/Republican-leaning respondents expecting a worse economic outlook in April, up from just 9% in February.
Also read: Apple's US tariff-led $900 million pain is India's gain
Labour market resilient
177,000: That's the number of non-farm jobs the US labour market added in April, exceeding the Dow Jones estimate of 133,000 and bringing some cheer amid the gloom. As a result, the unemployment rate held steady at 4.2% during the month, remaining near historic lows. While strong jobs data has brought some optimism, economists warn that trade and tariff uncertainties could still take a toll on the economy and lead to a weaker job market as companies adjust their hiring plans in response to trade tensions.
Uncertainty dominates
Uncertainty has become a dominant theme in economic reporting during Trump's second term. Analysis by Policyuncertainty.com reveals a dramatic surge in its US Economic Policy Uncertainty Index, which analyses policy-related economic uncertainty based on the number of news articles across a set of newspapers that contain words related to economic uncertainty. Since Trump took office on 20 January, the index has jumped from 193 to 786. It scaled a recent new peak of 975 on 5 April.
Impact on India
Several countries are expected to feel the impact of the US's policies. International agencies have cut India’s GDP growth projections for 2025-26 at least once since January. India’s growth relies heavily on the information technology (IT) sector and exports to the US. A historical analysis of GDP growth in the US and India shows similar economic momentum, which suggests India is not completely insulated from US economic trends.
Also read: Advocates of free trade should articulate an alternative to US tariffs
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