The Commerce
Department released on Wednesday its advance estimate for the U.S. gross
domestic product (GDP) for the first quarter of 2025, which showed that the
U.S. economy unexpectedly shrank in the reviewed period.
According to the
estimate, the U.S. real GDP decreased at an annual rate of 0.3 per cent q-o-q in
the first quarter of 2025, following an unrevised 2.4 per cent q-o-q advance in
the previous quarter. This represented the first contraction
since the first quarter of 2022 (-1.0 per cent q-o-q).
Economists had anticipated
the U.S. GDP to increase by 0.3 per cent q-o-q.
According to
the report, the decline in real GDP in the first quarter reflected a rise in
imports, which are a subtraction in the calculation of GDP, and a decrease in
government spending. These movements, however, were partly offset by gains in
investment, consumer spending, and exports.