Hit by Trump trade wars, U.S. economy falls 0.2% in first quarter, an upgrade from initial estimate
The
U.S. economy
shrank at a 0.2% annual pace from January through March, the first drop in three years, as President Donald Trump's trade wars disrupted business, the government said Thursday in a slight upgrade of its initial estimate.
First-quarter growth was brought down by a surge in imports as companies in the United States hurried to bring in foreign goods before the president imposed massive import taxes.
The January-March drop in gross domestic product - the nation's output of goods and services - reversed a 2.4% gain in the fourth quarter of 2024. Imports grew at a 42.6% pace, fastest since third-quarter 2020, and shaved more than 5 percentage points off GDP growth. Consumer spending also slowed sharply.
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Undo
Trade deficits
reduce GDP. But that's mainly a matter of mathematics. GDP is supposed to count only what's produced domestically. So imports - which the government counts as consumer spending in the GDP report when you buy, say, Costa Rican coffee - have to be subtracted out to keep them from artificially inflating domestic production.
The first-quarter
import surge
likely won't be repeated in the April-June quarter and therefore shouldn't weigh on GDP.
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Thursday's report was the second of three Commerce Department estimates of first-quarter GDP. The final version comes out June 26.
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