FX.co ★ US GDP Unexpectedly Contracts in Q1

In the first quarter of 2025, the U.S. economy contracted at an annualized rate of 0.3%, representing the first decline in economic activity since Q1 2022. This downturn contrasts sharply with the 2.4% growth experienced in the preceding quarter and fell short of market forecasts, which had predicted a 0.3% increase. A significant factor contributing to this reduction was a 41.3% surge in imports, as both businesses and consumers hastily increased their inventories in response to impending higher costs due to the Trump administration's tariff announcements. Consumer spending grew at a subdued rate of 1.8%, marking its slowest progress since the second quarter of 2023. Furthermore, federal government spending decreased by 5.1%, the most substantial decline observed since the first quarter of 2022. In contrast, fixed investment witnessed a robust increase of 7.8%, the highest since Q2 2023.