U.S. Economy Shrinks in First Quarter: Here’s How Families Should Respond

by Zachary Mettler | April 30, 2025 | Family

The U.S. economy contracted in the first quarter of 2025, increasing worries about a potential recession.

On Wednesday, the Bureau of Economic Analysis released its advance estimate for first quarter Gross Domestic Product (GDP). The bureau found that real GDP – the inflation adjusted value of all goods and services produced in the U.S. – decreased at an annual rate of 0.3%.

A recession is typically defined as two consecutive quarters of declining GDP.

Photo Credit: The Wall Street Journal

However, just as a book shouldn’t be judged by its cover, the BEA’s economic report shouldn’t be judged by its headline number.

Dig deeper, and the report is much rosier than it appears at first glance.

The BEA said the decrease in real GDP “primarily reflected an increase in imports” and “a decrease in government spending” which were “partly offset by increases in investment, consumer spending, and exports.”

In other words, the decline in GDP came primarily from an increase in imports, as companies anticipated and tried to get ahead of the president’s increase in tariffs, and a reduction in government spending, thanks to the efforts of the Department of Government Efficiency (DOGE). Net exports – the difference between what the U.S. imports and exports – reduced the headline GDP number by nearly 5%.

Consumer spending – a more accurate reflection of the health of the American worker – still rose at a modest 1.8% pace.

“The headline decline overstates weakness because a lot of that was tariff-induced pull-forward,” Shannon Grein, an economist at Wells Fargo, concluded. “Overall, I think that it was a relatively solid underlying report when it comes to demand.”

Likewise, E.J. Antoni, a research fellow at The Heritage Foundation, concluded:

Q1 GDP declines 0.3% SAAR as massive front running of tariffs caused imports to explode 41.3%, dragging GDP down by -5.03pp; gov't declined 1.4% in 1st drop since '22; meanwhile, investment exploded 21.9% higher – despite the headline number, this is a surprisingly good report: pic.twitter.com/JTSAi7ZsfI
— E.J. Antoni, Ph.D. (@RealEJAntoni) April 30, 2025

“[The GDP report] grossly exaggerated the economy’s dimming prospects,” Reuters agrees. “Though consumer spending slowed considerably, the pace of growth remained healthy. Businesses also boosted investment in equipment.”

Nevertheless, with stock market indices remaining in correction territory and ongoing uncertainty over the economic impact of newly imposed tariffs, families may still face considerable financial uncertainty in the coming months.

The Daily Citizen spoke with Geremy Keeton, Licensed Marriage and Family Therapist and Senior Director of Counseling at Focus on the Family, about how couples should respond.

“Financial coordination and problem-solving as a married couple never happen with passivity,” he said, “There needs to be intentionality and planning; it’s a skill, and sometimes couples need to get creative about how to draw upon each of their unique strengths in navigating a joint and structured plan.”

Keeton added,

We don’t always learn from our families-of-origin how to handle our finances wisely. So, it’s also good to get outside advice so you can grow in financial competency.

Most importantly, it’s key to realize that finances are often a symptom [or outgrowth] of couple communication, power dynamics, emotional engagement and even spiritual commitments in the relationship.

Working to define – and document – shared value commitments and investing in healthy emotional intimacy can both undergird good financial planning and wise stewardship of shared resources.

If you’re struggling financially or need help handling money, please utilize our available articles and resources below.

To speak with a family help specialist or request resources, please call us at 1-800-A-FAMILY (232-6459).

Focus on the Family offers a one-time complimentary consultation with our ministry’s professionally trained counseling staff. The consultation is free due to generous donor support.

To reach Focus on the Family’s counseling service by phone, call 1-855-771-HELP (4357) weekdays 6:00 a.m. to 8:00 p.m. (Mountain Time). Please be prepared to leave your contact information for a counselor to return a call to you as soon as possible. Alternatively, you can fill out our Counseling Consultation Request Form.

Related articles and resources:

Counseling Consultation & Referrals

Healthy Budgeting Habits for Your Marriage

When Your Money and Marriage Clash

Getting on the Same Page Financially in Marriage

Equipping Your Kids to Handle Money

Cash Clash: How to Talk About Budgeting

How Can My Spouse and I Get Out of Debt?

How to End Conflicts With Money in Your Marriage

Money and Marriage: Is It His, Hers, or Ours?

Marriage and Money: What Does God Expect?

Focus on the Family: Money & Finances