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3d ago

U.S. GDP Drops 0.5% in Q1 on Import-Driven Trade Drag

Policymakers are pausing rate moves as they await clarity on how the import surge will affect the economy.

Shipping containers are stacked on container ships at the Port of Los Angeles on June 25, 2025 in Los Angeles, California.
Shoppers push their carts amid displays of goods in a Costco warehouse Wednesday, May 21, 2025, in Lone Tree, Colo.
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)

Overview

  • Imports jumped 37.9%, the fastest pace since 2020, subtracting nearly 4.7 percentage points from first-quarter growth as firms front-loaded ahead of tariffs.
  • Consumer spending slowed to just 0.5% in Q1, down sharply from 4% in the prior quarter amid rising tariff uncertainty.
  • Federal government outlays fell at a 4.6% annual rate—the steepest decline since 2022—further weighing on GDP.
  • The U.S. merchandise-trade deficit widened to $96.6 billion in May after exports fell about 5% and imports held steady, signaling diminished net-export support for Q2.
  • Economists surveyed by FactSet expect roughly 3% growth in the April–June quarter, while the Federal Reserve holds off on rate cuts pending clearer data on trade impacts.