The U.S. economy shrank by 0.5% in the first quarter of 2025, between January and March, as two earlier estimates were
revised downward by the
Commerce Department’s Bureau of Economic Analysis.
Looming fears about the extent of President
Donald Trump’s
trade war on American trading partners — announced on the so-called
“Liberation Day” of April 2 — saw a surge of imports as U.S. companies and households rushed to buy foreign goods before Trump could impose tariffs on them.
The
Commerce Department, headed by Secretary
Howard Lutnick, previously estimated that the economy fell 0.2% in the first quarter. Economists had forecast no change in the department’s third and final estimate, so the deterioration from earlier data was unexpected.
Gross domestic product (GDP) measures the nation’s output of goods and services, and these are the first figures for Trump’s second term, reversing a 2.4% increase in the last three months of 2024 during the final months of President
Joe Biden’s administration.
The data shows that for the first time in three years, the economy contracted — the last time being in the first quarter of 2022.