Today, the Commerce Department released a new report stating that the U.S. economy contracted by 0.5% from January to March, higher than earlier estimates.
First-quarter growth slowed due to a surge in imports, as U.S. companies hurried to bring in foreign goods before tariffs could be put in place. The Commerce Department had initially estimated a 0.2% decline.
In Q1:
- The GDP declined after a 2.4% rise in late 2024, marking the first contraction in three years.
- Imports surged 37.9%, the fastest since 2020, reducing GDP by 4.7 points.
- Consumer spending slowed sharply to 0.5% from 4%.
- Core economic measures grew at 1.9%, down from 2.9%.
- Federal government spending decreased by 4.6% annually, marking the largest decline since 2022.
Economists expect a rebound to 3% growth in the second quarter. Therefore, it’s unlikely that the first-quarter import surge will happen again in April-June, impacting GDP.
The Commerce Department will release its first estimate of April-June GDP growth on July 30.
By CEO NA Editorial Staff
