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US economy shrinks in Q1 for first time over 3 years

Laptop with stock charts, dollar bill overlay, smartphone trading screen Photo illustration shows a person monitoring market data on a smartphone and laptop with trading charts, overlaid with a close-up of a U.S. dollar bill, created on May 1, 2025. (Collage by Türkiye Today/Mehmet Akbas)
By Newsroom
May 1, 2025 8:54 AM

The U.S. economy unexpectedly contracted by 0.3% year-on-year in the first quarter of 2025, according to data released Wednesday by the U.S. Bureau of Economic Analysis.

This reignited recession concerns amid President Donald Trump’s continued protectionist trade policies.

This marked the first contraction in the U.S. economy since the first quarter of 2022. By contrast, U.S. gross domestic product (GDP) had expanded by 2.4% year-on-year in the final quarter of 2024 and grew by 2.8% for the entire year.

Graphic showing the growth of annual US GDP by quarter since 2015
Graphic showing quarterly year-on-year U.S. GDP growth since 2015, accessed on May 1, 2025. (AFP Photo)

Growth forecasts had anticipated a 0.2% expansion for the January–March period.

“The decrease in GDP in the first quarter primarily reflected an increase in imports, which are subtracted in the calculation of GDP, and a decline in government spending,” the report said.

Imports surged, consumer demand weakened

While imports rose sharply and consumer spending slowed, the negative impact was partially offset by increases in private investment and exports.

“Compared to the fourth quarter, the downturn in real GDP in the first quarter reflected an upturn in imports, a deceleration in consumer spending, and a downturn in government spending, which were partly offset by upturns in investment and exports,” the bureau added.

The personal consumption expenditures (PCE) price index rose by 3.6% in the first quarter, up from a 2.4% increase recorded in the final quarter of 2024. The core PCE price index, which excludes food and energy prices, climbed by 3.5% over the same period.

Last Updated:  May 1, 2025 8:55 AM