U.S. economy contracted by slightly less than expected in first quarter

Published 29/05/2025, 13:38
© Reuters

Investing.com - The U.S. economy contracted by slightly less than initially reported in the first quarter, but the uncertainty surrounding the volatile U.S. trade policies during the opening months of President Donald Trump’s second term in the White House continued to hinder economic activity.

U.S. gross domestic product, an indicator of growth in the world’s biggest economy, contracted by 0.2% during the January to March period, according to the second estimate from the Commerce Department’s Bureau of Economic Analysis on Thursday.

The initial estimate had suggested that the U.S. economy contracted by 0.3% in the first quarter, after growing by 2.4% in the fourth quarter.

The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending,the BEA said. These movements were partly offset by increases in investment, consumer spending, and exports.

The preliminary release “is widely understood to have understated U.S. economic growth,” said analysts at S&P Global Market Intelligence, “but it is clear the economy has weakened while price pressures have risen.”

“The flash PMI data have set the scene nicely, though there is not much to celebrate here. The good news from the early U.S. PMI for May was that growth and business confidence pulled up from lows recorded in April. However, that is where the good news ended. While up on April, both gauges remained subdued by recent standards, pointing to annualized U.S. GDP growth of just 1% so far in the second quarter, well below trend.”

 

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