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Indebta > News > US economy shrank at 0.2% rate in first quarter
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US economy shrank at 0.2% rate in first quarter

News Room
Last updated: 2025/05/29 at 9:06 AM
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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The US economy shrank by an annualised 0.2 per cent during the first quarter of 2025, according to revised official statistics that confirmed its first contraction since 2022. 

The fall in GDP compared with a 2.4 per cent expansion in the final quarter of 2024 and was largely caused by a surge in stockpiling activity as companies rushed to buy goods before President Donald Trump announced sweeping tariffs. 

Thursday’s reading from the Bureau of Economic Analysis was revised slightly higher from the 0.3 per cent contraction reflected in initial data released last month. But the change was not enough to put the world’s biggest economy in positive territory for the period. 

The statistics for the first quarter were distorted by a surge in imports — driven by companies’ tariff fears — that were not offset by a corresponding rise in inventory investment or purchases by consumers.

The balance between imports and exports is an important factor in calculating GDP, which also measures domestic consumption, investment and government spending. The BEA calculates GDP based on numerous reports, so the figures do not always align precisely.

Trump’s trade war has been expected to be a drag on the US economy during the second half of the year. The IMF in April slashed its outlook for US GDP growth this year to 1.8 per cent, from 2.7 per cent in January. 

A US court ruled this week that Trump’s “liberation day” tariffs were illegal, in a decision that could throw the president’s global trade policy into disarray. 

This is a developing story

Read the full article here

News Room May 29, 2025 May 29, 2025
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