US economy shrank at 0.2% rate in first quarter

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The US GDP of the United States decreased by 0.2 percent annually in the first quarter, according to the revised data that confirmed the first contraction since 2022, as the trade war in Donald Trump was ripped throughout the world’s largest world.

The decrease in GDP compared to the expansion of 2.4 percent in the last quarter of 2024, and was largely the result due to an increase in imports as companies rushed to buy foreign owners’ goods before the announcement of the “Tahrir Day” tariffs of the US President in early April.

On Thursday’s reading of the Economic Analysis Office, a 0.3 percent higher contract was revised in the initial data issued last month. But the change was not enough to put the largest economy in the world in the positive lands of this period.

The statistics of the first quarter have been distorted through an increase in imports – driven by the concerns of the corporate tariff – that have not been compensated by a similar rise in investment of stock or purchases by consumers.

While investing in the revised statistics increased, this was compensated due to the low rate of growth in consumer spending – especially in services – as Americans compete with the high prices and the uncertainty resulting from the trade war. Residential spending slipped.

“You see consumers who have slowed consumption,” said Andrew Holinhurst at City. “This type of compatibility with what we have heard, especially from hotels and airlines, is that spending services slows down.”

Consumer prices in the United States have increased by more than 25 percent since 2019, before the Covid-19 pandemic, prompting shoppers concerned to reduce consumer morale reports and weight.

The balance between imports and exports is an important factor in the gross domestic product account, which also measures local consumption, investment and government spending. Bea calculates GDP based on many reports, so the numbers are not always in line with.

Economists said that the revised numbers still fully reflect the high inventory that is expected as a result of import jump.

“At the end of the day, it really reflects how it is very difficult with data that has long legs in getting everything that is happening in an economy with many sudden transformations in politics,” said Diane Swank at KPMG.

“Because of the sudden transformations, the numbers are still distorted, the stocks are still very low,” she added. “There is still a decrease in the courses of the Boom statue that the tariff creates again.”

Trump’s trade war is expected to be a traction on the American economy during the second half of the year. In April, the International Monetary Fund reduced its view of the growth of GDP in the United States this year to 1.8 percent, from 2.7 percent in January.

A US court has ruled this week that the “Tahrir Day” tariff in Trump was illegal, in a decision that could aim to the global trade president’s policy in a state of chaos.