US economy contracts 0.5% in Q1 2025
Official data released on Thursday showed that US real gross domestic product (GDP) shrank at an annualized rate of 0.5% in Q1 2025, compared to a 0.2% contraction in the second estimate. The downward revision reflected weaker consumer spending and exports, despite a cut in import estimates.
According to the Bureau of Economic Analysis, the GDP contraction was driven by a slowdown in consumer spending and a decline in government expenditures, partially offset by an increase in investment.
The agency also revised up its estimate for the personal consumption expenditures (PCE) price index to 3.7%, from 3.6% in the first and second readings. The core PCE index, which excludes food and energy, was also revised higher to 3.5%, from 3.4% in the previous estimate.
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