Particle.news

Download on the App Store

U.S. Economy Contracts 0.3% in Q1, Marking First Decline Since 2022

The contraction, driven by a surge in imports and federal spending cuts, coincides with market turbulence and heightened recession fears under Trump’s tariff policies.

Overview

  • The U.S. GDP shrank by 0.3% annualized in Q1 2025, the first quarterly decline in three years, according to the Bureau of Economic Analysis.
  • A 41.3% spike in imports, as businesses stockpiled ahead of new tariffs, was a major factor in the contraction, subtracting over five percentage points from GDP.
  • Federal government spending fell by 5.1%, further contributing to the economic slowdown, while consumer spending grew modestly by 1.8%.
  • Wall Street indices dropped nearly 2% following the GDP report, reflecting investor concerns over trade policies and recession risks.
  • Uncertainty surrounding Trump’s aggressive tariff measures has dampened business and consumer confidence, with analysts warning of potential further economic strain.