US Economy Contracts in 1st Quarter for First Time Since 2022

The U.S. economy contracted to kick off 2025 as a spike in imports weighed on the country’s growth prospects.

According to the Bureau of Economic Analysis, the economy declined 0.3 percent in the first quarter, down from the 2.4 percent expansion in the previous quarter.

This was the first quarterly contraction since the first quarter of 2022, but it was better than some forecasts signaled.

The widely watched Atlanta Federal Reserve Bank’s GDPNow Model estimate had anticipated a 2.7 percent contraction. However, after adjusting for gold imports and exports, the alternative model forecast suggested a 1.5 percent decline in GDP.

Imports, which are subtracted from the gross domestic product calculations, rocketed 41.3 percent in the first three months of the year as businesses were front-running President Donald Trump’s tariffs.

GDP data indicate that the decline was also a reflection of a decrease in government spending. In the January–March period, government outlays fell by 1.4 percent, with federal spending plummeting by 5.1 percent.

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