US Economy Shrinks Less Than First Estimated

2025-05-29 12:35 By Joana Ferreira 1 min. read

The US economy contracted at an annualized rate of 0.2% in Q1 2025, a slight improvement from the initial estimate of a 0.3% decline, but still marked the first quarterly GDP contraction in three years.

The upward revision was driven by stronger-than-expected fixed investment, which partially offset weaker consumer spending and a larger-than-anticipated drag from trade.

Imports of goods and services soared 42.6% as businesses and consumers rushed to stockpile goods in anticipation of higher prices following a series of tariff announcements by the Trump administration.

Additionally, consumer spending growth slowed to 1.2%, the weakest pace since Q2 2023, while federal government spending dropped 4.6%, the steepest decline since Q1 2022.

In contrast, fixed investment rose by 7.8%, the strongest gain since mid-2023, and exports increased 2.4%.



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