U.S. Economy Shrank 0.5% Between January and March, Worse Than Earlier Estimates Revealed
The U.S. economy shrank at a 0.5% annual pace from January through March as President Donald Trump’s trade wars disrupted business, the Commerce Department reported Thursday in an unexpected downgrade from its previous estimate.
First-quarter growth sank under a surge of imports as companies in the United States rushed to bring in foreign goods before Trump could impose tariffs on them. The Commerce Department previously estimated that the economy fell 0.2% in the first quarter. Economists had forecast no change in the department’s third and final estimate.
The January-March drop in gross domestic product — the nation’s output of goods and services — reversed a 2.4% increase in the last three months of 2024 and marked the first time in three years that the economy contracted. Imports expanded 37.9%, fastest since 2020, and pushed GDP down by nearly 4.7 percentage points.
Consumer spending also slowed sharply, expanding just.0.5%, down from a robust 4% in fourth-quarter 2024 and sharp downgrade from the Commerce Department’s previous estimate.
A category within the GDP data that measures the economy’s underlying strength rose at a 1.9% annual rate from January through March, down from 2.9% in the fourth quarter of 2024. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
And federal government spending fell at a 4.6% annual pace, the biggest drop since 2022.
Source : APNEWS
