The U.S. economy shrank by an annualized 0.3% in the first quarter of 2025, the Commerce Department said Wednesday, marking the first economic contraction in three years. The decline was attributed mainly to a surge in imports as companies rushed to bring in goods ahead of President Trump’s new tariffs, and to a drop in government spending.
Despite the headline figure, real final sales to private domestic purchasers — which excludes trade and inventory swings — rose 3%, signaling underlying economic strength.
Consumer spending slowed to 1.8%, down from 4% in late 2024, with spending on goods increasing just 0.5%. Harsh winter storms and wildfires in January may have contributed. Business investment rebounded, particularly in equipment purchases, possibly to preempt tariff costs.
The GDP report covers January through March, prior to the full implementation of Trump’s 10% universal tariff and a 145% levy on Chinese goods, which has disrupted trade flows.
Although the White House has since made tariff concessions for autos and electronics, the long-term trajectory for trade policy remains uncertain.
Source:
Discover more from News Facts Network
Subscribe to get the latest posts sent to your email.
