US economy shrank 0.5% between January and March, worse than 2 earlier estimates had revealed
The U.S. economy contracted by 0.5% in the first quarter of 2025, a significant downward revision from the previously estimated 0.2% decline. This marks the first quarterly contraction since early 2022 and reverses the 2.4% growth recorded in the fourth quarter of 2024
Key Factors Contributing to the Contraction:
Surge in Imports: Imports increased by 37.9%, the fastest pace since 2020, as businesses rushed to bring in goods ahead of anticipated tariffs under President Trump's trade policies. This surge subtracted approximately 4.7 percentage points from GDP .
Decline in Consumer Spending: Consumer spending grew at just 0.5%, down from 4% in the previous quarter, reflecting reduced household demand amid economic uncertainty .apnews.com
Government Spending Cuts: Federal government expenditures fell by 4.6%, marking the steepest decline since 2022 .
Despite these challenges, economists anticipate a rebound in the second quarter, with forecasts suggesting a 3% growth rate. The next GDP estimate for Q2 is scheduled for release on July 30 .
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