U.S. Economy Shrinks 0.5% In First Quarter Of 2025

The U.S. economy shrank by 0.5% in the first quarter of 2025, as two earlier estimates were revised downward by the Commerce Department’s Bureau of Economic Analysis, Oliver O’Connell reported for The Independent.

For the first time in three years, the US economy contracted—the last time being in the first quarter of 2022.

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—led to a surge of imports as U.S. companies and households rushed to buy foreign goods before Trump could impose tariffs.

Commerce Secretary Howard Lutnick had 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. These are the first GDP figures of Trump’s second term and mark a reversal from the 2.4% increase in the final quarter of 2024 during President Joe Biden’s administration.

The data show that, for the first time in three years, the economy contracted—the last time being in the first quarter of 2022. If the economy contracts again in the second quarter (April through June), the U.S. will officially enter a recession. Preliminary second-quarter data will be available on July 30.