The US economy contracted for the first time in three years to start 2025 as a surge in imports dragged down GDP and prices increased more than forecast.
The Bureau of Economic Analysis’ advance estimate of first quarter US gross domestic product (GDP) showed economic growth contracted at an annualized rate of 0.3% during the year’s first three months, more than the 0.2% decline expected by economists surveyed by Bloomberg. The reading came in significantly lower than the 2.4% rate of growth seen in the fourth quarter of 2024.
This marked the first quarter of negative GDP growth since the first quarter of 2022.
“While a decline during an expansion is unusual, it’s not unheard of and the economy isn’t in a recession,” Oxford Economics chief US economist Ryan Sweet wrote in a note to clients on Wednesday.
The decline was driven by a large surge in imports, which are a subtraction in the calculation of GDP. Imports surged at an annualized rate of 41.3% in the first quarter as companies front-loaded orders ahead of anticipated tariffs from the Trump administration. The surge in imports was good for a -5% contribution to the GDP calculation in the first quarter.
Final sales of goods to domestic purchasers, another sign of demand in the economy, grew at a 3% annualized rate in the first quarter, above the 2.9% seen in the fourth quarter of 2024.
Trump on the GDP, Thats Biden Not Trump
We’ve been hearing from members of Trump’s cabinet on a range of topics. We’ve heard about plans to improve air traffic controls in the US, issues surrounding veterans affairs, and military updates. One voice we will be looking out for is Scott Bessent, secretary of the treasury.
Meanwhile, Trump has once again brought up the Biden administration during this meeting.
He blames the previous administration for economic issues that the US is facing.
Trump wrote in a post on his Truth Social account earlier today that US President Joe Biden has left “bad numbers”, adding that today’s GDP figures had “nothing to do with tariffs”.
And last night during his political rally to mark his 100 days in office, he also mentioned Biden several times.
Economists and the Federal Reserve have been anticipating tariffs to push inflation higher and weigh on economic growth in the coming quarters.
“Overall this is indicating that tariffs are having an impact on the economy, that it’s been negative so far in 2025,” Faucher said. “And they’re likely to remain negative through the rest of this year.”
