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14h ago

U.S. Economy Contracts 0.2% in First Quarter on Import Surge

Final GDP figures due in late June will help policymakers gauge the impact of tariffs on growth.

FILE - The per-gallon price is illuminated on the pump at a Costco warehouse gasoline station Tuesday, April 1, 2025, in Thornton, Colo. (AP Photo/David Zalubowski, File)
Pedestrians walk past a retail space at 715-717 Fifth Avenue in New York City, U.S., May 27, 2025. REUTERS/Jeenah Moon/File Photo
FILE - People pack their supplies into their vehicles at Costco Wholesale store in Burbank, Calif., on Thursday, April 10, 2025. (AP Photo/Damian Dovarganes, File)
Shoppers hold bags while waiting to cross Post Street in San Francisco on March 27.

Overview

  • The Bureau of Economic Analysis reported that U.S. GDP fell at a 0.2% annualized rate in Q1 2025, upwardly revising the initial estimate of a 0.3% decline.
  • Imports surged 42.6% as companies frontloaded goods ahead of new tariffs, slicing more than five percentage points off GDP growth.
  • Consumer spending decelerated sharply in the quarter, contributing further to the overall contraction.
  • Inflation climbed 2.3% year-over-year, prompting the Federal Reserve to maintain elevated interest rates despite softening growth.
  • The drop reversed a 2.4% gain in the fourth quarter of 2024, breaking a three-quarter expansion run.